Realtors: luxury properties not hard to sell

Bulgarian property funds do not plan to raise fresh cash for investments and have no trouble selling their finished projects, the major market players said. The bulk of the companies have already secured resources and agreed bank loans but owned up to slower sales and pickier housing and holiday property customers. Offices on good locations and with developed infrastructure are still in demand. Holiday real estates are attracting buyers from Russia and the former Soviet countries and supply meets demand in the luxury segment. In the middle and low segments, supply outstrips demand. We are looking at a reflux in the home segment as prices are trying to settle, according to Todor Stoyanov, executive director of Prime Property BG. Real estate investment trusts came round the view that pressure is highest in the holiday segment but said that good projects find buyers. Property management funds would rather talk about a settling market, sifting through projects and a temporary stagnation than of a crisis. Park Management Company manager Atanas Georgiev said companies can no longer easily rely on sold or rented projects to finish new ones. Source: http://news.dnevnik.bg/

Bad household loans catch up with corporate loans

The volume of bad loans for individuals and households almost touched corporate loans in end-July 2008 although individuals took some 11 bln levs less, central bank data showed. Bad consumer, mortgage and other loans of individuals added up to 468.5 mln levs. Bad corporate loans totaled 493.6 mln levs. Companies drew 28.5 bln levs worth of loans. Households and individuals borrowed a combined 16.9 bln levs. Banks’ retail loan portfolios grew as fast as bad and restructured loans. Bad consumer loans picked up 44.8 pct year-on-year as the whole consumer portfolio expanded by 47 pct year-on-year. Bad housing mortgage loans grew 48.9 pct and the whole portfolio added 50 pct. The close paces are due to the smaller growth rate of new loans, bankers commented. Bad and restructured loans combined soared by 282 mln levs to 962.1 mln levs for a year making 2.11 pct of the total portfolio. The combined profit of Bulgarian lenders surged 38.2 pct to 842 mln levs from January to July. Source: http://news.dnevnik.bg/

Greek Titan Group may put 200 mln euro into Lovech plant

Greek cement maker Titan Group is mulling over pouring up to 200 mln euro into boosting production capacities in the northern town of Lovech, said economy minister Petar Dimitrov quoted by Focus news agency. The holding company has so far invested 51 mln euro in production operations in Bulgaria. It has units near Sofia, Zlatna Panega and Plovdiv. The company unveiled on September 13 a new production line at the Zlatna Panega factory wrapping up the first phase of its investment strategy. Titan Group is ready to build another production line provided that the future national development plan recognises the sector’s economic and industrial growth, said executive director Alexander Chakmakov. The new facility will increase to 1.2 mln tonnes the production capacity for clinker, the key cement raw material. Source: http://news.dnevnik.bg/

Consumer Credit in RON in Romania Exceeds 10 Bln Euros

Consumer credits taken out by the Romanian population in RON went up to a level equivalent to 10.3 billion euros, a 36% increase on July last year, according to data from the NBR (National Bank of Romania), Ziarul Financiar reported.While overall there is a slowdown in the credit growth rate, consumer loans taken out by the population in RON jumped significantly in July. In fact, the 3.4% growth rate in July was the most accelerated rate this year, followed by the April rate, of 2.5%.The annualized growth was also above the one calculated in the previous month, but lower than in the first few months of the year. However, all the other categories of credit saw a slowdown. Data points to a slowdown in lending, and a significant slowdown is expected over the next few months.This is primarily due to the base effect, the volume of credits granted by banks is much higher than last year. From a 56% credit growth rate, I expect we will reach 40% by the end of the year, said Ionut Dumitru, head of Raiffeisen Bank's research department.Source: Profit.bg

Bulgaria attracts 150 000 Romanian tourists in summer 2008

About 150 000 Romanians came to Bulgaria for their vacation in the summer of 2008, according to data published in the Romanian press.The total number of Romanians who went abroad for a summer holiday in 2008 is 700 000. Greece remains the most popular destination for them with over 250 000 Romanian tourists.The number of Romanians who visited Turkey over the summer registers the highest growth. Romania's Black Sea coast was visited by 100 000 foreigners in summer 2008.Source: News.bg

