Evaluating Current Situation And Development Trends For The Bulgarian Real Estate Market In 2008

Nowadays, the Bulgarian real estate market is in a sufficiently balanced condition. There are a stable interest and demand, and on the other hand sufficient supply on behalf of local and foreign investors to meet this demand. The price increase is moderate, without sharp jumps, as the indications show about 50% annually; in other words except well-balanced, the real estate market is in a stable growth period. The sudden price jumps, the stagnation, the lack of new construction and the lack of demand remain in the times past. As a matter of fact, the demand has always been there, but it used to be either avalanche-like or it was turning into a small flow and therefore usually the buyers could not find that what they were looking for. Things are different now. There are many sites, available in varied price ranges, at different distance from the sea, which in itself influences the prices. On the market the sites differ by their area and planning. To a great extent the variety refers to the apartments and the apartment complexes. The private houses are also widely represented on the market, however, the difference in the house demand compared to the apartment demand, is that no foreigner would buy an old-construction apartment, but the demand of old houses is as stable as the demand of new houses.

Of great interest are the areas located within close proximity of the sea – in Bulgaria the length of the coastline is approximately 240 km. The resource is vast; a lot of the attractive plots with a varied-size area, available especially in such regions, are suitable not only for high-rise construction, but also for building of private houses and villas with a magnificent sea view and scenery.

Land properties are wanted as in the vicinities of the large seaside cities, such as Varna and Burgas, as in the area of the summer sea resorts, such as Golden Sands, Albena, St. Constantine and Elena, Sunny Beach. As a general rule, the most preferred ones are the localities where the infrastructure is already developed.

Here is an interesting fact: if earlier the resort apartments were mostly bought for the purpose of seasonal living, thus more often now, the owners stay living in Bulgaria all year round, go on sight-seeing journeys all over the country, including to the uppermost west regions, to enjoy the natural resources and the variety of resorts. The customer service enhancement in the apartment complexes and the resorts in the country has proven its positive effect on the buyers’ choice. All sites are provided with all-year-round maintenance and security guarding, restaurants and shops, indoor and outdoor swimming pools, gyms, bars, etc. Also very perceivable is the construction quality improvement, all the more that Bulgaria joined the European Union and it does its utmost to build as good as the rest of the European countries. For instance, there are more often sites with autonomous or central systems for heating and cooling of the interior premises. Due to the mass and progressively increasing competition in the sphere of construction, the building companies are frequently urged to bring in their tough business progressive technologies, materials, engineering systems and facilities, in order to ensure better habitability standards for the residential sites and to innovatively bring to life the latest scientific and technological achievements in the field of construction, production of building materials, and last but not least, to befittingly make use of the marketing and advertising art. Also a significant trump for them is the necessity of supply of such sites on the real estate market in the same price range as of the sites not particularly innovative as regards finishing.

An example could be the sites that are being built in the quite popular residential area in Varna, called Breeze. Both buildings – with high quality interior and exterior finish, where the apartments are of the same price range, but in one of the sites every apartment is planned to be equipped with the newest autonomous system for heating and cooling of the premises by Daikin, a Japanese manufacturer, and in the second building – the apartments will be heated by regular converter air-conditioners, that is to say the market prices of the apartments are the same, but the level of their technical equipment is different. There are many examples as this one.

If we give consideration to the sites that enjoy the highest popularity among newly arrived buyers, the leading positions are taken by those complexes and small apartment buildings, which are located in the prestigious panoramic areas of Varna – Bulgaria’s sea capital, in regions such as Breeze, St. Constantine and Elena (sea & spa resort in the vicinities of the city), Primorski Park, Galata. The apartments in these areas are suitable as for a seasonal summer vacation, as for all year round living and business. Moreover, there still is a quite good demand for not too expensive complexes in the small resort towns, such as Kranevo, Byala, Nessebar – with pure nature and moderate resort activity. The rise in popularity of the big summer resorts, such as Albena, Golden Sands, St. Constantine and Elena, Sunny Beach – famous across Europe – and the apartment complexes located on their territory continues, all the more that the customer service standard in the country’s resorts gets continuously improved and gradually meets the requirements for a European-level service.

Taking a look at the construction materials, used in the building of these dwellings, we should gladly notice the increasing popularity of the German-made 15 or 30 cm red bricks, that allow mechanized application of gypsum plaster; 150 or 200 cement quality class; good exterior 4 or 5 cm polyurethane façade thermal insulation boards; ETALBOND-type aluminum façade panels, natural stone facing slabs of local or European origin; multi-chamber PVC window framing, double glazed window with tinted glass in a range of colours; polished aluminum tubing and connections or stainless steel tubes for outdoor and indoor railings and outdoor railings for terraces and balconies; high quality and Bulgarian and Spanish tiles and granitogres, sanitary ware and mixer taps, both regular ad designer series; high quality interior and exterior doors with natural facing; high class laminate parquet; natural plank wood flooring or classic oak patterned parquet; interior paint finishes – mainly durable innocuous water-based paints; water supply and sewerage mains of polypropylene pipes and connections; autonomous electric- and water-meters ; contemporary electric units with safety fuses and switches.

Looking at the new construction private homes, it may be remarked that this kind of building is mostly concentrated in new complexes of closed type, located either within close distance to a populated area, within the boundaries of small towns or villages, near the sea or the beach, as well as in the villa areas of district centres such as the cities of Varna and Burgas.

