The Bulgarian government will urge the local pension funds to inject some cash in the nation's underinvested water sector which needs to absorb 10 mln euro by 2015, said deputy regional development minister Dimcho Mihalevski.A meeting has already been held with the investment committee of the Bulgarian association of supplementary pension insurance companies to acquaint them with the new bill on water and sewerage services.The two sides discussed the placement of bonds by the water companies that could be added to the portfolios of the pension funds.Milen Markov, chairman of the investment committee, said the government could put in place a mechanism to ensure that a portion of the future revenues of the issuers will be set aside to repay the issued debt.The pension companies are interested in buying at interest rates close to the market levels and yield levels higher than those of government securities and lower than corporate bonds, said Markov.The idea will be discussed also with the EBRD and consulting companies.A failure to raise the money needed to overhaul the nation's water supply infrastructure would push the completion of the reform back towards 2035-2040.
Friday, May 23, 2008
Why Investing in Bulgaria Worths?
Bulgaria is one of the fastest growing property markets in Europe offering investors low property prices, continued strong capital growth and high rental returns.Executives at a property exhibition taking place in Larnaca and Nicosia thios week are expected to argue that Bulgaria also provides investors with one key element above many other European investment hotspots; "value for money".Dwayne Holt, Nikolay Pavlov and Nimet Kama, CEO of Platinum Global, will be speaking at presentations at the Golden Bay Hotel in Larnaca on Wednesday and at the Europe Hotel in Nicosia on Thursday, where they will explain how for a relatively low outlay investors can buy high quality well managed properties offering great returns over the medium term, and with Bulgaria really only starting in its investment cycle, these trends should continue well in to the future.Foreign direct investment in Bulgaria reachjed more than EUR 1.6 bln in 2004, leaving behind developed countries like Italy, Greece, Austria and Portugal. The amount of confidence shown by both institutional and retail investors is down to the very positive economic indicators emanating from the country.High prices and over-development in much of the Mediterranean means investors are looking at Europe's next favourite destination, Bulgaria. It offers properties at some of the lowest prices in Europe, and benefits from favourable weather and a low cost of living.This low cost alternative for holiday makers is proving to be immensely popular with tourists and tourist numbers have increased by 20% for the last four consecutive years.Bulgaria is also regarded as one of the best investment destinations in Europe with strong capital growth rates made possible by extensive EU investment in infrastructure and tourism. Against this backdrop of positive, targeted government and EU investment, real estate prices are proving remarkably resilient to the global credit crunch. Bulgaria is the first country in central and eastern Europe to establish a national Real Estate Market Index, REMI, which shows property prices have been increasing considerably for the last four years, and are anticipated to continue rising steadily by 15% in the upcoming years. These capital growth rates are unheard of in more established markets such as Spain and Portugal.According to the WTO forecasts, 12 mln tourists will visit Bulgaria in 2020, which will make it the most promising destination in the eastern European region.Continued development of the tourist infrastructure such as airports and rail are accommodating the large increase in demand from major tour operators in the area and will ultimately allow for a 50% increase in capacity over the coming years.Bulgaria has 370 km of coastline boasting some of the best beaches in Europe and a summer that lasts from April to October.The country has an impressive scenery of mountain ranges and breathtaking views with many lakes, waterfalls and caves, which remain unspoilt, despite the rise in tourism. It has a rich, diverse history and large numbers of architectural treasures. A unique element about Bulgaria's geography and climate is that it can accommodate an all year round tourist season with both the Black Sea coast and the numerous ski resorts located in the southerly mountain ranges.A typical sea village, Aheloy, keeps in tune with what is a fascinating national treasure of natural landscapes blending perfectly with a charming sea. It has 5,000 inhabitants and is 3km from Ravda and 6km from Sunny Beach and Nessebar.There is a small stone beach and a quay for boats. Aheloy is also famous for its beautiful fruit gardens and vineyards and is a unique mixture of preserved green sites, calm and pleasant sea and sandy beaches.By contrast Bansko is a charming and historic city at the foot of the north-eastern part of the Pirin Mountains, with a population of about 9,500. Positioned 6km south of Razlog, 60km south-east of Blagoevgrad and 160km south of Sofia, Bansko is a climatic mountain resort, famous for ski sports because the location of the city allows favorable conditions for skiing from the month of December to April.The ski tracks have a length of 65km from 1,100m to 2,550m above sea level while the ski facilities rival many western European resorts, but at a third of the price, while extensive new development is currently underway in the neighboring villages which will vastly increase capacity and ultimately make the Bansko region one of the most sought-after ski destinations in Europe.
