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The phenomenal interest in Bulgarian property shown by shrewd buyers during the last two years has been compounded by a sudden surge in golf course development. The millions of Euros being invested by large international corporations in these ventures will probably feed this buying frenzy. According to the 2004 survey of the International Real Estate Federation (FIABCI) and ResearchWorldwide, which monitors house price rises in 23 countries on a monthly basis, the highest was South Africa at 27.8%. By comparison, Bulgaria recorded an average increase of 31% for the 12-month period (Q4 2003 - Q4 2004). The most popular
investment now, and probably until Bulgaria enters the European Union in
2007, is 1- and 2-bedroomed apartments, purchased off-plan, in strategic
winter and summer resort areas.
Bulgaria Properties Ltd has purchased almost 6 acres of prime development land adjacent to the proposed golf course at Dolna Banya. The plans are to construct about 220 apartments around a comprehensive sports complex, with access to the golf course by a short footpath. The amenities on site are to include tennis, volleyball, squash, badminton, lawn bowls, boules (boccia), shooting, archery, croquet, mountain biking, and fishing nearby. Indoor facilities will include a 140-seat main restaurant and cabaret stage, a huge main bar (perhaps the largest in Bulgaria), a sports bar with projection TV, snooker, pool, table football, table tennis, a Chinese restaurant, Indian restaurant, fast food cafeteria, pizzeria, gymnasium, sauna, massage parlour, clinic, chemist, sports shop and mini market. .
As for property values, Bansko went mad for a period of three months at the end of 2003, with land prices doubling, and then calmed down. Many poor goat herders suddenly found that they were rich. Nothing wrong with that, I say. Since then values have been pretty steady there until now, when they’re starting to creep up again. The reason for this is that the sudden surge in foreign tourists to Bansko has left the supply of holiday accommodation woefully short of the demand. And this trend shows no sign of abating. To try to cope with it, many hotels have been springing up and apartment projects, but it seems unlikely that even these will be able to satisfy the demand for accommodation for several years yet. As a result, the prices for such apartments range from 1,000 Euros per sq.m. for a ground-floor unit facing away from the mountains, to 1,350 Euros per sq.m. for a top-floor example with a mountain view. Yet, people buy them. I guess, because a 1 bedroom 60sq.m. apartment for £41,000 is still a far better deal than you’d get in Spain. I’ve heard developers claim that 90% of their apartments are sold within 3 weeks! I only hope that we have such luck when ours are released in April! ..
I am personally of the opinion that the ‘Bansko effect’ could strike around Borovets at any moment. That’s the reason why Bulgaria Properties Ltd is developing four projects here, and only two in Bansko. We can sell these apartments about 15% cheaper – at the moment, anyway. Borovets must surely offer a better return on investment, regardless of the type of property bought: land, a shack, whatever. You won’t find new apartments easily, though. As far as we know, Bulgaria Properties Ltd is the only developer building them. I don’t, however, expect this monopoly to last for long. Bulgaria’s third ski region is at Pamporovo, which, like Borovets, is purely a resort. Funding is starting to come in, but full development, if it happens at all, is likely to follow several years behind Borovets. Its distance from Sofia (a day’s drive) makes it less attractive to visitors from north and west Europe. It is, however, popular with Greeks, because of its proximity to the frontier. One of Bulgaria’s major motorway routes to Greece will pass very close to Pamporovo, and this should boost its popularity, as well as making the Mediterranean Sea more accessible. Property values are lower here than
in Bansko and Borovets, but are creeping up gradually. I reckon that Pamporovo
is a good long-term prospect; say five to ten years. The only reason why
Bulgaria Properties Ltd has no developments here is because I’ll probably
have retired before the boom happens.
