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Bulgarian Off Plan Property Market in Bansko

Those who are in the midst of off plan property purchases in Bansko, Bulgaria, will welcome information from Bulgaria Property Action Group who are working with distressed property purchasers. With several developers unable to complete on their current off plan projects, buyers are being offered 'relocation packages'. In most cases the relocation offer will be a proposal to swap their current off-plan investment for a 'like-for-like' apartment in another development by the same developer, which is already built or which will complete.

 What has made this happen?

As buyers have dwindled, developers are heavily negotiating prices. Prices which are on the open market are frequently not the prices being achieved for off plan now, with the withdrawal of numerous purchasers who consider the potential risks too great. However, their fear is that to openly market properties at such low prices would devalue their assets further.


The nervousness about off plan sales is not exclusive to Bulgaria, of course, it is worldwide. Off plan fell out of favour for several reasons. The risks of buying an uncompleted project started to weigh heavily on buyers' minds as more developers have 'gone to the wall': over-building in the Bansko area, creating more supply than demand: some owners having difficulty renting apartments, affecting in particular those who were looking to rental income to cover a mortgage. Many who needed the rentals for mortgage repayments have defaulted on their mortgages, which has only lead to the banks becoming even more nervous.


Add to this, those who are still in the process of buying and are now no longer able to obtain a mortgage in order to complete on their purchase and it is easy to see why developers are keen to negotiate on relocation packages.


Pamella from BPAG says, "By that time, April this year, the market had almost completely dried up and everyone was in criris. Banks, developers and property buyers. Estate agents were closing and prices were behaving like lemmings".

 

Who is relocating?

Firstly, buyers who are finding the development is on hold or will not be completed. BPAG says "the development, Summit Lodge, is one which we receive a lot of enquiries about. PDI have apparently confirmed that the development is on hold and are offering like-for-like apartments in an alternative development, White Oaks".


Pamella goes on to add, "S and K are a young couple with two children who agreed to purchase a two-bed apartment in Summit Lodge. They plannned to use the property as a holiday home ffor their family and rental was not a priority. Now they are still waiting for their holiday home. The original investment was for a total of 100,000 euros for the apartment and presently they have made two stage-payments towards the apartment with 40,000 euros left to pay. They are considering relocation.

 

How does relocation work?

As an example, you have 40,000 euros left to pay on your apartment, right now in Bansko the prices are so low that we can get you a finished apartment with act 16, everything in place for that 40,000 euros in another completed development. Some of the developers are even offering free furniture packages as an added incentive. So instead of giving that 40,000 to your developer and continuing with the problems on the unfinished development, you use it instead to get yourself an apartment that you will be holidaying in or renting out this season.


Others who are relocating are those who are now unable to obtain a mortgage. A number of developers in Bansko are offering financing options on their apartments. This may be a lease to buy deal or straightforward monthly payments over, say, four years. BPAG state "We met one developer who has persuaded the bank to give him proper mortgages for his two developments in Razlog. One of these developments has act 16, is fully completed and lovely, with everything working and the other has act 16 but needs finishing. The bank is the same lender who has commercial finance across the development and I guess they are just realising that if they don’t pass the loan onto someone else, everyone is going to lose. It is a very good sign in the mortgage market".

 

Market rationalisation

This is an inevitable rationalisation and consolidation of the market. Relocation packages and alternative financing help everyone: the buyers and the surviving developers, offering a good indicator for the future of the Bansko property market.


Another bright note is the number of re-sales which are taking place. Whilst mortgage lending criteria remain stringent there is activity in the marketplace with buyers who have cash money. BPAG say that apparently Bower Estates in Bansko told them that recently there are no off plan transactions but all sales are with resale properties.


If you are a buyer who is part way through completing on an off plan property and are finding the developer unable to complete or are discovering that you are unable to obtain a mortgage to complete, then contact Pamella at Bulgaria Property Action Group to see if they can assist.

 

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