Búlgaría: Construction and Property in Bulgaria are Booming

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Both the construction industry and the property market in Bulgaria are continuing to boom as we move in to 2008, with 2007 having been bumper years for both economic sectors according to a series of independent reports. This is excellent news for the nation and for all those who had committed to the market prior to the country’s 2007 EU entry...but what does the market have in store for the short to medium term for those who have yet to buy?

Well, there is an opinion widely shared that the construction industry will continue to expand well in to 2010 simply because of a general dearth in supply of quality residential, retail and some industrial commercial stock across the nation...so this will bring with it undoubted opportunity. But what about basic buy to let strategies or buying now and reselling a few years down the line for realization of equity expansion? Well, neither investment strategy will bring much success in the short term in our opinion…

How can it? There is already a strong investor base that has bought in to the buy to let tourism market - and the World Travel and Tourism Council’s predictions of an increase in real travel and tourism activity growth per annum is less impressive in 2008 than it was in 2007. In addition to this, those who want to live and work in the likes of Sofia are now more likely to be buying than renting – with those who continue to rent also having a strong investor base in place with assets that they can let.

In terms of buying low and off plan today or buying a renovation and tidying it up all for resale within the next few years, there is likely to be a hold on financing, a tightening of belts globally speaking when it comes to property, and a continuation of supply anyway in Bulgaria which will make this particular property investment strategy a tricky one to pull off in the short to medium term.

All this negativity to one side for a moment though – and back to the facts from last year – yes Bulgaria’s was one of the best performing property markets in the world in terms of price appreciation with figures for year on year growth ranging from 30 – 35% depending on which sources you favor. The turnover in the construction industry was a whopping 11 billion leva – up 15% from 2007 – and the property market turned over in excess of 11 billion euros. So Bulgaria is certainly not down and out, it is certainly not a market to dismiss, as mentioned there are solid expectations the construction industry will continue to boom until at least 2010 because very real demand still exists for commercial and residential stock – but for investors to get the very most out of property in Bulgaria they need to target their locations carefully and they need to hold for the medium to long term.

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Bulgaria’s 2008 Investment Potential

The property market of Bulgaria has achieved an incredible rate of growth over the past few years, bolstered by a fast-growing economy and its admission into the EU in January 2007. Bulgaria’s National Statistic Authority noted that property prices have grown by 15% during the first half of 2007, with Knight Frank’s Global House Price Index registering a 27% increase over the past year, and are predicted to grow at the rate witnessed during the Spanish market boom, as the figures all point towards a fantastic opportunity for property investment.

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Búlgaría: Kiten – a piece of Paradise

The summer resort Kiten is situated on a small peninsula, about 50 km south of Burgas. During the summer season, this small pretty town is full of visitors, who have come to spend their holiday there. We also had some unforgettable nights in Kiten, followed by some relaxing days on the beach. But we are not going into details of our sweet memories, because the best moments are still to come. We shall only tell you about this wonderful site, the fine sand, the sun and the sea.

One of the things you would really love in Kiten is the greenery that surrounds the town and the beaches. There are no big constructions near the sand stripe as well, so Kiten is a sheltered, cosy site with its own magic and exotic. There are two beaches, situated in quiet bays to the north and to the south of the town. During the summer they are filled with life and the merry din of the holiday-makers. According to the visitors the northern beach is better one. Probably it is so attractive because of the very old legend. At the beginning of the Turkish slavery, the ottoman sultan besieged the coastal fortress Urdoviza. Its remains can be seen near Kiten. He fell in love with local lass (according to other saga she was the ruler of the fortress) and he wanted to marry her. She accepted with tears in her eyes, but she asked the sultan to free of the taxes so mush land as she was able to go round on horse for one night. The girl rounded 17 villages and in the morning she reached the bay, where she and the horse passed away. The sultan was filled of admiration for the brave Bulgarian girl and he kept to his promise. The northern bay was named Atliman – the horse bay.

Today there is no sigh of the tragically events, went on centuries ago. Now the tourists are basking under the sun, swimming in the blue sea and happy kids built sand castles, living in their imaginary world, just like “Le petit prince”. Music sounds from the beach bars and the beer pours from the beer tenders - everything necessary to have a great time on the beach. And during the night there is a real summer fiesta in a very attractive night club. Half of it is on the beach and the other half is in the sea waters. It is quite common to miss the beach parties, because of the numerous cosy taverns along the way. It is a question of priority and one would definitely love to share the delicious meal and the heavy drinks with a good company. The night clubs are still there and you can plunge in their atmosphere as soon as you can.

