A clear strategy for attracting foreign investments in other sectors besides real estate was what Bulgarian needed if it wanted to avoid serious crises in its economy. This was the message business sent to the Government on April 16, at the second regional conference Balkan Real Estate Conference (BalREc) held in Sofia on April 15-16.
According to Rosen Plevneliev, general manager of Lindner Bulgaria, about 50 per cent of the FDI in Bulgaria was aimed at the construction sector, which could continue for no more than three years. The high level of FDI of about six billion euro has made Bulgaria dependent on foreign factors he said. “What would happen if at some point the British and Irish banks stop funding projects in Bulgaria?” he said, quoted by Bulgarian-language Dnevnik daily.
A way out of the situation was for the Bulgarian business to apply pressure on the Government to develop a strategy with a clear vision for Bulgaria’s future. For this to happen, he said investments should go in other sectors of the economy, not just to real estate and construction.
Another possible route was for more EU funds to be absorbed.
Besides the lack of such strategy, business representatives complained about the unreasonably high prices of land suitable for construction. Mixed with the high expectations of local entrepreneurs, the high price of land was the main problem of Bulgaria’s residential property market, Pablo Rodriguez-Losada general manager of Spanish developer Martinsa-Fadesa said. “The only way to beat this is to have clear and accurate information provided by municipalities about the legal state of the land.” Bulgaria had to avoid the Spanish experience where entrepreneurs worked based on their own expectations rather than on the reality of the market.
According to Plevneliev, the lack of proper infrastructure was also a serious challenge for investors. Again the authorities were in investors’ debt. “It is unfortunate that investors had to finance the construction of infrastructure and not municipalities,” Plevneliev said.
“Despite the problems, participants agreed that Bulgaria’s real estate market still had room for further growth in the next three years. The market started growing in 2003 from a very low base and that’s why it has further potential,” Plevneliev said.
He cited statistics according to which, in 2003, Sofia had about 2000 newly built apartments, while in 2007 the number was 5000. He expects that in 2008 the number would reach 8000. In general, participants concluded that with the negative trend on the Bulgarian Stock Exchange, real estate investments in Bulgaria were still the safest investment one could make.
