Property developments worth over 2B euro put on hold

20:55 Wed 24 Sep 2008 - dnevnik.bg

Photo: Julia Lazarova

The effects of the mortgage meltdown in the US and the subsequent global financial fallout are slowly being felt in Bulgaria, with property developers putting projects worth over two billion euro put on hold.

The crisis is hitting hard across the board, business climate is changing and no sector will escape unscathed, Rossen Plevneliev, manager of property developer Lindner Immobilien Management, has said. Next year will be a tough time for businesses, but 2010 may see the light at the end of the tunnel, he said.

Entrepreneurs were wondering whether to go ahead or pull out of projects, according to Tihomir Tsakov, owner of local real estate agency Aristo.

Under pressure by shareholders, property funds have already started selling out assets. Private equity firm Equest sold its City Center Sofia shopping mall to US real estate investment management firm Heitman at a humble profit of 7.5 million euro earlier this week and the company’s cinema halls have also been put up for sale.

Immoeast AG, the Austrian real-estate developer that focuses on Eastern Europe, unveiled plans to freeze or abandon projects worth two billion euro to bolster liquidity. The company has not given details whether Bulgarian projects would be affected.

The property funds listed on the alternative segment of the London Stock Exchange are also shedding Bulgarian assets after their share prices halved in the past year.

Bulgarian Land Development placed on the block its projects in Borovets and Kavarna; Black Sea Property gave up on its Tsarevo development; Bulgarian Property Development halted its investments in Bansko.

The holiday property segment was hit the worst with the number of deals shrinking by 10 per cent, according to data from the Registry Agency.

Speculators are fleeing the market and selling homes for virtually no profit at 600 euro a sq m, Nikolai Pehlivanov, director of investment company Green Life, said.

Foros real estate agency said that some 50 000 second-home properties are up for grabs on Bulgaria’s Black Sea coast. Soaring loan prices are dragging the urban property market as well.

Foreign direct investment, a large part of which has gone into the property market since end-2005, shrunk by about 500 million leva in the first half of this year compared to the same period of 2007.

Comments

Comments by Patrick - 22:18 27 Sep 2008
	Dear Sir, Apart from the credit cruch affecting most of the world, property prices in Bansko are falling because of the activities of corrupt and unscrupulous APARTMENT-HOTEL COMPANIES defrauding their individual apartment owners in a number of ways: 1) They rent the apartments to tour operators when they know the owners will not be there, but do not pass any rental money to the legal owners. 2) They overcharge apartment owners for water, heating and electricity. 3) They charge owners for heating, lighting and water even when the owners have CLOSED the apartment AND turned off all heating and water services. 4) They refuse to maintain the facilities at the apartment complexes even though they are paid an annual maintenance fee by all the individual apartment owners. 4) They make it difficult for individual apartment owners to market and advertise their own apartments by turning off the water, heating and electricity when guests arrive and say it's because the apartment owner has not paid their bills, when they have! 5) They threaten and bully the local legally appointed representatives of individual apartment owners, by denying them access to the complex - even though the local representatives have Powers of Attorney. 6) They put pressure on individual apartment owners to sell their apartments to the management company for much less than what they paid for it. These are not rumours. This is the truth, because I am one of many apartment owners at one of the most prestigious apart-hotels in Bansko where this activity is going on, and without any help from the local Mayor, the local authorities or the Bulgarian Ministry of Tourism. Is it any wonder why people believe that Bulgaria is the most corrupt country in Europe?