News

 There comes a time in any emerging property market’s period of transition when it stops emerging and it actually arrives, and 2007 could very well be the year when Bulgaria’s property market arrives. The future profit potential for property in Bulgaria in 2007 will be aided greatly by the fact that the country will become a member of the European Union on the 1st of January and between 2007 and around 2010 the property market in this Eastern European country will most certainly remain hot.

Some have said that prior to accession all of the profits have been drained from the market, that greed and speculation have damaged the long term attraction of Bulgaria for its required international tourism and retiree market and that actually Bulgarian property was a flash in the pan as an investment commodity – this article will prove that to be a false series of assumptions. Bulgaria will return profitability in 2007.

It’s true that Bulgarian property as an investment asset has boomed significantly in just three short years. Gone are the days when a buyer could snap up a decent property with good sea or mountain views for next to no money but then gone are also the days when one could not get a mortgage to buy in Bulgaria, when the property buying process was opaque, corruption was rife and it was impossible to determine whether a given patch of land would be awarded planning permission or even get utilities run to it. The market has definitely matured and this maturity has improved the investment climate in Bulgaria.
As the country joins the European Union so it will open the doors for further investment and one of the main sectors likely to boom in 2007 and beyond is the retail sector which is a good alternative market to residential property for an investor to examine.     

Bulgaria has launched a system of 23 points, which allow a complete monitoring of the sea in terms of physical, chemical and biological indexes.

The monitoring system complies with all EU requirements.

It has been created thanks to a project financed by the government of the Netherlands and costs BGN 400,000.

The main sources that pollute the Black Sea are the Danube, Dnepr, and Dnestr. The Varna and Burgas bays however remain risky because their waters are mainly polluted by industrial and agricultural activity.

     The lack of skilled workers, more expensive construction materials and electricity will bring up construction prices in 2007, Capital weekly reported. At the same time the market prices of property are not expected to climb up at such high pace because of the increased supply.

Bulgaria would also have to meet European quality requirements, the report said. These demands would also bring up construction prices, property analysts said.

An expected increase would vary between three and five per cent, representatives of the National Construction Federation said.

Apart from the higher standards, EU entry would enable Bulgarian workers find employment in other countries, Capital reported. The country already experiences labour hand shortage.

To keep their employees construction companies will have to offer higher wages. According to construction sector representatives wages would increase until they reached the European levels of 20 euro an hour   

 “Investments in the building sector next year are expected to be 5,4 billion BGN”. This was the prognosis of the participants in an international, scientific conference entitled “building development and property” at the Economic University in Varna. The event was organized by the economic and property management department of the university.

Construction investments in the country are around 42% of the total volume of investments and the annual growth of the building sector in Bulgaria is 13,8%. The prognosis for 2007 was calculated on this basis.

According to Dr Ivan Jelev PhD, the future of investment activity is in industrial projects. The fact that there are many appropriate plots and old buildings ready to be reconstructed could gradually turn Varna into the Bulgarian Silicone Valley.

 On November 29 the National Electric Company (NEC) and Russia's Atomstroyexport will sign an agreement for the construction of Belene nuclear power plant (NPP).

NEC selected on October 30 Atomstroyexport as the project executor. Bulgaria received two offers for the project, one from the Russian company and one from the Czech Skoda Allianz.

The project envisions the construction of two 1000 megawatt units, Focus news agency reported.

Construction of the Belene power plant became even more necessary because of Bulgaria's commitment to shut down two units of the Kozloduy nuclear power plant. The reactor closure resulted from EU entry requirements.

 Low prices, long-term investment prospects and changes in lifestyle have fuelled record-high property sales in Bulgaria for 2006, a realtor data shows.

The year-end count of transactions is forecast to reach 260,000 at a combined value of more than EUR 5 B, according to figures of BulgarianProperties.com, partner of foreign property buyers in Bulgaria.

The experts comment that following the massive 25% to 30% annual capital gains of recent years, Bulgaria's property market is now showing a much more realistic growth rate of 15% so far this year, setting the pattern for more predictable and sustainable long-term investment.

EU membership in January next year, the nationwide development of major tourism and infrastructure projects, the planned expansion of low-cost airline routes in 2007 and mortgage facilities remain the main attraction for making a property purchase in Bulgaria.     

 Riding the gleaming blue Doppelmayr gondola up the Pirin mountains over a pine forest blanketed by overnight snow, it was easy to imagine we were in the French Tarentaise rather than Bulgaria. The meticulously groomed pistes and a final glorious descent in a bowl at the top of the ski area, through 15cms of light powder, did nothing to dispel the illusion.

It was the lunch bill that restored reality. A welcoming hut with honest mountain fare before a roaring log fire are essential components of the perfect skiing day. But in recent years the cost of a long lunch in the French or Swiss Alps has reached iniquitous heights. Even a modest meal at a waiter-service restaurant in Val d'Isère is £20 a head without drinks. In high-flying Courchevel the damage can easily be double.

Here it was a different story. £10 for two, with a decent bottle of local Cabernet Sauvignon? Surely some mistake. Back in Méribel it barely buys a soggy sandwich. A six-day lift pass costs £100 compared with £150 in the Trois Vallées. In town, a beer is 50-70p, chicken and chips £2. Last season the combination of rock-bottom prices and a high standard of mountain facilities made Bansko the hottest property in European skiing - and the trend seems set to continue. Bansko lies close to the Macedonian and Greek frontiers and on a clear day you can see the Aegean Sea.

