Bulgaria: Sun, Coast And Mountains
Index Imoti Magazine, 19th June 2007
A number of reasons given by the Russian property investors for their orientation to Bulgaria, as shown in the Russian “Digest Nedvijimosti”.
Recently a representative of the Bulgarian National “Real Properties” Association mentioned in an interview that oil companies from Russia, Great Britain and Israel show interest in the building of closed-type residential complexes near Varna. According to him, there are five complexes in process of construction, which are going to be used by the said companies, and besides their Black sea coastal invasion the oil investors have shown interest in the Pamporovo mountain resort and the picturesque villages of Arbanasi and Bojentsi.
The oil corporations are a fraction of the foreigners who recently have been interested in Bulgaria, wrote “Digest Nedvijimosti”. The demand is multifarious and not only for closed-type residential complexes. As a whole the geography of the foreign buyers in the country is very diverse, commented the Digest.
Psychological comfort +28 degrees Celsius
Only recently an internet launched an inquiry asking the participants why they would choose to buy real properties in Bulgaria. Some of the answer options included business in Bulgaria, that Bulgaria is already in the European union and is easy to travel throughout Europe from there, that the country is a profitable and still not too expensive investment and others. However the unbeatable number one answer was: “I like the country - it has sun, sea and mountains”.
This leads us to question ourselves – maybe the time has come when price would not be the most important factor when choosing to make an investment.
Bulgaria has lot of natural advantages over its competitors – mostly over the hot Mediterranean. The climate is much softer. The summer temperatures rarely rise above +28 degrees Celsius. And the water may heat up to 25 degrees above zero. Now add the ecologically clean sea and the almost perfect sandy seabed.
During the winter the geographical disposition of Bulgaria guarantees a stable snow blanket in the mountain resorts.
The last dry winter resulted in many ski resorts throughout France, Austria and Switzerland not being able to open the season, while the Bulgarian Pamporovo and Borovets were working at maximum capacity, and the administration of Bansko (declared by well-known German “Die Zeit” newspaper to be the most important ski resort in Eastern Europe) announced that the city had been visited by one million tourists.
One should not overlook that Bulgarians and Russians have the same faith. The common past of the two nations allows them to speak one language both literally and metaphorically speaking.
This is why Bulgaria has remained one of the destinations most sought after on both the Russian tourist market as well as the real estate market, in which the Russian investors are growing more and more interested.
Constantly rising prices
Until recently the Bulgarian destination used to be described on the Russian market as inexpensive. But today the dream for cheap Bulgaria seems unreal. The word “inexpensive” might be better replaced by “advantageous”.
Given the mad buy-out of different kinds of real estate properties, for the purpose of living, or for letting under rent, with commercial purpose or with the intention to resell in the future, the prices keep rising (for the last 5-6 years in some regional centers they have jumped with 150-200%, and somewhere the rise was as sharp as 350%).
The prices will keep rising now, when the country is already part of the EU. BBC for example recently quoted British analyzers saying that the price of the land in Bulgaria will rise almost 10 times, due to the changes in the Bulgarian legislation made in order to comply with the European requirements and regulations; therefore now would be the best time to buy land.
The increase of the real estate prices for year 2006 reached an average of 8-15%, for year 2007 an estimated 20% is expected.
According the consultancy company Соlliers International the residences in Sofia have not increased dramatically. However some not so well-known locations, which suddenly become known as a resort or balneology center quickly become popular and prices there double or triple in the matter of months.
Despite this the Bulgarian correlation euro per square meter does not appear to be shocking to anyone. According to a recent research by ЕRА Real Estate the prices in Sofia are the lowest among European capitals. A two-bedroom apartment of 85 sq.m. costs approximately 78 thousand euro, while in Berlin it would be 180 thousand euro, in Lisbon - 185 thousand euro, in Vienna - 231 thousand euro, in Madrid – 357 thousand euro and so on.
The community of the foreign investors
The first places in the list of foreign investors in Bulgaria are held by Irish and Britons, who have acquired extensive experience in real property investment gained in Spain, Portugal, the Czech Republic, Cyprus. Some analyzers suppose that some 50% of the real property deals in Bulgaria are concluded by British nationals. And, according to an inquiry performed by the “McAnthony Realty”, 13% of the Englishmen have expressed willingness to invest in the newly-admitted Romania and Bulgaria.
In 2001 foreign nationals invested in Bulgarian properties approximately 14 million euro, while at the end of 2005 the investment totaled 320 million euro. For the year 2006 specialists say that the total investments in real properties were approximately 10 billion euro, 2.5 billion of which were contributed by foreign nationals. And these figures should be assessed taking into consideration that the deals are generally not concluded at the real price, but on the tax authorities’ defined base price.
Foreigners have brought not only money in Bulgaria. Thanks to them the volume and quality of the constructions has substantially improved, as well as the level of the offered services. Probably not all from the thousands of Bulgarian real estate agencies meet the international standards but the drive to ensure better service can already be seen.
The appearance of large holiday- and closed-type residential complexes
with their own infrastructure is an achievement of the recent years. Earlier only houses within the city limits were considered to be prestigious, and it was not rare to see a magnificent villa outside the city, and another one right next to it, built back in the socialist era, already falling apart. Now the villa zone around Sofia is just as luxurious as the Podmoskovie region is for Moscow.
