Summary of an article by Kliment Robev
In brief
Kliment Robev compares buying a home directly in Bulgaria with investing in REITs — listed companies that own real estate — and weighs up their advantages and risks.
Key points
- High inflation and low rates drove rapid house-price growth in Bulgaria’s big cities, while prices in Europe fell or stood still. The falling number of transactions at home is a leading indicator of a correction.
- REITs give access to real estate anywhere in the world. In the US they must invest at least 75% of their assets in property and distribute 90% of taxable income as dividends.
- A direct purchase needs substantial capital: for a three-room flat in Sofia’s southern districts, about €200,000 — roughly €36,000 down payment, a deposit, about 3.6% agency fees and about 4% transfer costs. REITs can be bought with low exchange fees.
- The advantages: diversification across market segments, fast liquidity and regular income comparable to rent.
- The risks: sensitivity to rising interest rates (because of significant borrowing) and no control over the asset itself. Experienced investors know that the profit is made when you buy, not when you sell.
Context
Published on 9 February 2024, amid strong house-price growth in Bulgaria and a 25% fall since early 2022 in the largest exchange-traded fund investing in REITs (Schwab US REIT) as US rates rose.
Views reflect his position at the date of publication and are not investment advice. Regulatory information
