News

  Framed by the window of my seventh-floor attic studio, just on the outer limit of today’s 10-meter visibility, is the silhouette of a lone construction worker devouring a cigarette atop the roof of an almost-ready new apartment building that has risen on what was an empty plot four months ago when I moved in. So even the fog cannot obscure the rapid, abundant and dense construction that has marked, and some would say scarred, Bulgaria’s urban landscapes in 2006.

  You name it, we are building it. Sofia’s first three malls opened in 2006, and a flurry of shopping center construction activity followed suit. In its October 2006 issue, PropertyWise quoted analysts saying that with a population of 1.5 million, Sofia could absorb four or five big malls. If that is true, the capital city will reach a point of saturation very soon, when Bulgaria Mall opens in the next few months.

  So either analysts got it wrong, or investors are going overboard, because there are plans for 10 additional malls to open in Sofia alone by 2010.

  Neither off-the-mark projections, nor over-development are foreign to the property market.

  Valeri Vulchev, Real Estate Managing Partner

  The Bulgarian commercial property market has experienced dynamic development in all sectors, with trends varying greatly in terms of growth cycle, performance, investor interest, and geographic location. Modern quality supply has registered robust growth, with most of the activity concentrated in the office and retail sectors of the market. However, modern-standing investment stock is still limited in supply, with the retail and industrial sectors of the market offering the greatest investment potential.

  Office market is most likely going to reach its stage of maturity in 2006, as about 200 000 sq m of office space is in the pipeline, and another 100 000 sq m is at the project design phase. Yet, there are unexploited niches with enormous market potential, where demand for the right product in the right location is huge. Thus investment timing and location will continue to be of major importance. With Bulgaria’s ranking at 15th position among the top outsourcing destinations in A. T. Kearney’s index, the country is expected to attract substantial level of investments in the services sector, which will increase demand for quality office premises.

  2005 and 2006 have appeared to be the long awaited turning point in the retail property sector of the market. The first three malls that will provide a combined modern retail space in excess of 100 000 sq m are awaiting completion, and will put under pressure some of the prime high-street locations. These are: Mall of Sofia that will offer 54 000 sq m of retail space; Sofia City Centre Mall with about 31 000 sq m of retail space, and Sky City Mall with 16 000 sq m of retail space.

  Preferences and shopping habits of Bulgarian buyers are shifting toward larger facilities, a leading agency found in its report on retail property in Bulgaria in the first quarter of 2006.
This trend is supported by the increasing number of international-style shopping malls currently under development, as well as the number of projects in the pipeline.

  In 2006, three major shopping centres will open in Sofia and one in Veliko Turnovo (northern Bulgaria). Large-scale shopping facilities are also planned to be built soon in the Black Sea cities of Varna and Bourgas.
Demand for retail space in high street locations in Sofia continues to exceed supply. Strong demand comes mainly from fashion boutiques, fast food restaurants, pharmacies and financial institutions.

  Over 1.5 bln euro will be invested in the development of business properties in Bulgaria in the next 1-2 years. The top deals for 2006 were the transaction involving office property Business Park Sofia and 3 shopping malls, 2 in Sofia and one in Veliko Tarnovo.

Specialists estimate that the value of transacted business properties - offices, warehouses, production sites, commercial centers, hotels, entertainment venues, holiday vacation villages and land, reached 570 mln euro in 2006 versus 215 mln euro a year earlier.

The spread of shopping mall developments will continue. There will also be an increase in lettings in commercial centers and mixed-used buildings where the ground floor is designated as retail space.

The demand for shopping malls is here to stay as a number of international store brands are yet to open shop in Bulgaria, said Petar Dudolenski, executive director of Mall Plovdiv. In his view, every Bulgarian city with 100,000-150,000 residents can do with a 20,000 sq m mall.

  Vacation property in Bulgaria appears to be inexpensive for foreign buyers and for wealthier Bulgarians, which leads to further price increases.

Despite the construction boom and intense property offering prices remain high, 24 Chassa daily reported.

Property in Bansko winter resort and Sunny Beach coastal resort registered highest price increase percentage. Imot.bg reported that investors have to spend now 20 per cent more on property in the two regions as compared to values for January 2006.

Bansko is the winter resort that offers most property for sale. A number of investors have also turned to Pamporovo.

Some 80% of the guests of local spa and wellness hotels and resorts are Bulgarians with mostly Brits and Germans making up the remainder, found a survey of 900 spa tourists conducted by the State Tourism Agency.

Away form the home market, the Bulgarian spa industry is targeting Russia, the UK, Germany and Denmark.

