Foros Number Of Property Deals Will Fall This Year
The number of property transactions in 2008 is expected to decline due to the withdrawal of British and Irish customers, who used to fuel the market’s development in the last several years, and the logical downswing of the business cycle curve, Foros real estate company manager Dobromir Ganev told a news conference on April 3.
Despite the experts' expectations for a drop in the number of real estate deals for last year, 2007 turned out to be quite successful for property market in Bulgaria. Prices went up by 30 to 35 per cent and the number of transactions marked a four to five per cent increase. In Sofia, Plovdiv and Rousse the increase was even bigger, Ganev noted.
This year is likely to see 15 per cent real estate price increase, according to Foross forecasts, but the company analysts expected a rise to the same tune in 2007, only to see the market surpass their predictions by far.
About 976 000 sq m holiday properties were added to the market last year, 350 000 sq m of them being in Bansko. To date, there is a stock of three million sq m vacation units under construction, two million of which along the coast, according to Foros report for 2007.
One of the interesting trends for last year was the emerging secondary holiday property market. This could be ascribed to a number of reasons, the first one being that units bought off-plan several years ago as an investment were logically put up for sale. The other reason was that a large amount of properties were bought on the developers’ pledge for fetching high returns, which did not happen and the owners opted for prompt disposal of the assets.
The profile of holiday real estate buyer changed in 2007 – the number of British and Irish customers, who were buying mainly with investment purposes, decreased, which was partly offset by the increased interest of Russians and Greeks. Unlike their predecessors, they preferred to venture into purchases of ready units for personal use. Russians tend to prefer seaside units, whereas Greeks are noted for their craze for Bansko, which could be explained by the virtual lack of mountain resorts in Greece.
Another interesting group, accounting for some 20-25 per cent of the holiday property purchases, has taken shape last year. These were Bulgarians working in resorts, looking for small apartments of up to 25 000 euro, located in less attractive areas. These transactions were usually financed through loans, Yana Vassileva from Foros' market analysis department said.
The number of Romanian customers also increased last year – they opt for real estate along the northern Black Sea coast.
A survey, commissioned to Foros about two months ago, found that at the southern seaside alone (from Slunchev Bryag to Bulgaria’s southern border with Turkey) there are about 22 000 – 23 000 ready units on offer.
Developers have to be very careful when venturing into vacation projects, Ganev said. Foros has already advised two investors either to change the characteristics of the projects or to give up on them, he added.
Holiday prices in 2007 varied from 500-600 euro a sq m in subprime locations to 1500-2000 euro a sq m in attractive areas, such as on the beach-front or near a golf course.