Russians, Greeks and a prodigiously high number of British skiers and snowboarders flocked to the new resort a two-and-a-half hour drive south of Sofia. Many of them returned home with more than just memories, having bought their own ski homes at a tenth of prices in the French Alps. They have already made - on paper - a 10 per cent profit. You could still buy a studio at the base of the ski area for £40,000 while £80,000 secures a luxurious two-bedroom apartment.

For £15,000 you become the proud owner of a tumbledown stone-and-wood farmhouse in a nearby village such as Dobrinishte, although it would probably cost you at least twice that to do it up. In the days of the Ottoman Empire, Bansko was an important staging post on the caravan route from Constantinople to Thessaloniki.

More recently the ancient town, a quaint huddle of old stone buildings and cobbled streets with gaping storm drains, was better known for its school of Orthodox icon painting than for its pistes. All that changed five years ago when a Sofia-based property company finally took the step from which foreign investors had previously shied. Ulen spent £95million on making Bansko a modern ski resort, first building a state-of- the- art gondola, seven chairs, and three drags. A second gondola and more lifts are in the pipeline. (The present piste map is more a creative view of future development than currently available mountain transport.)

 Drive through almost any pretty French or Spanish town and there is bound to be a derelict villa asking for some love and attention. Just a lick of paint and the help of a few local tradesmen will transform a wreck into a holiday home for friends and family.
Today, a second home in the sun is now the boast of more than 300,000 people, according to a study of foreign home ownership - more than three times the figure recorded in 1995.

While Spain and France lead the list of destinations, Bulgaria, Romania, Hungary and the Czech Republic are rapidly gaining favour with Britain's affluent homebuyers. Montenegro, which features in the latest Bond movie Casino Royale, is also on the shopping list of British bargain hunters. Budget flights, booming property markets and the rise and rise of the super rich pensioner have fuelled the boom, which is continuing to gather pace, according to the report.

By 2025, it says, there could be around 1.3m British nationals living in other countries.
A comfortable home with a better guarantee of sun is one of the chief reasons for taking the plunge, with 38% of buyers saying they will holiday in their new home or eventually use it as a place to retire.

Not everyone is aiming to move abroad. The study shows that four in every 10 buyers of foreign property believe it will be an investment either to supplement their pension or for their children.

However, the authors of the report warn that many potential buyers fail to investigate how much they will need to pay to buy and maintain their property and how much they will pay in fees and taxes.

They said the attraction of a warm climate, cheap cost of living and easy access to a second home overseas can blind buyers to many hidden perils.

Mike Warburton, of accountants Grant Thornton, authors of the report with City firm Lombard Street Research, said: "Purchasing a property abroad has important tax implications. Contrary to popular belief, you are still subject to tax on your offshore income and capital gains if you are a UK resident and live here. And, if the UK tax system is not complicated enough, the purchaser of a property abroad has to cope with a local tax system that may be culturally dissimilar to our own."

The report says that today 2% of the UK population owns a property overseas. The typical owners are either pensioners with their main residence abroad, or affluent fortysomethings, usually aged over 45, who take their holidays abroad or use it as an investment.

About 1.2 M British tourists will probably choose Bulgaria as their Holiday destination in 2008, James Knight, Managing Director of leading property specialist Knight International said at Bulgaria's key annual tourism event, Bulgaria Dream Area.
The number of Brits visiting Bulgaria has been steadily rising since 2002, when they numbered 100,000 to their current count of 400,000 for 2005, Knight said, adding that he expected an even greater rise in the upcoming years.
Bulgaria has finally entered the Brits' "comfort zone", Knight explained, and along with countries like Spain, Portugal and Italy, it is a country they now know a lot of good things about.

 In 15 years time there will be 40 golf courses in Bulgaria - on the Black Sea coast, around Sofia, Elena, Gabrovo, Trun, and Miroviane. There will be new houses and apartments built around the new courses, which will serve as a “carrot” for buyers.

Manuel Ferry Sanches, president of Spain’s Ferry Group, signed a contract with Sofia municipality, confirming his company’s plan to invest 150 million euro in the next three years in the Kuttina golf resort project, which will include a multifunctional modern golf centre, commercial centre, and recreation area with a sports centre including swimming pools and tennis courts.

Sport Center Kuttina received a first class investment certificate from InvestBulgaria Agency in accordance with the Investment Promotion Act.

During the construction phase, there will be about 2000 jobs, and about 700 permanent jobs after the project is completed.

Sanches, who has 20 years experience in the golf industry, said that in Europe municipal golf courses were common.

He said that golf is not elitist, and is not only a sport - it is a business, an industry in its own right. He does not agree that the golf course should be built before the houses; in Spain there is a similar problem with investors who cannot complete the building of their golf course. Sanches said that Bulgarian investors should stop waiting for help from the state and for grants.

They should start to act, said Sanches. To him, not only is golf is a sport, but it also encourages protection of the environment and land regeneration. Golf additionally supports the property and tourist sector and is a separate and independent industry. A lot of people live in golf complexes, yet do not play golf; they live there because of the pleasant environment, he said.

More than 65 million people in the world play golf. The United States is the world leader with more than 156 000 golf courses. More than 27 million Americans play; in both Europe and Canada, about 4.5 million. In Japan the sport is very popular - there are about 16 million players.

In Africa, however, there are only 58 golf courses. Land and location need to be optimal for a golf course, and a golf school should be created, in Sanches’s opinion. He said that golf is not sold through advertising, but by word of mouth. Golf should be freed from the label of an “elitist sport”. It is not necessary to be a millionaire to play golf, he said.