Assets of Bulgarian REITs Up by 67% in One Year

The assets of Bulgarian real estate investment trusts (REIT) amounted to 1.54 bln leva as at the end of the second quarter of 2008, up by 67.3% year on year, data of the Financial Supervision Commission (FSC) show. It should be taken into consideration that a total of 68 REITs were included in FSC's statistical data for 2008, compared to 47 a year earlier.The combined assets of REIT's rose by 7.68% in the second quarter of 2008, compared to the first three months of the year. The REIT's managed 1.43 bln leva assets as at the end of March 2008.A total 56 of the REITs invest in real estate properties other than arable land. They managed assets for 925.78 mln leva as at the end of June 2008.Their assets amounted to 512.22 mln leva a year earlier and stood at 857.93 mln leva as at the end of the first quarter of 2008.FairPlay Properties REIT (114.13 mln leva), Serdika Properties REIT (80.69 mln leva) and Arco Twoers REIT (80.53 mln leva) are the three biggest companies in terms of assets. The last two, however, are not traded on the Bulgarian Stock Exchange (BSE).The six REITs specializing in the securitization of arable land managed assets for 532.4 mln leva as at the end of the first half of 2008.The assets of the six REITs stood at 300.41 mln leva a year earlier and at 482.52 mln leva as at the end of March 2008.The three biggest funds in terms of assets in this group are Bulgarian Real Estate Fund REIT (183.43 mln leva), Elana Agricultural Land Opportunity Fund (153.56 mln leva) and Advance Terrafund REIT (102.35 mln leva).The REIT specializing in the securitization of receivables rank third. Their number has increased from 7 to 9 in one year, while the value of their assets has gone down from 95.38 mln leva as at the end of June 2007 to 77.36 mln leva a year later. The assets of these REIT's totaled 85.6 mln leva in the first quarter of 2008.The top three REIT's in this group in terms of assets are Capital Management REIT (48.36 mln leva), Transinvestment REIT (15.33 mln leva) и Energetics & Energy Savings Fund SPV-Sofia (7.28 mln leva).Source: Profit.bg

SOFIX Companies' Proift Growth Slows Down in H1

Ten of the 19 companies included in the calculation of the SOFIX blue-chip index of the Bulgarian Stock Exchange (BSE) posted year on year increase in profit for the first half of 2008, a check-up conducted by Profit.bg shows. Two of the companies posted losses for the first six months of the year and seven others booked a year on year decline in profit for the period. The average year on year increase in the earnings of the SOFIX components stood at 26% in the first half of the year. This marks a slowdown compared to the 43% year on year rise posted for the year-ago period. Neochim's profit, which went up by 382.57% in the first half of the year, contribute greatly to the results, even though the company has a relatively low eight in the index. Monbat, which has a relatively heavy weight in the index, booked a 124.8-percent year on year rise in profit for the first six month of the year. Except for Holding Roads (22.9%), Monbat and Neochim are the two companies with the highest increase in stock prices over the last year – 6.19% and 6.13%, respectively. Corporate Commercial Bank was the only other company that managed to post an increase in stock price over the last year. The stock of the bank has appreciated by nearly 3% over the period. A total of 15 of the 19 companies included in the calculation of the SOFIX posted stock price declines in the last year. Twelve of them saw their stocks decline more than the index over the period. The stocks of Albena, Euroins, Kaolin, Lead&Zinc Complex, Orgachim, First Investment Bank and Central Cooperative Bank have depreciated by more than 50% in the last year. Rousse-based paint and varnish maker Orgachim posted the highest decline in profit amongst SOFIX's components. The company booked a 52.3% year on year decline in profit for the first six months of 2008, compared to a 509-percent year on year jump for the corresponding period of 2007. The fact that one-off gains are included in the financial results of the companies for the past year should also be taken into consideration: Company Profit growth Q2 2008 Profit growth Q2 2007 Stock price change РЕ Albena n.a n.a. -50,21% 15,38 Elana REIT n.a n.a. -18,47% 2,28 Euroins -86,40% 200,48% -60,14% 13,43 Industrial Holding Bulgaria 71,70% -32,42% -39,88% 13,08 Kaolin -55,75% 132,07% -55,21%% 15,71 M+S Hydraulic 18,71% 30,00% -43,43% 18,78 Monbat 124,80% 80,00% 6,19% 19,99 Neochim 382,57% 28,70% 6,13% 5,98 Lead&Zinc Complex -86,72% 105,40% -64,75% 165,82 Orgachim -52,29% 508,65% -64,76% 27,01 Sopharma -43,50% 25,00% -46,82% 18,16 Sparky Eltos 88,00% n.a. -56,25 10,31 Bulgarian American Credit Bank 25,40% 62,30% -25,33% 14,22 Corporate Commercial Bank 83,50% n.a. 2,96% 23,48 First Investment Bank 24,40% 62,50% -53,36% 12,81 Central Cooperative Bank -26,00% 110,00% -63,76% 15,45 Toplivo 90,00% -64,19% -42,83% 10,38 Chimimport 8,02% n.a. -43,50% 8,62 Holding Roads -68,72% n.a. 22,90% 30,38 SOFIX -40,30% 12,61 Average 0,26% 0,43% Source: Profit.bg

