Bulgaria has become a favoured destination for international holiday home investors, Financial Times (FT) wrote in its last report on Bulgaria, published on November 15.
Although coming with a bit of delay, this recognition by one of the business bibles of today's world was seen as another chance to highlight Bulgarian real estate opportunities.
But the country has much to do, FT said, if it is to avoid damage to its environment through overenthusiastic construction.
As the Echo has pointed out on a number of occasions, the boom in holiday construction in Bulgaria has already led to some disturbing news about the local environment and even about the development of the tourist sector. This year's summer tourist season was overshadowed by numerous complaints from foreign tourists being tortured by the noise and dirt of construction works at the seaside.
However, FT is optimistic about Bulgaria, saying that investors have been turned off by high prices and overdevelopment in much of the Mediterranean and are looking at Bulgaria's Black Sea coast and unspoilt inland lakes and mountains.
Several investment funds are focusing on Bulgaria, where real estate prices rose more than 20 per cent last year and are expected to increase by an annual average of 10 to 15 per cent for the next few years.
Developments vary from apartment blocks and hotels to modern luxury complexes with swimming pools, solariums, restaurants and a host of other facilities. Some property experts worry about the lack of clear regulations to ensure development does not ruin the coast's qualities.
In the past two years, parts of the Bulgarian coast have become almost unrecognisable, FT wrote. One example is where Sunny Beach meets neighbouring Sveti Vlas, a village almost overrun by new building. Another is Nessebar, an ancient port designated as a UNESCO world heritage site with about 40 medieval churches.
According to FT, legislation currently under discussion on conserving Bulgaria's coastline should - it is hoped - ensure that there is a better balance between construction and the natural and historical environment.
The main problem facing local construction companies is that most are small (60-70 per cent of them have an annual turnover of up to five million leva). A small company is not competitive because it does not have the necessary technical and financial resources and borrows it from bigger companies to carry out orders.
One chance for them is to set up joint ventures with foreign companies that are more and more convinced of the advantage of coming to Bulgaria. They should preferably select one that is ISO certified.
Currently only some 25-30 per cent of local construction companies meet the standards but these are only the large companies. Small firms cannot spend $10 000 or more to comply and be certified with the international standards.
Offices were the most attractive real estate class in the past month, according to estate agencies operating in Sofia. This has led to an increase in prices in the city centre where most business buildings are located.
The neighbourhood surrounding the Medical Academy was the biggest surprise as transactions there were few. Real estate brokers comment that the increased prices in that neighbourhood are due to the growing demand for flats by students and the resulting rise in rent rates.
Dragalevtsi, a suburb in the slopes of Vitosha, ranks among the top areas too. Average prices there amount to 730 euro per square metre, higher than those in other suburbs with similar location, such as Boyana, Simeonovo, and Bistritsa.
For Brits
The special purpose vehicle TBI BAC Real Estate, incorporated in the second half of 2003 to invest in real estate property developments, said that shareholders from the UK have acquired minority stakes in the company. TBI BAC Real Estate is trying to develop a business relationship with two leading British real estate consultancies and their Bulgarian partners in a bid to market with their assistance a new coastal residential community to British buyers. The residential development in question will occupy a 1336-square metres site located 200 m from the sea between the village of Sveti Vlas and Slunchev Bryag (Sunny Beach) resort. The land plot on the Black Sea coast was the second property investment made by TBI BAC after it purchased a 200 000 euro plot in Sofia earlier this year for the construction of an office building.
Growth 2004
Expected growth in construction for this year is between 18 and 20 per cent, compared to 2003, when the sector registered a 10 to 12 per cent increase, Bulgarian Construction Chamber said. Forecasts show that the volume of construction works is estimated to reach about 3.7 billion leva, with 3.06 billion leva reported a year earlier. The size of the construction sector in terms of gross domestic product has been constantly growing in the past four years, rising to 4.6 per cent of total GDP. However, Bulgaria occupies one of the last positions in Europe in terms of construction's GDP share. In EU member countries (including the newly accepted), the average construction sector share of GDP is 9.9 per cent, reaching 18 per cent in Spain and Portugal. Bulgarian construction businesses expect that after Bulgaria's accession to the EU, similar increases will also be observed in the country.
