Bulgaria was the world's strongest property market in 2007 with an estimated turnover of 11.36 billion euro, an increase of 2.36 billion euro over the previous year, British property investment company Obelisk said on February 1, 2008.

The previous lack of modern apartments, retail, and administrative buildings, as well as growing investment in tourism, production, and the need for modern infrastructure caused the construction boom.

Construction sector growth is expected to be between 12% and 16% year on year until 2010, Obelisk said in a statement.

The huge property price rise has been largely attributed to a good mortgage market, high annual revenue of properties and the weak impact of the global credit crunch on Bulgaria, since there is virtually no cross-border banking in the country.

Britons accounted for 40% of all Bulgaria property investment in 2007, followed closely by Russians with 38%, and "played a primary role in maintaining excellent market conditions (...) and adding to the robust appeal for Bulgaria property investment," Obelisk said.

Bulgaria's decision to slash taxes to a flat 10% starting from this year makes the country a very tax efficient place to relocate or invest in, according to Obelisk, while budget airlines' plans to increase the frequency of their flights would make traveling to and inside the country easier.

"Despite such rapid price growth, Bulgarian property investment remains very competitive and highly profitable in comparison with other European markets, giving the country a long-term profitable investment edge," the British firm said.

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Bulgaria's National Statistics Institute (NSI) said that real estate prices in Bulgaria had, on average, risen by 28.9 per cent in 2007, compared to the year before.

Price increases in 2007 ranged between 44.3 per cent in Turgovishte to 15.6 per cent in Yambol, the NSI said.

Ranked by price increase, Sofia was fifth with 35.1 per cent, with Vidin (36.5 per cent), Silistra (38.7 per cent), Pernik (40 per cent), Rousse (140.9 per cent) and Turgovishte ranking ahead of the capital city.

Sofia was still the most expensive place to buy real estate, with an average price of 1813.17 leva a sq m, according to the NSI data.

Though the Bourgas was a close second with 1762.63 leva a sq m.

Other Bulgarian cities where real estate prices were in the above-1000-leva range included Varna, Bourgas, Rousse, Stara Zagora, Plovdiv, Blagoevgrad and Pleven.

The cheapest real estate was available in the Sofia region outside the capital, where the average price was only 488.14 leva a sq m.