Bulgaria's Real Estate Market Frozen but Expects to Thaw by 2013

Alex Finkelstein, 05/04/2012

Bulgaria-Real-Estate-Market.jpg Bulgaria, Europe's 14th largest country with a population of 7.36 million, isn't exactly setting the real estate market on fire.  No new residential complexes have been built in that Southeast Europe's parliamentary republic since 2010.

Office vacancies are at 25.4 percent and high-end residential is 18 percent vacant, according to Colliers International data.

But the market is showing slight signs of recovery. Colliers reports investment transactions in fourth quarter 2011 reached €186m ($246 million U.S.), the highest level since 2008. (1 euro = $1.32 U.S.)

A local agency estimates transactions rose by 22% in 2011, an indication the market may have bottomed out.  However, the figures for 2011 include the sale of Mall of Sofia, one of the capital's largest shopping complexes. That deal accounted for 55 per cent of the year's investment volume.

Prices also continued to slide in 2011, but at a slower rate than previous periods.

Prices in the first quarter of 2012 about equaled prices in the last quarter of 2011. That, say some analysts, could be a buy signal for some investors sitting on the sidelines with growing cash reserves. They haven't made a large move since the property price crash of 2009.

British and Irish buyers traditionally sought holiday property in Bulgaria as an investment or as a vacation retreat. But that hasn't been repeated in the past three years as the international monetary crises rolled on and burned many investors in its wake.

The real estate sector has long been a central driver of Bulgaria's economic growth and a magnet for foreign direct investment. But not today. The International Monetary Fund slashed its 2012 growth forecast for Bulgaria to 0.7 per cent, low for the European Union's poorest country, formerly regarded as a buoyant emerging market.

Todor Breshkov, chairman of the Bulgarian Real Estate Fund, a Sofia-based REIT, recently told the media in Europe, he wasn't expecting property sales to set any records this year. Prices could fall another 10 percent to 20 percent, he speculated.

Slowing real estate development in Bulgaria are the banks who have been blamed for the same slowdown elsewhere on the Continent and in the U.S.  Unless they are convinced there will be an immediate cash flow from a new project, Bulgarian bankers will hold back loans, local brokers state.  At the same time, loan demand remains weak from institutions and from individuals.

The savings rate is high and rising in Bulgaria. Individuals with available cash are putting it in banks rather than spending it. Banks also continue to hold numerous foreclosed properties in their portfolios.  Releasing them at this time would further depress prices.

Although the Bulgarian real estate market remains largely frozen, brokers note investors continue to show interest in logistics and retail property. Both categories lagged behind economic growth in the past decade.
 

Bulgaria's revenue agency to sell seized property online

Dec. 23, 2011

Starting from January 2012, Bulgaria's National Revenue Agency (NRA) will have a new online store where it will sell property seized from tax evaders, television channel bTV said on December 23.

The new online store will replace the existing directory listing, which the NRA inherited from the now-defunct State Receivables Collection Agency, merged into the NRA in 2010. This directory, however, did not offer even search options, making it very difficult to use, the head of NRA's sales department, Boryana Zhilova, was quoted as saying.

The store will offer good ranging from gold and diamonds to real estate and cars, according to the report.

Not all goods would be in brand-new condition, since the online store will only sell the goods no longer needed as evidence in ongoing court cases. Given how long some litigation takes and the fact that not all goods are stored in the best way possible, some of those goods could be in far-from-perfect state, Zhilova said.

Some of the unexpected items on sale will include agricultural aircraft seized in Veliko Turnovo, whose worth is estimated at about 350 000 leva, and 19th century 24-carat gold coins from the Franz-Joseph reign, seized in Rousse.

The goods would be sold in auctions, with each unsuccessful sale bringing the price down by 10 per cent, but no lower than 50 per cent of the initial auction.
The Sofia Echo

Distressed Property Sales in Bulgaria Attract New Wave of Buyers

9 February 2009

During the property boom in Western Europe many foreign buyers took credit lines and second mortgages in order to buy vacation homes in Bulgaria. Now facing increasing difficulties meeting monthly payments at home those investors, mostly from the UK and Ireland, are trying to resell their second residences at discounted distressed sale prices.

The down trending prices in the Bulgarian capital city Sofia have brought a new type of "bottom fishing" buyers. These are people who have some free cash, usually up to €100,000, and are looking to invest it. According to property brokers these are savvy investors looking for below market value good quality homes in prestigious locations. Over the last 3 months the rents in those sought-after locations have increased by 15%.