Although coming with a bit of delay, this recognition by one of the business bibles of today's world was seen as another chance to highlight Bulgarian real estate opportunities.
But the country has much to do, FT said, if it is to avoid damage to its environment through overenthusiastic construction.
As the Echo has pointed out on a number of occasions, the boom in holiday construction in Bulgaria has already led to some disturbing news about the local environment and even about the development of the tourist sector. This year's summer tourist season was overshadowed by numerous complaints from foreign tourists being tortured by the noise and dirt of construction works at the seaside.
However, FT is optimistic about Bulgaria, saying that investors have been turned off by high prices and overdevelopment in much of the Mediterranean and are looking at Bulgaria's Black Sea coast and unspoilt inland lakes and mountains.
Several investment funds are focusing on Bulgaria, where real estate prices rose more than 20 per cent last year and are expected to increase by an annual average of 10 to 15 per cent for the next few years.
Developments vary from apartment blocks and hotels to modern luxury complexes with swimming pools, solariums, restaurants and a host of other facilities. Some property experts worry about the lack of clear regulations to ensure development does not ruin the coast's qualities.
In the past two years, parts of the Bulgarian coast have become almost unrecognisable, FT wrote. One example is where Sunny Beach meets neighbouring Sveti Vlas, a village almost overrun by new building. Another is Nessebar, an ancient port designated as a UNESCO world heritage site with about 40 medieval churches.
According to FT, legislation currently under discussion on conserving Bulgaria's coastline should - it is hoped - ensure that there is a better balance between construction and the natural and historical environment.
The main problem facing local construction companies is that most are small (60-70 per cent of them have an annual turnover of up to five million leva). A small company is not competitive because it does not have the necessary technical and financial resources and borrows it from bigger companies to carry out orders.
One chance for them is to set up joint ventures with foreign companies that are more and more convinced of the advantage of coming to Bulgaria. They should preferably select one that is ISO certified.
Currently only some 25-30 per cent of local construction companies meet the standards but these are only the large companies. Small firms cannot spend $10 000 or more to comply and be certified with the international standards.
Offices were the most attractive real estate class in the past month, according to estate agencies operating in Sofia. This has led to an increase in prices in the city centre where most business buildings are located.
The neighbourhood surrounding the Medical Academy was the biggest surprise as transactions there were few. Real estate brokers comment that the increased prices in that neighbourhood are due to the growing demand for flats by students and the resulting rise in rent rates.
Dragalevtsi, a suburb in the slopes of Vitosha, ranks among the top areas too. Average prices there amount to 730 euro per square metre, higher than those in other suburbs with similar location, such as Boyana, Simeonovo, and Bistritsa.
For Brits
The special purpose vehicle TBI BAC Real Estate, incorporated in the second half of 2003 to invest in real estate property developments, said that shareholders from the UK have acquired minority stakes in the company. TBI BAC Real Estate is trying to develop a business relationship with two leading British real estate consultancies and their Bulgarian partners in a bid to market with their assistance a new coastal residential community to British buyers. The residential development in question will occupy a 1336-square metres site located 200 m from the sea between the village of Sveti Vlas and Slunchev Bryag (Sunny Beach) resort. The land plot on the Black Sea coast was the second property investment made by TBI BAC after it purchased a 200 000 euro plot in Sofia earlier this year for the construction of an office building.
Growth 2004
Expected growth in construction for this year is between 18 and 20 per cent, compared to 2003, when the sector registered a 10 to 12 per cent increase, Bulgarian Construction Chamber said. Forecasts show that the volume of construction works is estimated to reach about 3.7 billion leva, with 3.06 billion leva reported a year earlier. The size of the construction sector in terms of gross domestic product has been constantly growing in the past four years, rising to 4.6 per cent of total GDP. However, Bulgaria occupies one of the last positions in Europe in terms of construction's GDP share. In EU member countries (including the newly accepted), the average construction sector share of GDP is 9.9 per cent, reaching 18 per cent in Spain and Portugal. Bulgarian construction businesses expect that after Bulgaria's accession to the EU, similar increases will also be observed in the country.