In my opinion the south beach is in every way the north beach equal and it is excellent site for rest and entertainment. It is situated in Karaagch bay. It reaches the outflow of Karaagch River, also named Kitenska, to the south and Urdoviza peninsula, where the pier is situated, to the north. And one of things you will always remember is the magnificent view. Towards evening, when people leave and the beach becomes desert, the breeze brings white, playful waves, the sand is getting even more golden, lit by the sun. And in the distance the green hills of Strandzha Mountain let down lightly to the sea, to become in one with it forever.

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Búlgaría: New Lift and Two New Ski Runs in Pamporovo

A new six-seat ski lift and two new ski runs are to be built between Bulgaria’s Pamporovo ski resort and the village of Stoykite. The cutting where the new lift will pass is ready, as it starts from the center of the village and reaches Snezhanka peak.
The Mayor of Stoykite Ivan Malkochev confirmed the information and said the procedure is complex and slow, as the public debate regarding the effect the new lift and ski runs will have on the environment is yet to be held. According to the Mayor if everything goes according to plan the ski runs and the lift will be ready in the beginning of the 2008-2009 ski season. The total length of the ski lift will be 2,992 m as it will be one of the most modern facilities in Bulgaria. The two ski runs will be among the longest in the resort of Pamporovo – almost 5 km.
Mayor Ivan Milkochev hopes that the construction of the new lift and slopes will also help the total renovation of the old drag lift and ski slope located just above the village, as they are in close proximity to the new ski facilities.

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Búlgaría: Russian Websites Full of Bulgarian Property Offers

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Russian property websites are now full of offers for Bulgarian real estate, Monitor daily writes. More than 7 000 offers - out of a total of 24 000 - are now for Bulgarian developments indicating an increased Russian interest in Bulgarian properties, primarily in the holiday property segment.

Unlike the Irish and British, Russians do not usually buy for speculative reasons. Instead, they want to reside in the homes purchased. They prefer investing in high-quality establishments, either on the beach-front or with mountain views if at ski resorts.

А Russian client would not buy a resort apartment which has not been fully completed and is still in gypsum plaster and cement paste. These customers seek mainly turnkey offers for holiday units, according to brokers' observations. They add that Bulgaria is becoming a popular location because of its geographical and cultural closeness to Russia.
There is also an interest in apartment complexes situated in balneological resorts - like Sandanski, Velingrad and Banya village (near Bansko).

Rapid appreciation of real estate in Russia, particularly Moscow, is another factor stimulating interest in Bulgarian real estate. Middle class people opt to invest in property abroad so as to secure their money against devaluation.

Out of EU countries, only Latvia rivals Bulgaria in terms of the number of offers on Russian property websites. And yet, the total number of Latvian offers is less than half of those offered by Bulgaria.

Cyprus, which is popular with Russian holiday real estate buyers, is represented through some 2200 sale offers. Spain, Montenegro and Turkey lag far behind with 1981, 1089 and 1081 offers respectively.

Búlgaría: Global housing markets in review and some forecasts for 2008

Global Property Guide

Last Updated: Dec 19, 2007

ANNUAL HOUSE PRICE CHANGE (%), IN LOCAL CURRENCY TERMS
	2007* (LATEST)	END-2006
Bulgaria	30.59	--
China (Shanghai)	27.85	-0.61
Singapore	27.59	10.15
Estonia (Tallinn)	23.38	28.64
Lithuania	13.64	30.95
Philippines	13.04	9.63
Colombia	12.82	6.77
South Africa	12.52	15.12
Norway	11.56	16.67
Hong Kong	11.25	4.11
Australia	10.63	9.71
Latvia	10.22	68.99
Sweden	9.86	10.50
UK	9.68	10.49
South Korea	9.01	11.60
Poland	8.38	9.67
France (Paris)	8.27	9.70
Japan (6 cities)	7.75	4.12
New Zealand	6.67	11.86
Canada	6.13	10.74
Finland	5.88	6.56
Italy	5.60	6.30
Spain	5.31	9.14
Indonesia	5.24	6.60
Greece	4.18	10.54
Denmark	3.95	14.94
Netherlands	3.77	4.73
Malaysia	3.20	4.80
Switzerland	2.56	3.24
Germany	2.04	3.06
Portugal	0.49	0.65
Israel	-0.51	-3.16
Thailand	-0.78	1.87
Japan	-1.48	-2.78
Ireland (monthly)	-4.68	11.8
US (NAR)	-5.07	-0.18
US (FHFB)	-3.49	-1.9
US (OFHEO)	1.79	6.03
* latest available Source: various series, list of house prices, data and sources here

In 2007, the US housing market crashed, and Europe’s housing markets slowed. But house prices in Asia-Pacific gained momentum.