"These are the new speculators", says Nicola Savov of Imoti Bulgarian Investment Properties. "The old ones who put their money into building land are unable to sell and are out of the market for now."

Great discounted deals are however difficult to find and stay on the market for a couple of days only. Recently Imoti sold an apartment in Lozenets, a top location for Sofia, for €850/sqm ($110/sqf). Such transactions where 1400/sqm is considered a steal are extremely rare. Many buyers are disappointed to find out that their target of EUR900-1000 per sqm buys only in the second tier locations such as Gotse Delchev, Beli Brezi and Hipodruma.

According to several property agents in Sofia, most buyers with ready cash stay on the sidelines waiting for the prices to fall further. And there is an other consequence of the global credit crunch that can significantly impact the Bulgarian property market. With unemployment rising in South-East Europe Bulgarian borrowers can find themselves in a tight spot. If mortgage defaults rates go up in the upcoming months bank repossessions, foreclosures and distressed property sales will certainly attract more and more bottom fishers.

Bulgaria top budget destination in the world

dailymail.co.uk, 09 March 2008

When the credit cards bills roll in after a holiday the shock can be enough to leave you needing another break.

There may be a solution .. . and it's called Bulgaria.

When holiday destinations were assessed for weather, cost and quality of accommodation and price of food and drink the east European destination came out as the overall best value option.

A pint of beer in the country, which has fine beaches along its Black Sea coast , costs 49p on average.

A three-star hotel double room with breakfast averages £45-a-night, a three-course meal £7, a Big Mac £1 and a short taxi ride £1.45.

In second place was Morocco which, with only four days of rain a month, is particularly appealing to sun lovers.

Travellers heading for Marrakech and other resorts can expect to pay 51p a pint, £50-a-night for an equivalent hotel room, £10.50 for a meal, £1.48 for a burger and £2.80 for a cab.

Tunisia, which offers beach holidays and desert adventures, came third with Egypt fourth, the Czech Republic fifth and India sixth.

By comparison, tourists will pay for the privilege of sticking to favourites such as the Costa del Sol, the South of France or the Italian Riviera.

Spain may be the most visited destination but it came a lowly 17th in the value league commissioned by Teletext Holidays. A pint in Spain averages £1.56, the hotel room £80, meal £17.50, hamburger £2.25 and taxi £6.50.

France is the second most popular country, according to the Association of British Travel Agents' figures, and Italy the fifth. But both are more expensive than Spain.

A pint is £3.55 in France and £3.02 in Spain while the hotel rooms cost £100 and £95 and the meal £18.50 and £35 respectively. The burger is £2.25 in each country and the cab fare is £7.80 and £4.86 respectively.

Researchers found Bulgaria to have the cheapest pint, the Czech Republic the cheapest three-course meal at £6 and Egypt the best value Big Mac at 65p. The least expensive hotel rooms were in the Caribbean at £25.

Ash Makkar of Teletext Holidays said: "Interest in countries such as Morocco and India has grown significantly, proving people are becoming more adventurous when it comes to booking a trip abroad."

Choosing the Right Real Estate Investing Strategies in a Down Market

Sub-Prime Mortgages and Down Markets Make it Imperative that Real Estate Investors Choose the Right Strategy to Make Money.

Charlotte, NC, January 31, 2008 --(PR.com)-- According to Judson and Lynn Voss, Hosts of Get Real, The Real Estate Investing Show for the Rest of Us, markets like ours are the best time to make money for the long term in real estate. They believe that strategies that might have worked 12 months ago could be tougher today. “The sub-prime fall-out, the concern about a possible recession and record foreclosures are basically the perfect storm for anyone interested in real estate investing to get educated the right way and choose a real estate investment strategy that is right for them.”, according to Judson Voss. Read the article...

Germanwings Offers Bargain Flights from Sofia to London, Paris, Berlin

28 November 2007; (news article from novinite.bg)

Low-cost carrier Germanwings will launch this winter bargain flights from Sofia to Paris, Berlin, London and Dresden via Cologne.

"The Smart Connect service will be introduced during the new winter season and is expected to save up to 30% on the ticket price," Andreas Engel, a representative of the company, said at a press conference on Wednesday.

The average one-way fare from Sofia to Paris, Berlin, London and Dresden via Cologne will total EUR 60, including all taxes and charges.

The company, which has been servicing flights from the capital Sofia since the end of March, reported 92% occupancy rate aboard its planes.