Realtors, brokers, investors, property sharks and industry specialists gathered at the Kempinski Hotel Zografski in Sofia for the joint FIABCI European Congress and 12th CEREAN Conference from October 12-14. FIABCI (European Congress of the International Real Estate Federation) and CEREAN (Central European Real Estate Associations Network) hosted the event in conjunction with the National Real Property Association of Bulgaria and the Bulgarian chapter of FIABCI.
With attendees from nearly all countries in Europe, Russia, Turkey, the United States and elsewhere, the conference featured speakers on all matters of regionally and internationally applicable subjects.
FIABCI president Owen Gwyn, CEREAN president Artur Ohanseyan, European Integration Minister Meglena Kouneva, State Administration Minister Nikolai Vassilev, Regional Development and Public Works Minister Assen Gagauzov and Sofia mayor Boiko Borissov spoke at the opening ceremony.
Seminar topics included new realities and prospects in South East Europe; spotlight on the Balkans; comparisons of real property markets in the region; financing in Central and South East Europe; mortgage lending; mortgage securitisation models; insurance; REITS and the investment process for real estate markets; a panorama of real estate in Bulgaria and South East Europe; professional standardisation; sustainable growth after European Union accession; tax and legal issues including property rights in South East Europe; and a panorama of real estate in European markets other than South East Europe.
In vice executive director of InvestBulgaria Agency Pencho Nenov’s session entitled Property Investments in Bulgaria – Current Scope and Projections, he delineated some of the most significant strategic investments in Bulgarian real estate in 2005. These include Business Park Sofia/Residential Park Sofia/Commercial Park Sofia, for a worth of 76 million euro; Sport Centre Kuttina, at 150million euro; Golf Club Ibar, at 38 million euro, Perelik Sports and Tourism Centre, which received a first-class investor certificate on May 19 2006, at 255 million euro; Mall of Sofia, which received its first-class investor certificate in 2005, at 90 million euro; the Carrefour hypermarket and shopping centre, which is to be the largest Carrefour project on the Balkans, at 81.6 million euro; and Sofiiski Akropolis, an entertainment facility (bowling, cinema), office building and hotel complex with parking for 4000, at 500 million euro.
Nenov said that five to 5.5 billion euro had been realised in real estate in Central and South East Europe in 2005, with 1900 new developments (as compared with 1500 new developments in 2004). Of the Bulgarian residential building stock, 37 per cent had been acquired by foreigners. The residential market saw 36.6 per cent growth in 2005. However, there was a slight decrease in the price of prefab and old apartments in 2005, he said.
Jana Herdona, 2005 chairman of the board of the International Council for the Chicago and Illinois associations for real estate, from the Chicago area, US, who is also the president’s liaison to ARKCR/Czech Republic, came to the conference because she has a client who is interested in buying in Sofia. Herdona compared the Bulgarian market with the Czech one, saying that the Czech market “has advanced more, the reconstruction and development are further along” than what she has seen in Bulgaria. But, she can see that this country “has great potential”, one of its benefits being “nice geographic layout”, and the city of Sofia itself has a good historic district. Add the many green areas, and it’s very attractive, she said.
Belton Jennings, CEO of the Orlando Regional Realtor Association and the Orlando, Florida, partner for a Hungarian real estate association, part of a US-wide real estate partnering programme with Central and South East Europe. One of the most important factors of doing real estate in the region, he said, are governmental policies affecting investment. “Outside investors look at this: clear title, insurable title – can I get legal defence? Does the government function to insure safety of property and property rights?”
While not yet there, Bulgaria’s day for this “is coming”, he said.
What Bulgaria is doing through the CEREAN/FIABCI congress is something necessary for the country’s long-term profitability. It brings exposure to the country, placing it among major players in the world market.
Still, it is essential that “systematic problems be solved”, Jennings said, noting that while he sees them being addressed, progress is slower than in other countries in the region.
In order to provide first-hand experience of the Bulgarian market, guided excursions to real estate projects in Sofia and surrounding areas occurred on Saturday.
Marek Biegocki, of the Polish Real Estate Federation and his country’s CEREAN liaison, said that the conferences organized by CEREAN are really important events in the region – they’re a chance for networking, obtaining local knowledge about local markets, and exchanging knowledge and experiences.
“We all got similar problems,” he said. “Inefficiency of licensing systems, typical brokerage problems – ethics, use of technology, establishing standards.” Though, he noted, the real estate market in former Soviet Bloc countries only started in the 1990s.
He came to the conference in Sofia because he believes that clients in Poland may have interest in Black Sea coast properties in Bulgaria and Romania. “Poland’s second-home market is not strong,” Biegocki said. “Investors that are buying second homes are buying homes on the Spanish coast, in southern France – Western Europe, generally. They haven’t discovered these regions, yet,” he emphasised.
He believes the market in South East Europe is worth investing in, which is why he came, in addition to looking to make contacts.
Comparing Poland to Bulgaria, Biegocki said that it’s a fact that Poland is farther ahead, and he believes that his country can help this country, by sharing past experiences. “We are so mentally close to each other – we shared the same problems, same ideas – our (Poland’s) practical knowledge could be applied.”
A different perspective came from Joe Hanauer, chairman of the International Real Property Foundation, from Southern California. “One thing that becomes obvious are the different stages each country is in, in terms of economic development,” he said. “You can see the relationship between regulatory reform and growth.” The countries that “came to grips” with these things earlier, like Poland and the Czech Republic, he said, reflect this in their market stabilisation, GDP growth, property appreciation, vacancies – the general health of the market.
He observed the demand for higher-quality real estate in Bulgaria being very strong in terms of demand. One of the challenges he sees the market facing is the possibility that “supply might be too aggressive and get too far ahead of demand, which could cause an oversupply. That would result in higher-quality property being accepted well in the market, but the older properties experiencing vacancies and value pressure”.
CEREAN president Dan A Negulescu, who is also vice president of ARAI, the Romanian association of real estate, described the situation of real estate market offers between Bulgaria and Romania as having “competition, in a favourable way”, with overall demand being extremely high because of EU accession.
He expects the two countries to “recover quicker” from their EU entry than previous EU entrants, explaining that in previous accessions, there was a slight decrease in real estate prices immediately after entering the union, due to the “higher cost” of accession.
But, Negulescu, remaining diplomatic, said that there are not significant differences between Bulgaria and Romania. “In both countries we have issues concerning law, property. Both are very good targets for investment.”