20 Percent Less Foreign Tourists on the Romanian Seaside

The number of foreign tourists on the Romanian seaside decreased by 20 percent this year, while the number of Romanian tourists who spent their holidays outside the country increased by 25 percent, according to Romanian Travel Agencies National Association (ANAT) officials.Greece, Turkey and Bulgaria are among the favorite destinations for Romanians, BusinessStandard.ro reports.Tour operators sales on the Romanian seaside increased by 5-20 percent. ANAT estimated a total 1.4 million tourists will visit the Romanian seaside this year.As for Romanians spending their vacations abroad, some 250,000 tourists went to Greece, while the number of tourists who went to Turkey increased from 80,000 to 130,000, according to ANAT spokesman Traian Badulescu.Source: Profit.bg

Prices of New Homes in Hungary Projected to Rise About 7% in 2008

Hungarian real estate company Otthon Centrum projects the price of new homes in Hungary will increase about 7% in 2008, level with the rate of inflation, the Budapest Business Journal reports.Nonetheless, it still sees prices of both new and resale homes doubling in ten years, analyst Dávid Valkó said at a press conference on Wednesday.About 11,200 new homes will be completed in Budapest by year-end. Demand for resale homes is expected to fall 5%-10% during the year.Prices for resale homes in brick buildings averaged Ft 269,000 per square meter in the first half of the year. The price for free-standing resale homes was Ft 197,000 per square meter.The report noted that 10% of new home loans taken out in the first half were denominated in Japanese yen.Source: Profit.bg

Fourth BalPEx Exhibition Starts October 10

The fourth edition of BalPEx real estate exhibition will take place in Inter Expo Center in Sofia between October 10 – 12.More than 300 projects from different segments will be presented on an exhibition area of 4,000 square meters.More than 150 companies, among which leading Bulgarian and foreign construction and investment firms, property agencies, financial and credit organizations will be presenting their businesses to individual and corporate clients.The segment of home properties will dominate the presentations this year as well – with over 50% of exhibitors belonging to this sector. This year there will be more office, commercial and logistics centers projects.The following residential complex projects will be presented for the first time: Zelenica in Sofia, Residencia Botanica and Prestige in Sofia's Boyana neighborhood, Vista Park in the area of Kambanite, VIP Complex Pavlovo, St Anna and St Stefan complexes in Sofia and many others.Pravetz Golf and SPA Club will also be presented for the first time. The projects includes a gold course, a hotel and adjacent properties. European Trade Center Sofia will also make a debut during BalPEx.The event sponsors are RE/MAX, Bulgarian Properties, Home for You and Hercesa International. Source: Profit.bg