Bulgaria saw the world’s strongest house price growth at 30.6% (15.4% in real terms) to end-Q3 2007 from a year earlier.

Shanghai’s red hot housing market continued to rebound, despite efforts by the government to cool the market. House prices rose by 27.85% to end-Oct 2007 from a year earlier; a significant turnaround from 0.6% drop in 2006.

Singapore registered an annual house price increase of 27.6% (24% in real terms) to end-Q3 2007, significantly higher than the 7.6% price increase over the same period in 2006. In real terms, Singapore was the world’s best-performing housing market, given inflation of only 2.66%.

House prices rose by more than 10% year on year (y-o-y) in nominal terms in several developing countries - the Philippines, Colombia, South Africa, and Hong Kong. However, when adjusted for inflation, price increases were generally substantially lower.

In Europe most countries registered unimpressive y-o-y house price changes in 2007, aside from Norway and Estonia.

Property prices in Ireland started falling in 2007, the first time in more than 15 years. The Irish housing market had the biggest and longest house price boom among developed countries in recent memory.

Urban land prices in Japan’s six largest cities rose by 7.75% during the first half of 2007. Although Japan’s national urban land price index fell by 1.48% during 1H 2007, this is an improvement from the 2.8% price fall in 2006. The Japanese urban land price index is generally believed to lag reality, so significant recovery is taking place in the Japanese housing market.

Interest rates

The recent house price slowdown in Europe and the US is mainly due to higher interest rates.

In Europe, the European Central Bank (ECB) raised its key interest eight times in 15 months. The repo rate was raised to its current level of 4% in June 2007 from its historic low of 2% in Nov 2006.

In the US, the Federal Reserve Bank raised its key lending rate 17 times in 24 months during 2004-2006. The US Federal Funds rate rose sharply from its historic low of 1% in May 2004 to 5.25% in June 2006.

As signs of strain on the housing market started to appear in mid-2006, the Fed kept its key rate at 5.25% for 14 months to Aug 2007.

When the US housing market boom turning to a bust, the Fed slashed key rates in September by 50 basis points and in October and December by 25 basis points, bringing the rate down to 4.25%.

The central banks of UK and Canada reduced key lending rates by 25 points in December 2007.

Some would say the Fed raised rates “too much, too soon,” and is now frantically reducing key rates to avoid recession. Others however suggest that weak oversight of US mortgage market lending is the primary cause of the present crisis, in combination with a structural shift toward off-balance sheet lending.

The ECB’s stubbornly slow rate adjustments, in contrast, have allowed the Eurozone’s diverse housing markets to adjust relatively smoothly. Only the most overpriced housing market, Ireland, has actually crashed, while the rest are mostly slowing

Búlgaría: Seven Golf Courses to Mushroom Near Bansko

Seven new golf courses are being built on the territory of Bansko and Razlog resorts. "Our ultimate goal is to attract wealthy lovers of this aristocratic sport from all over Europe. This way we will be able to profit from tourism around the year," Lyuben Tatarski, Razlog Municipality Mayor, explained. The first golf facility is supposed to be operational this spring.

It also transpired that the joint venture set up by the Razlog Municipality and the local construction company Balkanstroy is about to invest 240 million levs in a state-of-the-art skiing center and a golf complex, which will spread over 600 hectares in the Betolovoto area. The skiing center will comprise 20 modern skiing facilities, a 19,4-kilometre ski lift, as the common length of the ski-runs will be 58,5 km. The golf course will have eighteen holes and will vie with some of the world's best facilities. The joint venture will also build up new hotels to shelter some 3,000 tourists.

Bulgarian Property Market 2007 Turnover Reached 11bn Euro

Property market was the absolute economic leader for Bulgaria's economy in 2007 with a record-breaking turnover of 11.36 billion euro, a real estate agency data showed.

The sum was the total value of deals with land and buildings in the country over the period.

In 2006, turnover in the sector was close to nine billion euro, Pari daily said.
According to experts, the increase in the number of property deals and in the property prices was the most accurate measure for the real estate market situation.

The data shows that the pace of price increase was twice faster than in 2006, thanks to a good mortgage market, relatively high annual revenue of properties and the weak impact of the world financial crisis in Bulgaria. The number of property deals in 2007 is expected to reach 292 000.

