Property demand crisis hits Bulgaria
By Sue Brown, 09 Jan 2006
There is good news and bad news concerning the real estate market in Bulgaria that for two years has been attracting inward investment away from Spain with promises of low prices, good returns and a growing holiday rental market…
The county’s Real Estate and Investment Forum (RINFOR), found that investment in real estate transactions and property development in Bulgaria was expected to have reached one billion euro by the end of 2005 and speakers told the forum that foreign direct investment (FDI) in the real estate sector would be about 25 per cent of all FDI expected to flow into the country by the end of 2005.
The volume of investments in real estate projects, including land purchases, construction works and transactions, totalled about 900 million euro in the first nine months of 2005.
But there were also some pessimistic appraisals of the situation in Bulgaria’s real estate sector in 2006. Mainly because of the lower return on investment level, which could drive away some potential large investors, they were also a result of the excessive construction at some holiday resorts in the past two years.
The 2005 summer season was proof of how excessive construction, accompanied by noise and dirt, can force some holidaymakers to change the destination for their vacation. German tourists, a traditional portion of foreign visitors to Bulgaria, were seen switching to other countries.
Another sign of crisis was the fact that the market had been flooded by offers for sales of hotels and other holiday properties, but had not seen a significant number of deals being signed. Supply was several times higher than demand, and the situation worsened after the end of the summer season when newly built hotels appeared on the market. Realtors ascribed the lack of deals to the enormously high prices and the constantly increasing number of offers.
Most properties on the market were small and medium-scale hotels in Black Sea resorts and lower-altitude mountain resorts. Main reasons for the owner wanting to get out were miscalculated investments, poor infrastructure and bad design.
Sofia Echo/Spanish Property News