Bulgaria during Coronavirus in comparison with Europe. What comes with the recovery?

"Bulgaria during Coronavirus in comparison with Europe. What comes with the recovery?"

Who we are?

Visa Free Europe is a Bulgarian company, specialised in investment immigration services and asset management for high-net-worth individuals and their families. We provide consultancy in migration, investment and financing matters under the provisions of the Bulgarian Investment Immigration Program (BIIP). Our mission is to help our clients and their families in every stage of implementation of the Program suitable for them. 

We have decided to write this article in order to familiarise our readers and clients with the current situation in Bulgaria. We believe that it is very important in these turbulent times to stay informed and get quality information. In view of this, over the next few weeks, we will explore in more details the segments and trends of the market in which our company operates.

Introduction. 

Coronavirus is shaking up business and consumer behaviour on a massive scale from all over the world. All economy sectors are currently scrambled in order to slow the spread of the illness and contain COVID-19 infection. While the full economic consequences are still unclear, we know that the effects that the virus—and the drastic measures being taken to stop the spread—are already precipitating change across industries. It is difficult to name industries that haven’t been affected by the current situation. More or less we all suffer but rather than focusing on the bad sides, let’s stay on the positive one. 

Since now the era of online webinars has come, we try to keep up with trends and follow them. The last webinar we attended was organized by IMC and the topic was “CBI Real Estate Challenges during COVID-19 Outbreak and how to overcome them”. This webinar provokes in us desire to analyze the current situation in Bulgaria in comparison with European countries. We think it is very important to focus on the bright sides and we strongly believe that the most difficult situations can teach us a lot.

Healthcare System. 

We would like to start our analysis with the most affected part which is healthcare. Health systems of all countries have been subjected to serious testing and we are no exception. Comparing to what Italy, Spain, US, Russia and other countries are going through during COVID-19, we can say for sure our health system is doing well. Thanks to the strict measures which Bulgarian government has taken at the beginning (March 13, 2020), hospitals are coping with the influx of patients providing them with sufficient medical care. This is shown by the data obtained be the Ministry of healthcare today (May 4, 2020): “In Bulgaria, there are only 1,652 confirmed cases of coronavirus, and 78 people have died.” Doctors all over the world are working at the threshold of their capabilities but no one is thinking about what the health system will be like after the epidemic. Now it is a good time to see which countries had a stable health system before the epidemic. 

Economic situation: Fees. Inflation. GDP.

In the Internet you can find plenty of articles about the impact of Coronavirus on the economies of countries around the globe. Some countries, like the Scandinavian ones, decided not to close any businesses and to continue working during the epidemic in order to save their economies. But largely, almost all other countries closed all businesses except pharmacies, hospitals, supermarkets, banks and some state enterprises. Due to this, millions of people all over the world lose their jobs and right now are living in a hard-financial time.  Economists only talk about how fees and inflation will increase in the economic aspect and GDP will decrease. All this discourages people and makes them think about how their life will continue after the pandemic. As long as people are currently locked down in their homes, everyone is thinking about where to invest their remaining money in order to secure their future. In line with above Bulgaria represents a perfect opportunity for such investors. Why? 

The European countries have started to provide financial help to small and medium-sized enterprises, but the damage caused by the coronavirus in the economy is quite large. It is expected when the current situation stabilises, states will raise taxes in order to restore the budgets. But this will not affect Bulgaria, as taxes here have always been the lowest compared to all countries in the European Union. In addition, the minister of finance explicitly has stated that raise of taxes is considered an inapplicable measure for our state. 

Bulgaria has one of the most favourable tax regimes in Europe. The corporate income tax is 10% flat rate, the lowest in the EU. The personal income tax is 10 %, flat rate. Industries in high-unemployment areas are granted 0% tax rate. In combination with her strategic location – Europe, Bulgaria is also a member of the European Union, NATO and WTO and the stability of the currency is supported by the currency board, pegging the Bulgarian lev to the euro at the rate of 1.9583. 

Sooner or later, Coronavirus will stay in our memory as a nightmare and the times of importance of market access will remain again. And here there is one more advantage why to invest in Bulgaria: due to country's location, it provides direct access to the following key markets: European Union – zero tariff market with population of 500 million, CIS – still not well penetrated market with a high potential, Turkey – zero tariff market of near 80 million population, Middle East – a market with high purchasing power, North African Market. 

  

Tourism. 

Life is on a pause. Almost all airlines have stopped their flight, world top travel destinations are closed, hotels and tourist agencies are screaming for help. 