Bulgaria Boasts Highest Real Estate Price Growth Globally in Q2

Bulgaria retained its number one spot in the Knight Frank Global House Price Index with a 32.3-percent year on year growth in real estate property prices in the second quarter of 2008. Real estate property prices in the country marked a 32.3% year on year increase in the first quarter of the year. Global house price inflation continues to slow, with annual growth standing at 4.8% in the second quarter of 2008, down from 6.1% in the previous quarter, Knight Frank data show. Prices are now falling in almost half the markets listed in the Knight Frank Global House Price Index. Nevertheless growth rates in double figures are still being recorded in eight markets - Bulgaria, Slovakia, Russia, the Czech Republic, Hong Kong, Singapore, Cyprus and Colombia. The economies of central and south-eastern Europe appear to be the strongest performers, while northern Europe (including the Baltic States), together with the United States, are suffering the most. The Knight Frank Global House Price Index shows that global house price inflation is continuing to fall back, with much of continental Europe now seeing low or negative growth, according to Nick Barnes head of international research at Knight Frank. Bulgaria is at the head of this list, where values have grown at 32.3% over the past year, and have now risen by 68% over the past two years. Admittedly this occurred from a low base, but demand from international investors and domestic economic growth remain strong, although there are fears of oversupply, particularly in the resort locations. Strong performance in Slovakia and the Czech Republic is also driven by robust economic growth. The rapidly depreciating housing markets of the Baltic States – led by Latvia, where prices fell by 24.1% over the past year, demonstrate that rising inflation and mortgage costs are real risks for the emerging economies of Europe. However, housing markets in countries such as Spain, Denmark, the UK and Ireland are all being severely challenged by the global credit squeeze. Country Y/Y % change in Q2 Y/Y % change in Q1 Rank Q2 2007 Bulgaria 32,2 27,1 3 Slovakia 31,2 20,5 5 Russia 26,5 53,7 1 Czech Republic 25,4 20,5 5 Hong Kong 25,1 - - Singapore 16,3 25,2 4 Cyprus 12,9 8 20 Colombia 12,5 12,8 10 Iceland 9,6 9,6 17 China 9,2 7,1 22 Australia 9 10,1 16 Belgium 6,9 11 12 Croatia 5,8 6,9 24 Austria 5,4 7,7 21 Italy 5,4 5,4 28 Canada 4,8 9,1 18 Indonesia 4,4 7 23 Sweden 4,3 10,3 14 Serbia 3,8 0,2 36 South Africa 3,8 15,5 7 France 3,2 6,8 25 Finland 2,8 6,5 26 Spain 2,4 5,8 27 Malaysia 2,2 11 12 Greece 1,7 4,2 29 Източник: Profit.bg

Obtaining Loan For the Purchase of Prefab Panel Apartment Gets More Difficult

Bulgaria's mortgage loan market was on vacation in August after the steep growth recorded in July. The lending was also affected in the holiday month, including the volume of the loans extended and their average size. The trend was witnessed in all cities across the country and may be attributed to the holiday season and the vacations of the banking employees. A considerable amount of the loan applications were not processed and will be reviewed in the start of the active season in September. August is a traditionally weak month for the banking system, according to Tihomir Toshev, executive director of CreditCenter. The smaller number of inquiries does not come as a surprise as we expect this slowdown to be offset during the most active period for the purchasing of properties, which is the end of the calendar year. All the declines mentioned today are for the month of August, while July was quite active, which actually means that the market has retained its normal pace, Toshev added. The activity in August was aimed mainly in the field of consumer lending, where nearly 40% of the extended loans were intended for residential property repairs improvements. The interest rates on loans continued to go up in August. This trend does not affect the market anymore, as consumers with stable incomes have been the most active for the second month in a row. The good news for the market is that many customers are more cautious because of the global credit crisis, which reduces the risks for both parties. The type of properties bought with bank loans is indicative of this cautiousness. The share of pre-fabricated panel apartments declines at the expense of apartments in new brick buildings. A total of 74% of the loans in August were extended for the purchase brick apartments, 20% of the loans were extended for the purchase of prefab panel apartments and 6% for other type of properties. This comes as a result of the banking criteria (the repayment term of the loan combined with the age of the prefab panel apartment should not exceed 50 years) and the forecasts of real estate agencies that the prices of prefabricated panel apartments will go down at the expense of the newly built properties with good location. The average size of the loans extended in August stood at 47,351 euros. Mortgage loan repayment term – Aug 2008 Up to 10 years 4,08% 10 to 15 years 16,32% 16 to 20 years 28,57% 21 to 25 years 20,41% 26 to 30 years 20,41% Over 30 years 10,21% The share of the loans extended in Bulgarian currency went up to 21% in August but this is only temporarily, according to CreditCenter's experts. City Avg loan size in euros Ratio euros/leva % Sofia 68730 92/8 Varna 47952 73/37 Bourgas 44880 85/15 Plovdiv 43357 83/17 Stara Zagora 34500 85/15 Rousse 38555 53/47 Blagoevgrad 32600 81/19 Veliko Tarnovo 35500 76/24 Pleven 32100 75/15 Dobrich 41657 80/20 Kardjali 25385 90/10 Sliven 23122 75/25 Yambol 26290 46/54 Източник: Profit.bg