There is also interest in old village houses located 10-15 km. from the sea in ecologically clean regions. There is also demand for lands located in not as renowned resort centers, but suitable for build-up of hotels and holiday settlements. There is also interest in the mineral springs and the areas in proximity. And this is just a small fraction of the entire real estate market, which foreign nationals take interest in.
Busy by the sea
The most sought after locations on the Bulgarian real estate market remain the developed Black sea cities of Burgas and Varna (and their regions with the famous resorts of Sunny Beach and Golden Sands. It is not a coincidence that the prices per square meter in these cities are among the highest in the country. Only the capital city, where the real properties are the most expensive, stands in their way to the first place.
In the autumn of 2006 the average price per square meter in Bulgaria was 529 euro, while in Burgas and Varna – respectively 755 euro per square meter and 820 per square meter.
Better than the mountain is only the mountain
The second most popular segment of the real estate property market in Bulgaria comprises the residences in the mountain resorts. The numbers of the visitors in the winter resorts of Pamporovo, Borovets, and especially Bansko are certainly not less than the ones coming to the summer resorts of Sunny Beach, Golden Sands and Albena.
The private-owned and already half-way reconstructed Pamporovo, Borovets and the East-European Mountain Mecca – Bansko, attract a large number of foreign investors. The Russian investors for now are almost in last place, but as Plamen Grozdanov, Bulgaria’s Ambassador in Russia said – there are Russian “settlements” already appearing in Bansko too.
A part of the modernization program of the resort is the realization of building projects in the neighboring Razlog. In the long perspective these locations will blend in a single “Razlog-Bansko” resort area de luxe, with its own SPA centers and golf-courses.
The construction of new residential buildings is the main drive in the development of Bansko. For the last year only the volume of residential areas in process of construction in the Bulgarian mountain zones has practically doubled and this is mainly due to Bansko. Respectively the prices closely follow the average European prices of 1200 - 1400 euro per square meter in a contemporary holiday resort.
Countryside
The Russians have not tuned in to the wave of the ecological tourism yet, while the west-Europeans, tormented by the civilization, fully appreciate its advantages. This is why British, Scandinavian and German nationals have been actively buying out houses and lands in Bulgarian villages – while 10-15 km away from the coastline seem to a Russian to be desperately far, the West-European has no problems.
The admirers of peace, fresh air, and the healthy way of life are also numerous, so recently some village areas, especially in the area of the Central Stara Planina, the Rhodopes, etc have experienced a swift development.
The prices of the real properties constantly rise, but not as drastically. And they start low, since until very recently a decare of land could be bought for 50-100 euro.
Investing in health
Until recently the most attractive investment was considered to be the one in the already developed resort complexes both on the coast and in the mountain, while the real boom is currently in the sphere of the balneology.
Judged by the concentration of mineral springs, Bulgaria is among the first in Europe. The country has between 500 and 2000 springs, but 30% are being used currently and the remaining ones are patiently waiting for their new users. Besides being so numerous, the springs are scattered throughout the country, so that the investor will be able to combine a SPA center with sea or mountain or a SPA center with country- or ecological tourism.
As was said by the chairman of the Bulgarian National Balneology and Tourism Association – Tsveti Milanova – “attracting foreign investors is a priority of the association and a specific department has been opened for this purpose. The specialists in this department are ready to give complete and thorough information regarding the composition of the mineral waters of a respective spring, the condition of the infrastructure, and even assistance in the preparation of required documents”
The first to discover the balneology segment were the British and Irish nationals, afterwards came the Germans. More and more frequently French and Israelis appear, as well as Russians. So the Bulgarian specialists are already talking for a “healthy investment boom”.
Offices
Despite that entertainment and commercial complexes are being built everywhere, Sofia bears the brunt of the sector. The capital city, which proclaims itself to be center of the Balkans is currently holding first position in the list of most profitable office investment in Europe. The need for commercial and industrial properties in the capital is extremely large and the demand for now exceeds the supply, while the annual investment return is assessed to be very high: 13-15% (according the Russian press, and in fact it does not exceed - 7-9% - note by the editor)
Analysts believe that the admission in the EU would affect the office properties sphere. The business has calculated a 20% price raise but for the office areas prices could rocket up 30-40%, and maybe more. The big international investment and developer companies, including the ones beyond Europe have already sensed this potential.
Waiting for investors
Absolutely all specialist related with the investment and real estate market in Bulgaria believe that the cross-regional cooperation would be most beneficial supported by the corresponding investment in the regional projects.
The construction of tourist sites in Blagoevgrad and in Gotse Delchev, residential and SPA complexes in Smolyan region, sports and tourist center “Perelik” in the Rhodopes mountain, the mud-baths located on Tuzla lake, the mountain sports complex of Berkovitsa are only a small part of the projects, which have been offered to the foreign, including Russian, investors.
All this is further stimulated by the Law for Investment Stimulation, since the State is ready to allocate land for specific projects without slowing the process with tender procedures.
There is already a reaction from the Russian investors. The example – a project performed by the Russians for the construction of villa settlement in the village of Stoykite, close to the Pamporovo complex in the Rhodopes.
Brought to you from www.bulgarianproperties.com