The survey found that Russian spa tourists vacationing in Bulgaria are middle-class and look for quality service. British guests are mid to lower class, looking for new experiences. Germans are also middle class attracted by the good remedial and therapeutic repute of the local spa facilities. The Danish participants in the survey singled out affordability as the main selling point of Bulgarian spa resorts.

Some 60% of respondents gave excellent marks to the Bulgarian spa product and the attentiveness of the staff. Half of the respondents said they got good value for their money. Almost all respondents plan to repeat their visit.

The survey also found that 35% of the local spa and wellness hotels were built in 2000-2004 while over 60% were renovated in 2005-2006.

 Building permits were issued in all Bulgarian regions in the third quarter of 2006, indicating that investors are finally making their way to previously unfancied areas like North-western Bulgaria, Razgrad and Silistra, shows data of the national statistical authority.

Most of the permits were granted to residential and industrial developers.
Sofia has been pushed out of the top 3 of cities with the most number of new building permits and has fallen to no.5 in terms of built-up area of approved developments.
The biggest number of building permits were handed out in the Plovdiv region (498), followed by Burgas (476) and Varna (469). Pazardjik is just outside the top 5 with 176 permits.

Blagoevgrad leads the rankings in terms of biggest combined built-up area of new construction with 476,000 sq m, followed by Burgas with 434,000 sq m and Varna with 364,000 sq m.

A total of 2,661 permits were granted in the third quarter nation-wide versus 2,682 a year ago. The built-up area of newly approved developments is slightly up year-on-year, going from 1.5 mln sq m in Q3 '05 to 1.7 mln sq m in Q3 '06.

 The average price of a house in Bulgaria's cities shot up by more than 36 per cent in 2005, according to the National Statistical Institute.

Property investors from the UK have been watching the market intently in the last few years and it is generally perceived as being one of the best prospective investment spots in Europe. With a number of problems still to be ironed out, however, many have watched cautiously from afar, while others have taken a gamble and acquired property for astonishingly low prices.
Those who were prepared to take this gamble will be delighted to hear that in addition to the 36 per cent rise in house prices last year, there was a substantial increase in the cost of apartments across the country.

In 2004, the average apartment cost less 190 GBP per square metre, but this had reached 260 GBP per square metre by the end of 2005.

Also encouraging is the fact that growth appears to be evident throughout Bulgaria, with Sofia no longer necessarily the best option for investment.

Nonetheless, an increase of 20 per cent in Sofia means that the capital is still one of the most exciting prospects, with an expected commercial boom in the capital likely to push prices up considerably before 2010. Apartments in the capital also continue to be the country's most expensive.

Varna fared even better last year, with a 25 per cent increase drawing attention to Bulgaria's third biggest city. As the main port for both naval and commercial shipping, Varna is developing a cosmopolitan atmosphere that will undoubtedly make it attractive to local and foreign house buyers.

 Bulgaria ended up at No 4 spot among the most popular destinations to British overseas property buyers in a ranking, topped by France and Spain.
Foreign currency specialist HIFX reported that France and Spain accounted for almost half (43 per cent) of all its currency transactions for buying property abroad in March.
Australia was in third place with 11 per cent of transactions, followed by Bulgaria (ten per cent), USA (four per cent), Canada (two per cent) and South Africa (one per cent).
The survey shows that the majority of Brits are looking for an overseas property that can be used for regular holidays, is easily rentable, with cheap flights, and offers a quick escape to the sun.

. Bulgaria was classified as "the new Costa del Sol" according to the UK Daily Mail one year ago. There are many people who are starting to look for properties in Bulgaria: Footballers from UK football clubs, including Chelsea, property investors from all over the world, people, seeking to buy second or retirement home. Like Croatia, Bulgaria is expecting EU accession within the next few years and this will necessarily lead to a considerable increase in its real estate value. A similar process has already started to occur in Cyprus and when Bulgaria accedes to the European Union in 2007 it is widely believed that Sofia in particular will compete with other leading European capitals as a location for the European offices of many multi-national companies.

Bulgaria also has ranked first in the world for 2005 in the amount of investments, compared to the GDP, a report by the World Bank states.
The country has received EUR 1.46 B for the first nine months of the year. After the purchase of mobile operator M-tel, Austria has become the biggest investor country in Bulgaria.
Bulgaria awaits investments totalling EUR 6.1 B for 2006. EUR 3.8 B of them would come from local investors and the rest EUR 2.3 B would be foreign. 20 new investment projects would be launched by March 2006.
It is a fact that most of the people who want to buy a property there know nothing or very little about the country.