USA Invsted $600 Mln in Bulgaria for 18 Years - US Ambassador Beyrle
In the last 18 years the American Agency for international development had invested in Bulgaria round $600 million. This was informed by the US Ambassador to Bulgaria John Beyrle, by the time of the international press conference on theme ‘Democracy that give result'. The Ambassador calculated that the US Government invested per $10 every year in each Bulgarian citizen. The local experience in the development of the democracy may be favorable for the Western Balkans, the diplomat added.
European University to Open Doors in Bulgaria
An agreement of opening a European University in Bulgaria was signed, the mayor of Pernik Municipality Rositza Yanakieva announced.The university will be based in the city of Pernik (Southwestern Bulgaria, near Sofia).The University will be private and will accept 1840 students in the subjects: business administration, computer systems, information, telecommunications, architecture and engineering.The project's coordinator is Professor Hristo Hristov from the Technical University - Sofia.The university is expected to start action in 2009.Pernik Municipality engaged itself to cooperate for maximally fast realization of the construction and starting of the project.
Tuesday, May 20, 2008
Return on investment of Bulgarian properties
New report of the Bulgarian think-tank Industry Watch analyzes the residential property market in Bulgaria for the first quarter of 2008. According to the information there the return on investments (ROI) in Bulgaria’s property is more dependent on sale price than on rental yield.
For the Q1 2008 the rental levels for two bedroom apartments increased by 4%. For the same period the purchase prices of residential properties are recording a faster growth. Thus the property investment pays out in 188 months taking the sale price into account while for rental yields it pays out for 234 months.
The Industry Watch report includes a forecast with annual growth in property prices in Bulgaria of 13-14% in the next five years. According to the report the foreign investments in real estate will decrease slightly.
John Beyrle Opens an Extremely Innovative Bulgarian-American Cultural Center
The US ambassador in Bulgaria John Beyrle together with his wife Jocelyn Green and the Center for psychological research will open today a Bulgarian-American cultural center in Sofia for people with disabilities. This is an extremely innovative and very positive project for popularization of the creative opportunities and the talent of people with certain specificities. The American experience in the field of integration of the people with disabilities will be applied in the center.It will be demonstrated how the human rights are a priority of every society and how discrimination is overcome through active action in the cultural field.
Brokers: Market To Start Picking Up Slowly
As usual Profit.bg asked on Monday three market experts to share their expectations about the trade on the Bulgarian Stock Exchange (BSE) this week. Here is what they had to say: Vesselin Morov, broker, Naba Investments The optimism that swept through the market in the beginning of May is indicative of the lack of a clear trend – in the search of new lows for the indexes and the establishment of a short-term intensive positive trend. I expect the trend to continue this week, while the market sentiment will be influenced mainly by the positive data from the consolidated first quarter reports of the holding companies. Nevertheless, we have to bear in mind that the market is still far away from a change in the medium-term sentiments of the market participants. We are witnessing a rather speculative trade in thin volumes. Nikolay Vitleemov, broker, Varchev Finance After seeing the first weekly gains of the stock indexes ranging between 5 and 5.5% and an increase in the average daily trading volumes last week we could expect the first attempts for bigger growth. The optimism on most positions is growing. As a result the total market capitalization of the companies listed on BSE reached 23.71 bln leva at the end of last week. Infrastructure companies may once again get in the spotlight this week. Positive news on the construction of the Trakia motorway may spark new stock price hikes, after the companies in the sector gained 20% last week. Chimimport will also be closely watched by investors after advancing by 4.54% last week. Ognyan Dechev, executive director, Populiarna Kasa - 95 The market will most likely continue to pick up slowly this week. The current stock price levels are similar to those of year and half, two years ago and are very favorable for buyers. The infrastructure projects and the positive financial results of many companies will support the rise of the capital market, but all this will happen slowly and with periods of consolidation. I am optimistic about the development of the market in the medium term and the long term. Furthermore, there are signs of recovery on the global capital markets after the turmoil. The article is not a recommendation for buying or selling stock.
