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A Buyers' Market?

Property market trends in Bulgaria. One minute the darling of the press, the next to be avoided at all costs. What is going on in real estate in Bulgaria? In this article Quest Bulgaria provides an up to date look.

There are certainly less British buyers now because of their own problems at home. However, it's all too easy to forget that there are other foreign buyers out there and, not least, the ever increasing local market.

 

Buyers deserting in droves?

The British only ever accounted for 15% of the market at its peak. The remainder of the market was always local based with a smattering of one or two other foreign nationals thrown in.

The market is still growing and prices on the up, fortunately in a more stable and sustainable way than the last three to five years.

It's generally the speculators who bought on the coast or in ski resorts, who are looking to sell now and move on to pastures new, rather than the individual buyer. The problem, of course, is that they are taking a "lemming" attitude and many are selling at the same time, putting downwards pressure on prices in the resorts because of this sudden supply.

Those buyers who purchased away from the resorts did so for a lifestyle choice and were primarily wanting to get away from the rat race and buy in the sun. Often these buyers were more mature and did not buy with a mortgage. They have little interest in selling, so the villages, towns and more rural areas are not feeling this impact.

The tourist areas may be suffering with over-supply but the remainder of the country, where the market is sustained by locals, is showing regular price increases and good activity.

Whilst there may be plenty for sale, it is clear that buyers have become more demanding and are placing emphasis on quality, character and location. This current situation will help the market to regulate itself and the best news is that only the best developers and agents who have clear business ethics and financial resources behind them will survive.

The Bulgarians are becoming more affluent and are buying properties, frequently without taking on mortgages. These purchasers are becoming more active - and are also more demanding. They are looking for the best location. Not just the sea or ski resorts but also for original, historic and authentic houses.

Greeks are also investing heavily in Bulgaria, along with others. A survey by Green Life Property Development shows a steadily growing number of Russian, Scandinavian and Romanian buyers, which has come as a satisfying substitute to any downturn in British purchasers, with Russian-speaking clients making up to 90 per cent of all buyers.

The company remarked that there are two groups of buyers coming into the Bulgarian property market. One is affluent Russians who are looking to buy large top end apartments for use as holiday homes. The second group, who are not as wealthy, are wanting smaller homes for an investment. It is this latter group which are replacing the British customers.

Romanian newspaper Financiarul reported ,that Romanian property buyers are shifting their focus to Bulgaria and are especially interested in holiday property.

 

Experts said that Romanian buyers have struck property deals worth 3.6 million euros in Bulgaria. Additionally a growing number of Romanian investors are purchasing in Bulgaria because it provides better returns, particularly near the town of Rousse on the Danube which has seen prices of apartments double.

Not to mention the Italians, despite the credit crunch, they certainly have not been put off buying property. In the first half of the year the quantity of real estate, bought by Italians has increased by over 16% compared to last year.

Just because some Brits are no longer buying due to home economics, does not mean that nobody is buying or that Bulgaria is not a good investment.


 

Time to Bag a Bargain?

With the global credit crunch, there are many properties for sale by owners who are really keen to sell to help their personal financial situation. Many of these owners re-mortgaged their property heavily back home in order to buy and are now pretty much cash strapped. Properties in the UK, France and Spain are still going down as their economies carrying on suffering.

Whilst local Bulgarian vendors don't usually have any financial pressures to sell and will stick firm on the market price for their property, many overseas investors really do need to sell and there are some keen prices to be had. Some vendors will take whatever they can get, which is not a reflection on the Bulgarian property market but a reflection on their personal finances.

This opens up some great opportunities! Maybe now is the time for those with a keen eye for a good property deal to bag a Bulgarian bargain.


News On the Ground

It has been reported that Bulgaria is now turning into a buyers' market. What is a buyers' market? When supply outstrips demand and the number of potential purchasers falls. This certainly does not seem true of all of Bulgaria.

The majority of property coming onto the market from those selling because of financial pressure is mostly in the resorts. Across the remainder of the board, it is a different story. From a straw poll, we found a firm picture of good buying activity from both Britons and other nationalities. Here's a sample of comments:

"I sold my apartment within two days"

"Last year there were no foreign owners here, now we have one British, one Dutch and one German family, plus a British family are building a hotel in the town"

"We live in a large village and have put one of our houses up for sale at 110,000 euros. Everyone who's contacted us, apart from one German, has been Bulgarian".

"We bought 4 off plan apartments in Sofia a year ago at 600 euros a sq.m, we've just sold one of them at 950 euros a sq.m. and another at 1,000 euros a sq.m."

 

The Future

In the long term, the basics are in place. The Bulgarian economy is growing and there is low taxation.

New construction is being reduced with tighter building regulations, together with the market stabilisation. Bulgarians are becoming much more affluent and there is an emerging middle class, plus huge interest from countries outside the EU.

Prices achieved per unit are up (inner city apartments for example, rose by 8% in just three months this year) with buyers looking for quality, which is a sign of the market maturing significantly. Buyers are taking less mortgages, so they tend to be more financially sound.

Our top tip would be to leave the British attitude at home and don't think you'll buy and then make a 50% profit in six months. The view to take regarding Bulgarian property is that of medium to long term. Buy and hold for three to five years.