At. Garov: Client Shift Witnessed on Holiday, Investment Property Markets

Profit.bg talked to Atanas Garov, managing director of Colliers International, about the condition of the real estate market in Bulgaria, its short-term development prospects and whether the supply has shifted towards another group of clients, different from the ones from the western countries: Mr. Garov has the slowdown of the economy in Western Europe affected the real estate market in Bulgaria? The slowdown affected the domestic real estate market a long time ago but not all its segments. There was a price correction in some of the segments before the slowdown in Europe. For example the holiday properties market. A lot of segments of the market, such as the letting of commercial centers, the office space markets and logistics properties are developing well provided the present market conditions. One could say that the market niches where the deals are sealed between an entrepreneur and the end client have not been disrupted by the crisis (with the exception of holiday properties). The only market niche that was affected directly by the global trend is the investment market. There is a slowdown in the number of deals and a price correction at present. After all, this is a market that depends directly on the external factors for the country. On the other hand market segments, such as commercial space, offices and logistics and to a certain extent residential properties, which rely on domestic demand, have only been slightly affected by the recession. Have foreigners started selling properties in Bulgaria already? Colliers does not specialize in the sales of holiday properties (where foreigners own most properties) and unfortunately we cannot comment on this issue. What are the optimistic, realistic and pessimistic prospects before the real estate market provided the recession concerns in the leading euro area countries? Optimistic: The interest rates in the euro area drop to their levels prior to the crisis in the next quarter. The volume of deals sealed on the investment market rise considerably, which prompts more sales to end clients. Pessimistic: Interest rates retain their current levels in the long term. Similarly to the dotcom boom the interest and the clients shift to other sectors, such as alternative energy production and agriculture. Are there companies in the sector that have shifted to another group of buyers, different from the ones from Western Europe? This issue may be discussed from the standpoint of holiday properties and investment properties. There is a shift on both segments, however. Russian buyers are showing interest in holiday properties. No clear shift may be outlined on the investment properties market yet due to the decline in the volumes but Middle Easter companies have been showing interested in Bulgaria and Southeast Europe recently.Source: http://profit.bg/index.php?cid=4&sid=0&aid=4470&sec_name=LATEST

German retailer Lidl starts construction of Bulgarian outlets

German retailer Lidl will start building a pilot outlet in the city of Lovech, Northern Bulgaria, said the company. Work on another five outlets will begin by the end of 2008 to be followed shortly be the launch of construction of as many Lidl stores. The retailer hopes to have 10-12 operational outlets here by 2010. The company will also invest in a distribution center. It has bought the site for the center but did not specify the location. Lidl is part of Schwarz Unternehmensgruppe which already has a retailing business here through the Kaufland chain. Market research outfit Planet Retail recently said the discount retailers are expected to own 4% of the Bulgarian grocery market. The local retail market will soon welcome a further two new entrants, Penny Market and Plus.

Household deposits continue to be biggest resource available to Bulgarian banks

Household deposits continue to be the biggest resource available to the local banks, accounting for 36% of borrowed capital in the system, shows data of the central bank on the balance sheet of the industry by late July. In a month, Bulgarian households deposited a further 480 mln levs to bring their deposits to 21.3 bln levs by the end of July. Corporate deposits added 538 mln levs in a month to 20.5 bln levs. Those two segments increase by a monthly 1.6% the size of borrowed funds. Their month-on-month growth rate is close to that of banking assets. The balance sheet assets of the banks rose 1.8% in July to 66.9 bln levs. The banking assets have increased by 37.9% (or 18.4 bln levs) in the past year. Five of the biggest local banks managed over half of the sector's assets by the end of July and retain their market share month-on-month at 57.5%. Credits and receivables (including financial leasing) rose to 52.8 bln levs or 79% of the sector's balance sheet. Corporate credits increased 2.9% month-on-month to 30.1 bln levs while retail exposures added 3.7% to just over 16 bln levs. The year-on-year growth of the corporate and household portfolios is 52.4%. The end-July profit of the banking sector rose 38.2% year-on-year to 842 mln levs.