“The coronavirus epidemic is putting up to 50 million jobs in the global travel and tourism sector at risk, with travel likely to slump by a quarter this year, Asia being the most affected continent” - the World Travel and Tourism Council has said.

First, road-accessed tourism will be restored, due to the massive problem in the aviation industry and unknown time for its recovery. People who have been locked up in their apartments until now will want to get some fresh air and go somewhere where they will forget about their past daily life for a moment. Island tourism will be much more difficult. Countries that do not have access to high-class sea and mountain resorts will look for the nearest destinations that have this access. These will be some of the countries located next to Bulgaria: Serbia, Macedonia, Moldova, Romania, Turkey and Greece. 

So, isn’t it the right time to start promoting local tourism inside the country and region? Post-lockdown times will come but people will be still afraid to travel abroad, moreover most of them won’t be able to afford a vacation somewhere outside their own countries. Well, the Bulgarians are privileged – our country is a perfect destination for local tourism.  In Bulgaria, summer tourism is well developed, and with the onset of winter local people get into their cars and go to the mountains, the nearest of which is only 16 kilometers from Sofia Center. Or what about combining mountain tourism with mineral baths and golf? You can find entertainment for every taste in Bansko, a picturesque town located 170 kilometers away from Sofia. 

 The landscape of the country is very diverse, and everyone can find a place to their taste: from small villas lost in the mountains, spacious fields and well-developed eco-tourism to dynamic life in winter and summer resorts. 

The trend is that the real estate market will revive tourism, as it will develop it in two directions: on the one hand, the sale of real estate (holiday homes), and on the other - rental of houses business.

Real estate.

Many discuss the impact of coronavirus on real estate purchases. Some assume that prices will continue to decline, even Deepak Parekh said in address to real estate developers at a webinar organized by the National Real Estate Development Council (NaredCo): “Prices of real estate have to come down and will come down. I believe NaredCo’s estimate is around 10-15 per cent. One must be prepared for even 20 per cent.” 

During IMC webinar, some trends were mentioned in this direction. According to the observations, we tend to support that investors will now be more discernible looking for branded products, paying more attention to good services and for them cheapest will not be the best. Companies will not make any discounts, because prices are already very attractive, and they are going to focus more on providing higher security rather than lowering prices. 

In the Internet many analyses of the Bulgarian real estate markets can be found, but it is important to mention that after five years of strong house price rises, Bulgaria’s housing market remains strong, buoyed by low interest rates and a stable economy. Moreover, as Mohammed Asaria, Managing Director and Board Member of Range Developments, pointed out during the IMC webinar – people who went through COVID-19 will search for secure place for them and their family and Bulgaria is a country, which can offer that. 

In times of economic crisis, people are looking for a place to invest their spare funds. In fact, one type of such investment is that of a sustainable real asset. As we all know, investing in real estate has lots of benefits: with well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, and diversification—and it's possible to leverage real estate to build wealth.

Procedure of getting RBI and CBI. 

Why you should choose Bulgaria for getting your Residence or Citizenship? Besides all the benefits like becoming an EU citizen, owning a European insurance card, Visa-free travel within Europe’s Schengen Area and others, the BIIP takes only 18 months from investment to citizenship. The features of BIIP include minimum investment in the amount of €512.000 for Permanent Residence and total of €1.024.000 for Citizenship by a Fast-track option, which the lowest amidst all European countries. 

Meanwhile we are still dealing with coronavirus, lock down and closed borders, it is good to know that most of embassies around the world are also closed, so this significantly complicates the procedure for submitting documents, but not in Bulgaria. Here all the necessary institutions continue to work, so there are no problems with submitting documents and declarations. 

Conclusion.

We are all dealing with hard times right now. We are afraid of the upcoming uncertain future but this does not mean good times will never come back. They will. But people will be different: their minds, visions, priorities and attitudes. While right now we have more time than usual, it is the perfect moment to focus on things we didn't have time for before.

Why not learn more about immigration and getting your Second Residence/Citizenship? 

In our opinion, the most profitable combination is to combine investments in a stable economy that is not affected by the virus, such as the Bulgarian one, and obtain Resident/Сitizenship.

Investment immigration allows people to invest and also provides them with a “plan B” option in the event of another crisis. Whereas previously the focus was on freedom to travel and traveling as a lifestyle, now people are looking to invest in another place and another market in order to secure their uncertain future.

Our advice is not to stop looking for something new and explore the unknown, and if you are still thinking about immigrating to Bulgaria, we are always ready to answer all your questions.

Bulgaria – better than expected!