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British Investors Flee Bulgarian Winter Resorts

Unlike other real estate sectors, where location, construction quality and infrastructure dictate the market, in Bulgarian mountain resorts the client is the crucial price-formation factor. Currently, around 90 per cent of winter holiday property buyers in Bulgaria are foreign.

Just two years ago British and Irish investors formed the core of mountain holiday properties buyers, responsible for an 80 per cent market share. Bulgarians contributed  only a few per cent. Last year this pattern was reversed: 70-80 per cent were Russian, Czech, Hungarian, Polish, Romanian and Bulgarian investors and only 20 per cent were British and Irish, according to the Bulgarian-language monthly magazine Imotut koito tursite (The property you seek). Green Life real estate company released a report showing that English-speaking buyers accounted for 39.58 per cent of property sales in winter resorts in 2007 and the Russian share stood at 37.87.

It is evident that the British customer has withdrawn from Bulgarian market and will probably seek after the next property hot spot. Some publications say that they are becoming interested in far flung destinations such as East Asia (countries like Singapore, China, Thailand), Africa (Egypt) and South America (Brazil, Uruguay, Paraguay). But Nikolai Pehlivanov, managing director of Green Life, believes that British clients will stage a comeback in a couple of years. UK investors traditionally rely on mortgage loans to finance their second-home purchases, so the global credit squeeze has undermined their purchasing power. Sofia-based estate agents report that purchases by UK investors of Bulgarian properties, priced between 45 000 and 90 000 euro, have fallen sharply. In an attempt to attract buyers, property developers offered discounts of between eight and 12 per cent discounts for buildings near completion in Bansko.

Mihail Chobanov, chief executive of Bulgarian Properties real estate agency,  believes that about half of UK investors who bought Bulgarian holiday properties four years ago -  hoping to cash in on the boom - are now trying to sell their properties. “Speculative buyers want to move on,” he said. Many British buyers bought off-plan, without on-site inspection – relying on the Internet and realtors’ promise of six to eight per cent minimum annual returns. Although the current return on holiday properties is officially estimated at five to seven per cent, the true figure was closer to three per cent in some places due to a shorter holiday season, over-supply of resort units and massive construction.

Since the sharp fall in the British market, new buyers of mountain resort properties are Russians and Greeks. Julia Titova, of Best Real Estate, a Moscow-based estate agent, said that Bulgaria had overtaken Montenegro and Spain as the most popular foreign country for Russian holiday home buyers. “Bulgaria is seen as an excellent place for family holidays,” Titova said. “It's nearer than the Mediterranean and more affordable than Russian Black Sea resorts.”

One of the main shareholders in the 600-million euro Super Borovets Project, for example,  is the Sultan of Oman, who believes Omani buyers will be interested in buying once the project is near completion. A major Greek company, Gek, has also invested 72 million euro in Samokov, just 10 kilometres from Borovets.  Another Greek businessman, Nikos Galanis, from Lestan Ltd, believes that Bansko has the potential to attract many Greek buyers. He bases his prediction on Greece's lack of winter resorts, its nearness to Bulgaria, the projected Strouma highway and the quality of units offered.