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Bulgarian Property Market and the Crisis

The global financial crisis may just help out the Bulgarian property market. "What, are you mad", I hear you say. The media says nothing is moving, developments are halted and money is nowhere to be found. Well, these very financial restrictions in the Bulgarian real estate and property market which are creating the slow down, could provide a moment to breathe, take stock and grab the opportunity to get it all back on track.

It was far too much easy money which kicked off the incredible property boom in Bulgaria and this money, as we are all too well aware, is no longer 'on tap'. Instead of sitting on their hands and saying it is all the fault of others, this is just the chance for the Bulgarian government, developers and agents alike to take a long hard look at the country's property market and make some decisions for a better, more solid long-term future.

Bulgaria truly is one of the most beautiful countries in the world. It is not too difficult to imagine how the property market could be improved and just going back to the basics of what customers want will give straightforward answers with simple common sense. There are still buyers and investors out there but what are they looking for and what will they look for in years to come? Where are the most attractive locations? Where do the tourists go? Which are the properties which will always sell, which people will always want?

 

Today's buyer is more discerning and also demands:

- Build quality and smaller developments in harmony with the environment - established proper infrastructure within and around the developments; green spaces, wide avenues, waste and sewage treatments, build materials and high quality of build
- Ethics in real estate agents and developers - buyers want them to stop being so greedy and will use those with a  long term vision and top-notch customer service
- A wealth of well-presented history and culture - villages and special historical towns with clean and tidy streets, renovated buildings demonstrating the stunning ancient architecture, high standard places to eat and drink with fresh quality local food
... all these bring both the buyers and the tourists

Currently, construction on some developments has halted, others are struggling to complete and some are starting to build. A very mixed bag. Many Bulgarians would love nothing more than an apartment in a city and the country is still very low in retail space, so building is needed.

Over the last few years, development has been rife, from Sunny Beach to Bansko. It was only normal that this would happen in a country emerging from its grey communist past and endeavouring to move into the 21st Century and improve their quality of life. It has not all been bad and the new construction has certainly allowed a low entry level for the average buyer, both local and international. Looking forward, Bulgaria can, with better quality construction and a residential plan which is property implemented, improve its global appeal.

Where the tourists go, real estate follows. Many of the most glorious buildings and towns across the country lie in wrack and ruin. No doubt tourists which have visited the numerous museums will have been disappointed by both the state of the buildings and the display of the exhibits themselves. There is a selection of museum towns and special historic towns in Bulgaria which would benefit significantly from improvement to draw in more tourists, potential property buyers and boost the local economies. The individual tourism sector is the one growing at the most rapid pace globally, seeking out history and culture. Those towns with such architecturally important buildings and historical links can be where the government and tourist agency start to rebuild the tourism sector and get it away from cheap sun, sand, sea and sex.

Some agents and developers (and vendors) really needed to develop a sense of reality, something which is likely being forced upon them now as the flow of money has dwindled.

Too many were in the market on an 'I'm going to be a millionaire in a couple of months' motive. Fortunately, the slowdown is weeding out many of the schemers and rogues.

It is only the long-established companies which are surviving - those who had long term plans, correct working practices and have good financial backing.

With GDP looking like being up to only 2% this year, now is an excellent opportunity where there is time to look at the property market and put plans in place for the coming decade and longer.


 

Quality is key

To support our view, according to Shtelyan Kalchev, the owner of RE/MAX Connection, the least affected of all property in the Bulgarian market is that of quality and luxury. He says, “the Bulgarian real estate sector is in desperate need of regulation not only for brokerages but also for developers and builders. We need a legal ethical code regulated by and supported by the Bulgarian government".

“The European wide RICS body regulations should be brought in as soon as possible here. We have waited long enough. These new regulations will clear out people who are here for fat profit, only hard working professionals will be left and the situation will definitely improve.”

Property Index Magazine recently reported on events at the BalREc / BalPEx summit, held at the end of last year, which key figures attended. Attendees are said to have given the message that the industry doesn't need help but does want support for implementing reforms in order to improve the property business environment, create new opportunities and enable afffordable quality property.

Their list of suggestions is long and impressive, including such elements as stimulating mortgage lending, measures to support purchasers of primary homes, encourage infrastructure development, low-energy and 'passive' houses, control of water, sewage and energy boards to give developers quick acccess to networks, standards for property sales and new-builds to protect buyers, regulation of estate agents.

It is to be hoped that at least some of these will be put in place swiftly. If so, they will go some way to putting the market back on its rightful footing.

Bulgaria still has an abundance of natural unspoilt beauty, heaps of history and culture, wonderful beaches and winter sports resorts. The cost of living is incredibly low and there are many opportunities if you'd like to establish your own business without a 'nanny state', with only 10% flat corporation and personal tax, one of the lowest in Europe.

The moment in time which presents itself must be grabbed with both hands. What a golden opportunity for the powers that be to strip out the massive speculative elements and over-building. Not be too greedy and create a property market which is sustainable, in keeping with the beautiful Bulgarian nature and with long term steady growth, which will in turn give international buyers more trust and confidence again in buying Bulgarian property.