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Rising inflation in Bulgaria may hold back investors

The largest bank in Bulgaria, UniCredit Bulbank made the announcement on Thursday that there simply is no property bubble in the country and that purchasing property here was still a solid investment. According to Levon Hampartzoumian, Chief Executive at the bank, the property sector offers good returns without a lot of risk.

According to Hampartzoumian, there is no effect from a global credit crunch here because the country follows different economic patterns. Additionally, while the initial boom of real estate markets here grew 34 percent in 2007, a slow down to between 15 and 20 percent in 2008 would show that the market was finally maturing. There was no risk, he said, of any sudden collapse in the sector and therefore any idea of a real estate bubble here was simply insinuations.

As quoted in the Sofia Echo by Mr. Hampartzoumian, "More than one third of the country's foreign direct investment last year went into the property sector, which means that there is an ongoing and solid interest in the field. UniCredit will continue to support real estate projects, but we are not likely to finance a seaside hotel."

While these facts come in and are good news, there is the other consideration in the economy of this country that has become a factor. That is inflation, which continues to grow exceedingly fast here. Many eastern European countries are facing the same value. In Bulgaria, prices rose to 12.5 per cent higher than a year ago. The hardest hit areas include food prices.

Some believe that these numbers are not accurate either, believing that the government is holding back. In all cases, the rise of inflation may be holding some back from investing here.