UniCredit Group: Bulgarian property market past peak
The Bulgarian property market scaled its peak in 2007 and is transitioning towards a more sustainable growth pattern in terms of both prices and number of transactions, UniCredit Group said in its latest overview of Bulgaria and the region. According to the banking group, some 15% of Bulgarian intend to buy a real estate property over the next decade. Demand is highest among the younger demographic and is driven by mortgage availability and expert Bulgarians. At the same time, the number of Bulgarians that can afford a new home remains limited. The acquisition costs per 1 sq m of housing space had doubled to 2.6 average monthly pays by the end of 2007. In an UniCredit Group poll, most of the potential home buyers said they will take out a mortgage loan. Intense competition between mortgage lenders has loosened the screening standards with the repayment period stretching out to 35 years. Some mortgage products on the market cover 100% of the market value of the transacted property. Mortgage loans added up to 2.9 bln euro by the end of 2007, accounting for 40% of household debt and 10% of the nation's GDP, said UniCredit Group. The Bulgarian property market remains stable on the backdrop of the global financial crisis, said the analysis of the banking group. There are indications for a softening on the holiday apartments segment where foreign buyers have been pulling back and the cost of borrowing has been on the rise. The stagnation of the segment was further compounded by planning mistakes in the development of some coastal areas. UniCredit Group forecasts that the demand/supply dynamics suggest a gradual moderation in property price growth over the next couple of years. However, credit growth and the leveling-off of real income will continue to point housing prices upwards. The number of housing units in Bulgaria stood at 3.729 mln in 2006 with 99% privately-owned. Over 80 of homes are old and of poor built. Some 40% of all homes have two rooms.
Romania Ready to Remove Danube Bridge Tolls
Bulgarian European Affairs Minister Gergana Gruncharova described the readiness shown by Romania to remove the tolls charged for crossing the Danube Bridge at Rousse-Giurgiu (North Central Bulgaria-South Central Romania) as "a very encouraging signal." Gruncharova was reacting to a statement made by State Secretary Adrian Ciocanea, Head of the Romanian Government's Department for European Integration. The bridge toll topped the agenda of Gruncharova's recent meeting with Romania's Secretary of State for European Affairs Raduta Matache, BTA reported. "I am happy with the Romanin side's prompt reaction; this matter has been pursued by the Simeon II National Movement party for six years," Gruncharova said, adding that "this is not a transportation matter, rather, the easing of free movement for persons is a European question: the interior of the EU must unite people. The bridge is currently the only one between the two countries and the tolls are illogical. The fewer bridges there are, the easier the means of travelling over them must be." Another bridge, at Vidin-Calafat (Northwestern Bulgaria-Southwestern Romania), is under construction, and a third one, at Silistra-Calarasi (Northeastern Bulgaria-Southeastern Romania), is on the drawing board.
Sunday, May 18, 2008
SPA and Wellness Tourism in Bulgaria to Flourish
The interest of Bulgarian and foreign tourists towards local SPA and wellness tourism is increasing. This was reported after the latest research of local State Agency of Tourism (SAT).According to the research 18% of the Bulgarians and 134% of the foreign tourists devote time for SPA tourism during their winter vacation.One of the main priorities in the strategy for developing of the sector is exactly this kind of tourism, pointed out Stela Baltova, vice chairperson of SAT.The interest towards SPA in world measures is enormous. According to specialists this must be the tourism product around which to be united all European countries and to offer it on the world market.
