Bulgaria's property profitability growing

Sofia echo, 2007-05-14

     The growing number of holiday property on offer has posed the question for an emerging secondary market at the Black Sea and mountain resorts, Pari daily wrote on May 4.
     In Bulgaria, this market is still in its early stage, but it's expected to develop in the next two to three years. Currently, there are about 40 000 properties for sale on the market around the country. Only in the past six months, the number has increased by about 50 per cent. Every third such property is in Slunchev Bryag (Sunny Beach), where offers have grown by 65 per cent.
     The beginning of the holiday market in Bulgaria was about four, five years ago in Sunny Beach and St Vlas on the Black Sea coast. For its development helped the marketing of the biggest and most popular resort in Bulgaria (Sunny Beach) as a destination visited by more than 500 000 tourists annually. The holiday property market, however, has shifted towards other places, as that part of the Black Sea coast saw over-construction and oversaturation of holiday complexes.
     Profitability is the main aim of the customers, who offer for sale already-purchased property. A large part from them are experienced investors who are looking for fast profit return. Revenue from resale of properties at the coast is between 15 and 20 per cent, depending on location. At winter resorts, earnings are larger, 60 to 100 per cent for the period of two or three years. What determines the price of the property is demand for properties in the area as well as the financial abilities of foreign investors, who are the main buyers.
     In Sunny Beach, a customer is able to choose from 20 holiday complexes that correspond to his or her needs. This oversaturation of the market leads to holding prices for a long-term period. At the southern Black Sea coast, for example, prices have grown just by one per cent for the first three months of the year.
     The rise in prices and the increase of profits from rent are to be expected in regions where supply is proportional to demand. At the sea coast, as well as at the mountain resorts, investors' focus is already shifting towards smaller and medium resorts. The reasons are the high prices of land in popular resorts and the heavy construction density there.
     The market at the northern coast still has potential for development. The extensive construction work in mountain resorts continues, but it will stabilise within two years. As competition grows, better construction quality and extras that the resorts offer will lead to increase of prices. Those resorts will attract new investors with greater purchasing power. Such are Russian and Scandinavian buyers. This will gradually turn into a factor for more construction of holiday homes to take place at the Bulgarian Black Sea coast. This, in turn, will lead to increase and stability of prices in regions where there is no over-construction and the place can offer a wide scope of high-quality services.

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