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Bulgarian Property Market Insight
By Steve Avery, Fri Dec 9th
GOLF GRABS BULGARIA! At the present time there are only three golf courses in thewhole of Bulgaria: one at Elin Pelin, near the capital, Sofia,and two owned by Air Sofia. These are located at Ihtiman, openedin 2000, 40km from Sofia, and at Sliven, opened in 2004, 90kmfrom the Black Sea. Because of the increasingly rapid rise in foreign interest inBulgaria recently, several more golf courses are proposed. Oneof these will be located at Razgrad, in the north-east, about90km from the Black Sea. More are scheduled to open in the nextfew years: two at Kavarna and one at Primorsko, near Sozopol.
Mountain and ski areas will be represented by a golf course inthe ski town of Bansko this year, and a very large golf complexbetween Kostenets and Borovets, the country's foremost skiresort. This is scheduled for 2007, the year of Bulgaria's entryinto the European Union, and will be located at Dolna Banya,already near Bulgaria's first golf course at Ihtiman. BulgariaProperties.net Ltd has purchased almost 6 acres of primedevelopment land adjacent to the proposed golf course at DolnaBanya. The plans are to construct about 220 apartments around acomprehensive sports complex, with access to the golf course bya 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 andcabaret stage, a huge main bar (perhaps the largest inBulgaria), a sports bar with projection TV, snooker, pool, tablefootball, table tennis, a Chinese restaurant, Indian restaurant,fast food cafeteria, pizzeria, gymnasium, sauna, massageparlour, clinic, chemist, sports shop and minimarket. Steve Avery, a Director of BulgariaProperties.net Ltd, said, “Itmay sound like a cliché, but we really were in the right placeat the right time! After two years in this business, I justcouldn’t believe my luck to find such a gem. Anyone involved inthis project should make a serious return on their investment.” On Borovets and Bansko generally, Steve had this to say: “Apartfrom having ski lifts and ski runs, these two towns are quitedifferent from each other, and appeal to different groups ofpeople. Bansko is an old, traditional residential town with lotsof character and no fewer than 180 quaint taverns full of localpeople singing and dancing to a typical Bulgarian folk band.Borovets, by contrast, is purely a resort, with hotels, modernwest European-style bars and night-clubs, cafés and restaurants.Residential property and holiday homes are therefore readilyavailable in Bansko, but not in Borovets, where the closest youcan get is usually in one of the surrounding villages. ‘As for property values, Bansko went mad for a period of threemonths at the end of 2003, with land prices doubling, and thencalmed down. Many poor goatherders suddenly found that they wererich. Nothing wrong with that, I say. Since then values havebeen pretty steady there until now, when they’re starting tocreep up again. The reason for this is that the sudden surge inforeign tourists to Bansko has left the supply of holidayaccommodation woefully short of the demand. And this trend showsno sign of abating. To try to cope with it, there have sprung upmany hotels and apartment projects, but it seems unlikely thateven these will be able to satisfy the demand for accommodationfor several years yet. As a result, the prices for suchapartments range from 1,000 Euros per sq.m. for a ground-floorunit facing away from the mountains, to 1,350 Euros per sq.m.for a top-floor example with a mountain view. Yet, people buythem. I guess, because a 1 bedroom 60sq.m. apartment for £41,000is still a far better deal than you’d get in Spain. I’ve hearddevelopers claim that 90% of their apartments are sold within 3weeks! I only hope that we have such luck when ours are releasedin April! ‘In this respect Borovets, again, is different. Although it’sBulgaria’s first and best-known ski resort, it stagnated foryears… until now. The ‘Super Borovets’ project, funded by EU,governmental, foreign and local business sources, is scheduledto run from 2005 to 2009, and will revitalise the whole regionaround the town to a radius of 10-12km. This has already startedto affect property values in the surrounding areas. To give anexample, in March 2004 we bought, unseen, a half-acre plot in avillage 15km from Borovets. When I visited it, I discovered thatit wasn’t suitable for building apartments; so, I put it on themarket in August. By November it was sold at an 80% profit –after all costs were deducted! ‘I am personally of the opinion that the ‘Bansko effect’ couldstrike around Borovets at any moment. That’s the reason whyBulgariaProperties.net Ltd is developing four projects here, andonly two in Bansko. We can sell these apartments about 15%cheaper – at the moment, anyway. Borovets must surely offer abetter return on investment, regardless of the type of propertybought: land, a shack, whatever. You won’t find new apartmentseasily, though. As far as we know, BulgariaProperties.net Ltd isthe only developer building them. I don’t, however, expect thismonopoly to last for long. ‘Bulgaria’s third ski region is at Pamporovo, which, likeBorovets, is purely a resort. Funding is starting to come in,but full development, if it happens at all, is likely to followseveral years behind Borovets. Its distance from Sofia (a day’sdrive) makes it less attractive to visitors from north and westEurope. It is, however, popular with Greeks, because of itsproximity to the frontier. One of Bulgaria’s major motorwayroutes to Greece will pass very close to Pamporovo, and thisshould boost its popularity, as well as making the MediterraneanSea more accessible. ‘Property values are lower here than in Bansko and Borovets, butare creeping up gradually. I reckon that Pamporovo is a goodlong-term prospect; say five to ten years. The only reason whyBulgariaProperties.net Ltd has no developments here is becauseI’ll probably have retired before the boom happens.” How does a mountain area investment compare with coastalproperties? “Significant differences yet again. Until recently, most of theinvestment was flooding into the northern Black Sea coastresorts, from Varna down to Sunny Beach. The area became verypopular as a result