The Property Market Turnover Topped 11 Billion Leva Last Year
Last year construction activity in Bulgaria was up by 15% which makes it one of the fastest developing sectors in the country, according to a CED analysis. The hike was prompted by the demand for modern residential buildings, commercial and administrative properties, warehouses and logistics centers. During Bulgaria's first year as a EU member country the prices of construction materials and services rose by an average of 12.6%. This year the price hike is expected to be a little lower – at 11.8%. The appreciation is a result of the growing prices globally and of the more expensive services on the local market. The active construction sector stimulates all activities related to real estate. The record turnover of 11.36 bln euros made the sector the absolute leader in Bulgaria last year. According to a Global Property Guide survey dated January 2008 Bulgaria was number one in the world in terms of annual appreciation of properties (30%) last year. Some are talking about a market bubble, but analysts say that even though the price growth is expected to slow down, there are no indications that they will be declining any time soon. Most Bulgarians finance their home purchases with credits. December 2007 was a record month for the crediting sector in the country in terms of both size and number. The reason for that tendency are the high prices. Most banks have raised the amount of financing from 70% to 90% of the home price. The average size of credits reached 51,148 euros at the end of the year, passing the psychological 100,000 BGN. The market of commercial properties continues its dynamic development, the CED analysis also states. Demand for properties near newly opened commercial centers is soaring. Demand for office space is expected to stay stable. The Law on floor property management was not passed in 2007 and because of its three-year long delay Bulgaria will not receive funds via the Residential Policy framework within the EU's Regional Development program by 2010. After several attempts to pass the law, the Government gave a green light to the project that concerns some 4.5 mln people in Bulgaria who live in the apartment buildings. This year Bulgaria has to introduce the Eurocode 8 in construction projects, which concerns the development of seismic maps. All EU countries must introduce the code by 2011.
Public Tender for Reconstruction of Part of Burgas Airport
The concessioner of the Bulgarian airport “Burgas” announced a public tender for an implementor of the rehabilitation of line “A” and an air-strip for taking off and landing.“Fraport” anticipates the reconstruction to include line “A” with an area of 1500 sq. m as well as 100 sq. m of a air-strip serving airplanes' taking off and landing.The company, which will be selected for implementing the reconstruction, should finish it in three months – this is the period the German company gives for completing the work on the air-strip, informs BGNES.The guarantee for participation is 1000 EUR. According to the law this sum could be up to 1% of the tender's value. The applicants should present documents, proving their economic, financial and technical capabilities for implementing the task. Recommendations from previous clients for good work are also needed.
Retail Space Rents in Sofia Depend More on Quality Than Demand
The last few months have once again seen Bulgaria’s progress in terms of economy, political situation, and social environment – a trend which accelerated after the country’s accession to the EU since 1January 2007, SB Richard Ellis states.The stable GDP and average monthly salary growth, the constant FDI inflow and the ever decreasing levels of unemployment rate make the country one of the hottest scenes for investment in Europe. The improving economy leads to an increase of the average wage and customers’ purchase power. This results in a higher demand for retail goods and, respectively, high quality retail space.In confirmation, more than 50% of all investments in speculative projects made during the first half of 2007 have been in retail centers, due to the high demand and the possibility for realization of longtermincomes.This results in a strong competition among investors, who are striving to purchase the few remaining suitable plots on key locations that make their schemes more attractive and rentable.Mall projects have also been launched in Bulgaria’s major cities as well: Plovdiv,Varna, Burgass, Russe, Stara Zagora, etc.Nevertheless, considering the fact that Bulgaria has only recently started to develop in terms of high quality speculative retail space, the retail market is still far behind the rest of the CEE countries.Approximately 125,000 sq m of modern retail space were put into operation in 2007, thus making thetotal modern retail space in Sofia over 650,000 sq m.The huge success of the first large-scale retail schemes has already attracted investors’ attention for a long time. As a result, several large-scale retail schemes have already been undertaken in Sofia, while more than ten others are expecting launch in the next few years; some of them have already been issued building permits.Among the largest projects in pipeline are Acropolis Centre, ETC Carrefour, Riofisa