The property market stimulated construction development, Pari said. The sector ranks among the fastest developing in Bulgaria in 2007 with a growth of 15 per cent on annual basis.

According to the Bulgarian Construction Chamber, the sector turnover would reach 11 billion leva.
Bulgarian Entrepreneural Chamber in Building president Nikolin Gavrailov said that the lack of modern apartments, retail and administrative buildings caused the construction boom. The investment growth in tourism, production and the need for a modern infrastructure also stimulated construction, he said.

Construction sector growth is expected to be between 12 and 16 per cent annually until 2010, he said.

Búlgaría: Love Affair with Bulgaria’s Property Market Continues

Contrary to recent rumors that the Bulgarian real estate market is not so attractive to foreign investors any more, Andrew Regan, a Scottish online freelance author, comments that the Bulgarian property boom shows no signs of abating.
“Bulgaria's expected adoption of the Euro in 2011 means that investors need to move quickly to snap up the best deals. Bulgaria's recent accession to the European Union has vastly increased its attractiveness to British holidaymakers as well as investment property buyers. Real estate experts also predict an even greater demand for property when Bulgaria adopts the Euro in 2011,” the author said.

Investors are particularly interested in Bulgaria, as it is believed that EU money will be spent on improving the country's infrastructure. Bulgaria has seen a great deal of political reform since the Communist era, and the government has shown solid commitment to economic improvements, with GDP growth the highest in Eastern Europe.
Economic growth has also caused a vast escalation in land values, which have risen from just 20 euro a square meter to around 350 euro in some areas. The prospect of high profits has lured many individual and business investors from Britain, Ireland and Russia to buy ski and beach chalets, which can be purchased for a fraction of the price of similar properties in more traditional holiday areas such as France, Spain, Austria and Switzerland.

The high price of UK properties and the recent rises in interest rates have also led UK investors to widen their search for better real estate deals. Bulgaria continues to excite investors as it is an emerging market that offers property at prices that are unobtainable in other parts of the world. It is still possible to pick up property for as little as 30 000 euros, a sum which would buy little more than a garage in the UK.

Rising prices – and the likelihood of this trend continuing - mean that investments in Bulgaria provide excellent returns, especially if properties are bought in areas that are predicted to become more popular over the next decade.

Bulgaria's connection to the UK via low cost airlines has also added to its appeal as both a holiday destination and investment area. Flights from London Stansted to Sofia take around three hours. More routes are expected to open up soon.

Búlgaría: Mall Bansko Will Be Completed Until Summer 2008

The construction of the first mall trade center in Bansko was officially started on 11th of June. Mall Bansko has extended built-up area of 5576 square meters and is situated in the immediate proximity of the cabin lift and Kempinski Grand Arena complex.

Investor of the project is the American-Bulgarian company “Bansko Privilege Resort” Ltd. It is planned that the investment in the site, together with the project and the construction will amount to more than 5 million Euros. This was said by Georgi Razvigorov – one of the Directors of “Bansko Privilege Resort” Ltd.

This will be the first project of the “mall” type on the territory of Bansko Municipality. Nearly 30 shops on four of the floors are planned to be constructed. The building works will be completed in one year’s term.

The location of the trade complex, and the development of Bansko during the recent years are prerequisite for the development of such for a trade site project, servicing the golf and ski tourism, said representatives of the investor company. Among the tenants, there will be a bank, a mobile operator, and a photo services office. The sports shops and shops for professional equipment will be the most numerous ones in Mall Bansko. So far, interest has been demonstrated for 90% of the areas. The rent prices vary between 17 and 35 Euros per square meter, depending on the location and size of the shops.

The idea for the investment project arose two years and half ago. The design works began two years ago. Some alternatives were consecutively offered.

The trade-and-entertainment complex will offer entertainments and shopping opportunities. It will have four above-ground and two underground levels.

There will be three entrances for visitors – two of them will be for pedestrians, and one – for vehicles. There will be a road entrance for supply, as well as a service entrance. The evacuation exits will be three.

The complex has underground parking lots with controlled access, four levels of commercial areas, a panoramic restaurant and a casino on the highest level, with marvelous views to the mountain through the large glazing.

The volumetric-spatial design entirely conforms with the purpose of the site. Each floor is designed as a mix of communication and commercial areas.

The complex exterior design is entirely coordinated with the specific architecture of Bansko. That is why, natural materials were prepared for the construction – stone tiling, wooden hanged façade, glass and glass hanged facades, as well as architectural metal elements. Their balanced application, the harmonious combination of solid walls and openings, oriels and inclined planes make a complete and integral architectural image.

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