Why Bulgaria

Key point of De Ferrari's business strategy is to undertake investment and property development projects, primarily in Bulgaria. Bulgaria is situated in the center of a region, which is undergoing dynamic transition. Within 500 km of its capital Sofia (1.2 million people) a population of over 60 million is concentrated throughout 10 countries, most of which have only recently embarked on their way to a market economy. A network of international motorways crosses the country, making vital connections to Western Europe, Russia, Minor Asia, to the Adriatic, the Aegean and the Black Sea.

Bulgaria is an European Union’s member since January first 2007. Bulgaria is also full member of NATO since April 2004.
Property prices in Bulgaria are relatively low compared to the other East European Countries that have recently joined EU like Hungary, Poland and Czech Republic. Furthermore according to De-Ferrari’s research and market analyses the prices in the Bulgarian real estate market, which have increased in previous years, are going to continue its upward trend in the next few years. Investment in property in Bulgaria could show a good annual return combined with the possibility of significant capital appreciation.

Bulgaria Key Indicators
Bulgaria Key Indicators	2006E	2007F	2008F
GDP (EUR mln)	24,3	26,8	29,6
GDP growth (%)	5.9	6.0	6.0
Export (EUR mln)	16.040	19.489	23.387
Import (EUR mln)	19.611	23.533	28.475
Inflation (avg, %)	7.3	5.0	4.0
Unemployment (%)	9.5	9.0	8.5
Average monthly gross wage (avg, EUR)	179	195	230
GDP per capita (EUR)	3.156	3.526	3.947
Budget Deficit (% of GDP)	3.0	2.0	1.5
Government Dept (% of GDP)	28.3	23.8	20.2
FDI (EUR mln)	2.326	2.400	2.400
FDI (% of GDP)	9.6	9.0	8.1
USD/BGN Exchange Rate (annual avg)	1.57	1.47	1.47
EUR/BGN Exchange Rate - pegged at 1.95583	1.95583	1.95583	1.95583
Base Interest Rate (avg, %)	N/A	N/A	N/A

Sources: Bulgarian National Bank, National Statistics Institute, Employment Agency, Ministry of Finance; Estimates by Agency for Economic Analysis and Forecasts (as of 29.08.2005), InvestBulgaria Agency and Economist Intelligence Unit

Presently Bulgaria has Positive evaluation of its investment climate, by the international credit rating agencies:

Global Competitiveness Report for 2004-2005: Bulgaria holds 59th place among 104 countries, about all the indicators for the complex competitiveness grade of a highly improved economy;
For the last 5 years, credit rating of Bulgaria improved 5 times. In 2004, Bulgaria managed to climb in the Investment Rating Level ranking in S&P's and Fitch scales. S&P gave Bulgaria an investment grade rating "BBB" in October 2005, while Fitch raised the country's credit rating to "BBB" in August 2005. In March 2006 Moody's credit rating evaluation of Bulgaria revised as stable.

More factors that focused De Ferrari's business activity are listed below:

Stable and predictable business and political environment based on solid legal framework harmonized with the European legislation
The Bulgarian economy is growing at one of the most fast rate in Europe
Low currency risk - the Bulgarian Lev /BGN/ has been pegged to the Euro since its introduction at a fixed rate equivalent to (1.00 EURO to BGN 1.95583)
Highly-skilled, multilingual workforce at Europe's most competitive wages
The lowest operational costs and tax rates in a European market economy
Industrial goods traded duty free between Bulgaria and the EU, EFTA, CEFTA and Turkey
Flat corporate income tax rate of 15%
VAT exemption on equipment imports for investment projects over EUR 5 million
Annual depreciation rate of 30% for machinery & equipment, 50% for new equipment used in entirely new investment or expansion and 50% for software and hardware
Acquisition of land and property through Bulgarian registered company with 100% foreign ownership