of the Bulgarian government’s ‘Bulgaria theBeautiful’ TV campaign back in the ‘80s, and the subsequentinterest of package tour operators. Now that the north issaturated with developments, the interest has begun to creepdown the coast. This is causing a steep rise in property values.They are still lower than those in the north, but the gap isclosing. An investment in the south should therefore offer abetter ROI. ‘Don’t expect, though, the ambience of the south to become likethat of the north. When I discussed the subject with theChairman of the Bulgarian Foreign Investment Agency last year –an extremely intelligent and able young man, I must add – hetold me in no uncertain terms that he did not want the south tobecome like the north. His very words were: “We don’t wantanother Benidorm.” So, prospective property purchasers need tobear this in mind, and balance their desire for more capitalgrowth, or their willingness to accept less, with the differentrental market appeal of the two regions, along with their owntaste in holidays. ‘There is one highly significant factor, however, which veryoften goes unnoticed until it is too late; and it applies to thewhole coast. Most people don’t know that it freezes on the coastin winter. When they see the coastal resorts basking in the hotsummer sunshine, it’s difficult to imagine snow on the ground.The entire coast simply shuts down in the winter, and nothinghappens. It’s a dead as a doornail. Therefore, rental income canbe fairly assured for 15 weeks, possibly 20, plus some odd bitsin the shoulder seasons of April and October. The coast has afive-month season from May to September, compared to nine monthsin 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 whichshould be obvious: location, size, view, amenities. The standardof finish and the condition of the property can also determineyour market quite radically. To appeal to west Europeans, and tocommand the highest rents, your property must be well finishedand appointed, and be in tip-top condition. If it is not, youstill have a market for east Europeans, who tolerate lesssalubrious surroundings because they pay much less, usuallyabout half of the west European rates. ‘Generally, summer rental rates on the coast equate to winterrates 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. Theserates should increase gradually, as the Government programmes tomake the ski towns more popular for summer holidays make theirmark. ‘There are several Bulgarian agencies willing to manage yourrental properties for you. Expect to pay about 20% of the rentas a fee.” What about properties in the countryside? “Not a serious contender in the ROI stakes, I think. Not if youconsider the effort involved. You can pick up property verycheaply indeed in the inland areas, away from the resorts.Almost always it’ll need some kind of work; anything from aface-lift to demolition. There’s often no inner staircase to thebedrooms, no bathroom, and the toilet is in a shed in thegarden. This kind of property is great for buyers who want toget away from their homeland, and disappear in the beauty ofnature permanently. As a business, it could appeal toself-builders or DIY enthusiasts, prepared to do it for fun, andaccept 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 primecity is, of course, Sofia, the capital. Buy the right apartmenthere, in the right area, and you can expect a guaranteed rentalreturn of about 12% per annum. The flavour of the month is gatedcommunities, particularly in the south of the city. Thediplomatic residential district of Vitosha is one of the bestbets. There is a ready demand for luxury accommodation fromdiplomatic staff and executives seconded by foreign companies,usually on a long-term basis, and this demand should increase as2007, the year of Bulgaria’s accession to the European Union,approaches. Although you should expect to pay high for suchproperties by Bulgarian standards, it’s still only the price ofa tarted-up Victorian terraced flat in a UK provincial town. ‘There’s virtually no market for tourist rentals in Sofia, asit’s probably the least interesting European capital city. It’salso very polluted, although they are trying to clean up theiract, ready for EU entry in 2007. ‘Plovdiv, the country’s second city, is much more pleasant. Ithas a quaint old town, as well as modern business districts. Ittherefore bridges the gap between business and tourism, as faras rentals are concerned. Plovdiv is connected to Sofia by anexcellent motorway, on which you can keep the pedal to themetal, if you’re prepared to risk an on-the-spot fine of 50 Leva(about £18). ‘Veliko Tarnovo is probably Bulgaria’s most touristic city, withits citadel and mediaeval ramparts. Most people who buy propertyhere do so to make it their main home. The city itself isbeautiful, and it has everything a townie needs. Drive a shortdistance, and you’re in some wonderful countryside. You couldn’treally make a good living from rentals, but it’s the perfectplace to retire to. ‘There’s one more thing which is important enough to mention:Mineral baths. These exist all over Bulgaria, the mostsignificant being at Narechen, south of Plovdiv, and MominProhod, near Kostenets. Scientific studies rank Bulgaria amongthe foremost in Europe for hydrothermal, bioclimatic and mudtreatments, sea cures and other health resources. Bulgaria is aworld leader with its exceptional diversity of medicinal herbsand the excellent curative properties of its apian products. Anyproperty near a spa should attract a premium to its sales orrental value.” Full details about the ‘Super Borovets’ project, price madnessin Bansko, golf developments in Bulgaria, and new apartments inBansko and Borovets can be seen at the BulgariaProperties.netLtd web site www.BulgariaProperties.net. Or you can e-mailadvice@BulgariaProperties.net, or call the company at +44 (0)871226 2296 to order a free 28-page hand-out, or just for a chat,if you prefer. They always have time for you. About the author:This article is the copyright of Steve Avery, ofBulgariaProperties.net Ltd. All rights reserved.
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