Mall, Serdica Centre, Bulgaria Mall, etc.Retail schemes are planned for development in all parts of the city. All these activities make us predict that Malls will take the place of the high streets as traditional retail destinations.Retail space supply cannot meet the demand in Sofia CBD, making tenants orientate towards pedestrianzones, less attractive premises or non-central locations. Considering the contemporary mall shopping fashion and culture among teenage and middle-age customers, demand for retail space in the capital’s largest shopping centers remains high.Fashion brands, banks, and mobile operators are among the most active tenants, all of them interested in high quality and spacious retail premises.Recently transformed into pedestrian, Graf Ignatiev blvd. has become even more attractive to tenants which caused increase in rent levels there.The high rent levels on the major boulevards and the insufficient supply make tenants orientate towards non-central locations and entrance boulevards.As a result, the boulevards surrounding the CBD are becoming more and more popular retail destinations: Vassil Levski, Hristo Botev, Maria Luiza, Madrid, etc.Rent levels for retail space in Sofia kept their high levels since the beginning of 2007, as a result of thehigh demand and low supply of quality premises. Another factor for the high rent levels is the new supply of higher quality retail premises which comes to prove that rent levels in Bulgaria depend on the quality of the premise, instead on the supply – demand ratio.CB Richard Ellis expects this trend to be preserved in the next few years. Rents in Sofia’s shopping centers are in the range of €25 – 60 per sq m per month. On the high streets their amplitude varies widely between €50 – 100 per sq m per month, with an average around €65 per sq m per month.Current yield for prime new retail space is circa 7% in Sofia’s shopping centers. Yields are higher on the high streets, varying around 7.75 – 8.25% depending on the location and the quality of the premise.Sale prices in CBD are usually in the range of €2,000 – 5,000 per sq m. The top quality retail premises asking prices are between €12,000 – 17,000 per sq m. However, despite the fact that there are even higher asking prices, these are single cases which do not correspond to the situation on the market.Retail projects remain one of the most attractive to speculative investors but if new developments keeptheir current rates of growth, this may oversaturate the market with mall-type schemes. At the same time, investors are directing their attention to cities with population below 100,000 people, which is an important indicator for the maturity of Bulgaria’s retail market.Source: Profit.bg
How do we travel to Bulgaria?
Direct international flights are available to the capital, Sofia, all year round. Direct charter flights to the Black Sea (Varna/Burgas) and Plovdiv are available during the spring/summer months and can be booked through local UK travel agents.
What are the costs of living in Bulgaria?
It's not possible to compare living costs in Bulgaria and Western Europe. Living costs in Bulgaria are extremely low! For example the food is generally twice cheaper than UK. House insurance: around €100-200 per year depending on the type of house, together with the belongings and furniture inside. For a property of price €30,000 insurance against theft, flood and fire costs about €125 per year with a decent insurance company like Allianz. Gas: the gas system network is not developed in Bulgaria yet. People here mostly use electricity to cook. For heating: there are central heating systems in the big cities: monthly costs for a 2-bedroom apartment around €120. In the small places people use charcoal and wood, which is even cheaper way to heat a house. For electricity, when used for cooking, light or hot water one pays about €30 monthly. Local and national taxes for owning a property: depending on the place where the property is located, the most expensive area is the capital Sofia, where the annual taxes of 2 bedroom apartment are around €150 per year, but the rest of the country is around €80 per year
How long will it take to buy a property?
Generally it will take 3 weeks to buy a property. This is dependent on a number of factors, not all of which are in your control. Once you have decided on a property, contact will be made with the seller or his estate agent. The terms and conditions of the sale can be negotiated very quickly, depending on how easily we can instruct an independent surveyor to assess the property, which is our usual practice. It is important to have an accurate picture of the condition of the property, likely repairs that will be needed and its consequent value. Usually a surveyor can prepare a report within a week of instructions. The legal title to the property can be checked at the Land Register in a day or two. Searches with the local authority, trying to confirm the uses and building permissions associated with the property, will similarly take several days. The Preliminary Contract is then exchanged and a deposit paid. There is then a period of, at maximum, a few days while the money transfer is arranged and any final checks made. The sale will take place in front of a Notary at an agreed date and time.
