More than 100 three- and multi-bedroom apartments in Slanchev Bryag (Sunny Beach), Elenite and Dyuni Black Sea summer resorts have remained unsold for months, real estate website imoti.net said on June 21.

According to the website, which focuses on Bulgarian real estate sector, this was a clear sign of stagnation in the market for big apartments in the leading resorts on the Bulgarian southern Black Sea coast.

Imoti.net quotes Dinko Slavov, sales manger of Bulgarian Properties, who said that indeed stagnation existed but it was affecting areas in resorts far from the coastline. "Large vacation properties are being bought by wealthy investors, who are ready to spend at least 100 000 euro, but they look for luxury properties and buy apartments next to the sea," Slavov said.

According to Dobromir Ganev, manager of real estate company Foros, "as a rule big vacation properties are hard to sell, because they are expensive".

Ganev said, as many had predicted for years, that "the supply in Slanchev Bryag already exceeds demand".

The price ceiling of unsold apartments on the southern Black Sea coast is about 1000 euro a sq m, imoti.net say.

However, real estate agencies say that deals are being closed at prices as high as 1500 euro to 1600 euro and sometimes even 1800 euro a sq m. Most buyers of large properties are from Scandinavia, Latvia, Denmark and Norway.

The negative trend described by both Slavov and Ganev was confirmed by the results of a study by Creditex loan company.

The study showed that the negative trend was not limited to seaside resorts but also affected big cities in the country.

The level of return on real estate investments in Bulgaria has halved since 2002 and in the case of housing units in Sofia's Mladost neighbourhood, the rate has dropped to 4.11 per cent from nine per cent, Creditex consulting manager Krassimir Goumnishki told a news conference on June 25.

"The decline is being seen in all parts of Sofia," he said.

"Besides that, the advertised 20 per cent rate of return for property along the coast is not realistic."

Aording to Creditex, the actual rates did not exceed five per cent. With commercial and industrial property and logistics facilities, the level was double that for residential property.

To offset the effect of sliding return rates, small investors can rent out their auxiliary properties in urban or holiday areas, Goumnilski said. Analysts say this implies a small risk but also small profit.

Mortgage is a more profitable option, securing money to refinance an owner's business while renting out selected properties. To get a mortgage loan, a borrower needs to have a stable income and to provide loan repayment security.

Creditex has given 25 million euro in corporate mortgage loans in two and a half years. The average size of these loans was 50 000 euro.

At the same time, buyers got contradictory signals from another real estate company. According to Era Bulgaria chief executive Teodora Dimitrova "real estate prices will continue to increase in 2007".

Dimtirovs told a news conference that "in the first quarter, prices grew 16 per cent in Sofia and 18 per cent in the coastal city of Varna".

Overall, property along the coast appreciated 22 per cent, and the same increase was reported in mountain resorts.

Also in the first quarter of 2007, housing purchase prices in Sofia averaged 812 euro a sq m of floor space, in Varna 842 euro, in Bourgas 671 euro, and in Blagoevgrad 493 euro.

A total of 312 000 real estate transactions were concluded in Bulgaria in 2006, which implies a 27 per cent increase compared to 2005. The number of such transactions in the first quarter of 2007 was 56 300.

Dimitrova said the rapid development of mortgage services was crucial for the dynamic growth of the national real estate market.

Dimitrova said the average return on investment for developers who have funded half the development costs with their own funds was about 36 per cent in the first half of the year, and if prices went up by 10 per cent in the second half, this rate would remain stable in the large cities.

About 70 per cent of property transactions are financed through mortgage loans.