How does a mountain area investment compare with coastal properties? Significant differences yet again. Until recently, most of the investment was flooding into the northern Black Sea coast resorts, from Varna down to Sunny Beach. The area became very popular as a result of the Bulgarian government’s ‘Bulgaria the Beautiful’ TV campaign back in the ‘80s, and the subsequent interest of package tour operators. Now that the north is saturated with developments, the interest has begun to creep down the coast. This is causing a steep rise in property values. They are still lower than those in the north, but the gap is closing. An investment in the south should therefore offer a better return of investment. Don’t expect, though, the ambience of the south to become like that of the north. When I discussed the subject with the Chairman of the Bulgarian Foreign Investment Agency last year – an extremely intelligent and able young man, I must add – he told me in no uncertain terms that he did not want the south to become like the north. His very words were: “We don’t want another Benidorm.” So, prospective property purchasers need to bear this in mind, and balance their desire for more capital growth, or their willingness to accept less, with the different rental market appeal of the two regions, along with their own taste in holidays. There is one highly significant factor, however, which very often goes unnoticed until it is too late; and it applies to the whole coast. Most people don’t know that it freezes on the coast in winter. When they see the coastal resorts basking in the hot summer sunshine, it’s difficult to imagine snow on the ground. The entire coast simply shuts down in the winter, and nothing happens. It’s as dead as a doornail. Therefore, rental income can be fairly assured for 15 weeks, possibly 20, plus some odd bits in the shoulder seasons of April and October. The coast has a five-month season from May to September, compared to nine months in the ski areas. Those people buying only for rental income, therefore, would find the mountains far more lucrative. Rents vary
greatly, and depend on many factors, most of which should be obvious: location,
size, view, amenities. The standard of finish and the condition of the
property can also determine your market quite radically. To appeal to west
Europeans, and to command the highest rents, your property must be well
finished and appointed, and be in tip-top condition. If it is not, you
still have a market for east Europeans, who tolerate less salubrious surroundings
because they pay much less, usually about half of the west European rates.
Generally, summer rental rates on the coast equate to winter rates in the ski resorts, both seasons being about five months. Remember that you also have about four months additional rent, though at lower rates, during the summer in the mountains. These rates should increase gradually, as the Government programmers to make the ski towns more popular for summer holidays make their mark. There are several Bulgarian agencies willing to manage your rental properties for you. Expect to pay about 20% of the rent as a fee.” What about properties in the countryside? Not a serious contender in the return of investment stakes, I think. Not if you consider the effort involved. You can pick up property very cheaply indeed in the inland areas, away from the resorts. Almost always it’ll need some kind of work; anything from a face-lift to demolition. There’s often no inner staircase to the bedrooms, no bathroom, and the toilet is in a shed in the garden. This kind of property is great for buyers who want to get away from their homeland, and disappear in the beauty of nature permanently. As a business, it could appeal to self-builders or DIY enthusiasts, prepared to do it for fun, and accept a low return on their financial and physical investment. As for rental income, forget it!” And the cities? Again, there are differences, even between cities. The prime city is, of course, Sofia, the capital. Buy the right apartment here, in the right area, and you can expect a guaranteed rental return of about 12% per annum. The flavour of the month is gated communities, particularly in the south of the city. The diplomatic residential district of Vitas is one of the best bets. There is a ready demand for luxury accommodation from diplomatic staff and executives seconded by foreign companies, usually on a long-term basis, and this demand should increase as 2007, the year of Bulgaria’s accession to the European Union, approaches. Although you should expect to pay high for such properties by Bulgarian standards, it’s still only the price of a renovated Victorian terraced flat in a UK provincial town. There’s virtually no market for tourist rentals in Sofia, as it’s probably the least interesting European capital city. It’s also very polluted, although they are trying to clean up their act, ready for EU entry in 2007. Plovdiv, the country’s second city, is much more pleasant. It has a quaint old town, as well as modern business districts. It therefore bridges the gap between business and tourism, as far as rentals are concerned. Plovdiv is connected to Sofia by an excellent motorway, on which you can keep the pedal to the metal, if you’re prepared to risk an on-the-spot fine of 50 Leva (about US$34 or £18). Veliko Tarnovo
is probably Bulgaria’s most touristy city, with its citadel and mediaeval
ramparts. Most people who buy property here do so to make it their main
home. The city itself is beautiful, and it has everything a townie needs.
Drive a short distance, and you’re in some wonderful countryside. You couldn’t
really make a good living from rentals, but it’s the perfect place to retire
to.
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