As of the end of 2005, the Bulgarian Property Market is continuing to grow in line with expert forecasts. During the first quarter of this year, growth stood at an impressive 10.6 percent. If as predicted, growth continues at this rate into 2006, the property market can expect to achieve gains of around 31% over the next 12 months. One of the factors which needs to be understood in order to take maximum advantage of the Bulgarian market is the extreme difference in market trends between each region. It is a fact that supply far outweighs demand in the Capital city, Sofia. Capital appreciation here in 2004 was just 5.9 percent. Compare this with for example, the town of Silistra on the banks of the River Danube which had capital growth of 36 percent, and the town of Vratsa with figures of 30 percent. It is true that these figures reflect the comparatively low cost of property in these towns previously, but also that supply and demand in these areas are much closer. Although these figures are impressive, investors with a buy-to-rent strategy should research these areas very thoroughly before purchasing here, and be realistic on probable returns. The main destinations attracting property investment, are of course the main tourist areas in the mountains and on the coast. Of these two regions, coastal property is the more expensive where in Varna for example, prices rose by 10.8 percent in the first quarter of 2004 which works out to be 1200.5 leva per square meter (approx £415.89 per m2 based on exchange rates as of Dec‘05). Despite the excellent growth figures experienced over the past decade as highlighted, Bulgaria continues to be a comparatively very low priced property destination. Other nations in Eastern Europe seen as competitors are becoming more and more expensive which ensures that Bulgaria’s competitive advantage remains intact, despite rises in property value between 2003/4. To highlight this, upon joining the European Union, the cities of Warsaw (Poland), Prague (Czech Republic) and Bratislava (Slovakia) all rose more than 10 places in the “Mercer Cost of Living” survey. This market trend has lead to Bulgarian property being up to 40 percent lower than in these example countries. As highlighted with these previous figures for 2004, when the figures for 2005 are released, they will show that price increases are continuing to grow at a higher rate in tourism areas than the rest of the country. There is no escaping the fact that the property investment market in Bulgaria is reliant on tourism for creating strong capital growth and high rental yield possibilities in the skiing and coastal resorts. This reliance is reciprocated however, with tourism being reliant on a thriving property industry to cater for demand. Each industry shall continue to grow hand-in-hand. The most recently identified trend in Bulgaria, is for the demand in secure, luxury developments. It is realistic to expect therefore, that 2005 shall have seen a great increase in purchases from reputable developers for higher quality builds. This is likely to continue to be the case in 2006. As a conservative estimate, prices in Bulgaria shall continue to increase at around 12 percent per annum until accession into the EU toward the end of 2007. There shall then follow an additional sharp rise in property value followed by the leveling out of the market by approximately the year 2009.