Bulgaria drives away foreign investors and now pays the price

“The outflow of foreign investments in real estate is a symptom of a systemic collapse in state policy,” emphasizes Yordan Yordanov, manager of the real estate agency “Nov Dom 1”

Bulgaria marks the third consecutive year of outflow of foreign investments in the real estate sector. Official statistics from the BNB show that in 2022 the outflow is at minus 21 million euros net, in 2023 it is minus 13 million euros, in 2024 minus 15.2 million euros. Preliminary data indicate that only for the first four months of 2025, the net outflow has already reached -7.5 million euros. Despite our country continuing to offer some of the best tax conditions in the EU, the data show that foreigners are not just stopping buying – they are actively leaving the market. Expectations are that if this trend continues until the end of the year, the outflow will exceed more than 15 million euros.

According to Yordan Yordanov, the main reason is internal, namely the lack of rule of law and a functioning judicial system that would guarantee security for investors. This is exactly what repels Western investors from our country. On the other hand, Bulgaria’s policy towards Russia in 2022 led to the mass withdrawal of Russian investors from Bulgaria. It is important to note that over the past 15 years, they have been the ones developing the Black Sea resort line. As a third factor, we can also note that except for Sofia, the rest of Bulgaria is difficult for Western investors to access by air.

The law does not apply to everyone – and this scares investors

“When a country is not a rule of law, investors leave. Here, laws are not enforced, the administration acts at its discretion. Completely legal projects are delayed or blocked without consequences for the guilty. And this is already evident in the numbers.”, he shares

Bulgaria should attract foreign capital, not lose it. “We have the lowest corporate tax in the EU, a thriving construction sector, lowest interest rates, and increased demand. The Bulgarian market is an extremely good opportunity for any investor. Instead of expecting an influx of investors, we are witnessing the opposite. And the reason is only one – the lack of rule of law, turning every foreign investment into a risk.”

Russian buyers withdrew and thus the market remained internal

By 2021, Russian buyers have been a major driving force in the real estate market along the Black Sea – mass presence, high purchasing power, and loyal behavior. They have mainly invested in properties, spent months in the country, poured money into the local economy, and seamlessly integrated into the local environment. However, the change in political relations between Bulgaria and Russia has led to a sharp outflow. According to him, largely provoked by targeted actions of the state, which repel the former buyers. As a result, their properties have been mainly bought by Bulgarian citizens.

“The market in the Southern Black Sea region is not abandoned, in the past year there has even been a significant growth compared to 2023, but buyers are now mainly Bulgarians, with less international presence and a limited share of Ukrainian and other foreign investors,” notes Yordanov. Currently, over 95% of the deals in the region are made by Bulgarians, which maintains activity but does not bring the external capital needed for the market to grow.

The Eurozone – What to Expect?

The expected accession of Bulgaria to the Eurozone is a reason for hope, but not a guarantee for the return of foreign investors.

“Bulgaria has all the prerequisites to attract companies and private buyers – security, climate, location, history, tourist attractions, mountains and sea, national psychology, market,” he comments.

The Eurozone can provide a huge boost if accompanied by real efforts for reforms. Among them stands out the need for better transport connectivity, especially between key regions outside the capital, which often remain outside the scope of international investments precisely due to their limited accessibility.

“Only a national strategy with concrete actions, guaranteed rule of law, predictable administration, and active support for real investors can turn Bulgaria into a preferred destination for foreign capital,” concludes Yordanov.