In terms of construction, the houses are monolithic, brick-built, two-storey buildings: as a rule, there are a spacious living room with a kitchen and some auxiliary rooms on the first floor and bedrooms on the second. Oftentimes, the second floor could be described as attic because of the type of the roof. The roof itself is either classic type of wooden beams with hydro insulation, ceramic or bitumen tiles, or a contemporary “flat” type with thermal and hydro insulation and finishing exterior bituminous membrane. Exterior 4-5 cm façade thermal insulation using a silicate plaster and paint. It is common to see houses with a stone base up to the level of the basement premises and garages. Furthermore, if houses are built in the style of the Bulgarian national revival, their particular features are the oriel and the partial or complete wooden planking of the second and third floors.

Frequently the roof of these houses is deliberately made of old Turkish-style tiles and the windows are double-glazed of stained glass or with window grating, in order to thereby invariably stick to the intended ancient style of the buildings. A quite common feature are also the working fireplaces in both modern and traditional natural stone style. The interior walls and ceilings are mostly plasterboard finished with mineral wool quilt provided for insulation. More often in the practice the walls and ceilings are finished with smooth gypsum joint-filling and high quality paint or with decorative plaster finish. The sanitary premises are fully finished and fitted, including room tiling, lighting, an electric water-heating boiler, equipped with sanitary ware, mixer taps, showers and shower cabins. As the newest standard in construction we can define the use of multi-chamber PVC window frames available in various finishes imitating wood or simply in white colour; a regular double glazing or stained glass double glazing in a few base colours; also the installation of high quality interior and exterior doors with natural facing, modern locks and hardware; the floorings are made of high class laminate parquet; natural plank wood flooring or classic oak patterned parquet; the water supply and sewerage mains is made of polypropylene pipes and connections, autonomous electric- and water-meters ; contemporary electric units with safety fuses and switches.

The equipment of the home with the most necessary communications, such as telephone, internet and television is a must. The installation of electric plugs, switches and lights on the walls and the ceilings is also obligatory. Often the properties allow having an original and impressive landscaping: a lawn and decorative trees, free-growing flower compositions, decorative blooming bushes etc.

The contemporary market and the services of specialized companies provide the opportunity of building indoor or outdoor swimming pools and non-complicated children’s water rides. As far as the market nowadays offers a rich variety of price options, it is possible to install such kind of a water system with comparatively small budget. The fences are usually erected on the base of reinforced-concrete rings – the fundament of slag blocks, concrete blocks; they can be solid or made of spans with wooden or concrete elements with openings. Tiling elements covering the top of the fence could also be seen; often the entrance gate is massive, made of wood or iron, with modern damper mechanisms to facilitate opening and closing of the wings;

As a rule the liquidity as well as the price of the land plots depend on their exploitability, on the availability of panoramic view and beautiful surroundings in the area where the plots are located, as well as on the distance to a populated area in view of the prospective connection of the plots with communications (electricity, water-supply and sewerage system, telephone and internet); the plot prices increase in proportion to their proximity to important natural resources such as a sea, beach, resorts; very popular among the local and foreign purchasers are the areas located near lakes and rivers which by the way is an incredible feature of the the southern part of the Bulgarian black sea coast. The method of acquisition and formalization of a land plot or any other property in Bulgaria is quite easy, starting with the reason that in Bulgaria the title to the land exists. If professionally organized, the period to purchase a real estate and formalize the transaction can be reduced to a minimum of a few weeks.

When wisely chosen, the area for purchase of an apartment, a house or a land plot can determine not only the comfortable vacation and lifestyle of every one, but it also involves the golden opportunity for quick and profitable resale of a particular real estate.

On the other hand Bulgaria is rapidly renewing its popularity among the Russians and the Balts not only as an interesting tourist destination but also as a destination for profitable investment of capital with quite quick return. We can give an example by indicating a part of the clients of our agency – Dao Real, who invested in fully finished apartments in Varna City during 2006 and at the end of 2007 sold them through our direct mediation service without any additional costs on the apartments earning a profit of 35 000 to 50 000 euro. In terms of the country’s good political line – on the one hand, as a current EU member, Bulgaria has fulfilled all the eligibility requirements and directives for the country’s faster joining the Schengen area, and on the other hand, it implements a smart policy of development of mutually beneficial foreign-economic and cultural relations with Russia – the expectations are for further development and preservation of the country’s popularity among the Russian and EU purchasers and the investors. The topical of today is the large-scale construction of malls, department stores and business centers in the cities, which are developed not only with the joint capital participation of both local and foreign big contractors but there are also projects that are 100 % financed by funds of European contractors and organizations.

The local city authorities render complete assistance to the investors and developers for infrastructure development and renovation, as well as for supply of the necessary powers and public utilities to the area, where the site is located. The fact that there is an interest and investment of western European funds in the country shows itself the increasing stability in the region. The first shopping malls and business centers based on the European model have already been built and are in operation, but there still is big deficiency in buildings of that kind. Formerly, the offices and the small stores in Bulgaria were often situated in hasty re-fitted apartments on the first floor in common residential buildings. Now the number of such type of “offices” quickly decreases, all the more that a law on their forbiddance and gradual elimination is being adopted. In general, Bulgaria can be described as Eden for the investors, an undeveloped niche market, where formerly there was nothing special and nothing much happened, but where tranquility has always existed. Now it is the right time to make and concentrate serious investments in the Bulgarian real estates and development; and to receive such a great profit that would be too difficult to earn in any other European country.

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