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

Homebuilding in US at 17-year low

The number of homes and apartments being built in the US sank in July to the lowest level in more than 17 years, government figures show. Builders started work on 965,000 properties, on an annualised basis, from 1.08 million in June, the Commerce Department said. However, this was not as bleak as some had been expecting. Separately, inflationary pressures saw US wholesale prices shoot ahead by 1.2% in July - its fastest pace in 27 years. Core inflation, which strips out energy and food costs, climbed by 0.7% from June, the Labor Department said, well above the the 0.2% rise which had been forecast. The rapid wholesale inflation seen in July was largely linked to energy costs during the month, which saw crude oil hit a record price of $147.27 per barrel, sending petrol prices soaring. But there are hopes that prices rises will abate, now that the price of oil has fallen by more than $30 per barrel. "Though commodity prices have come down significantly from record highs in mid-July and the dollar has strengthened, consumers can still expect to see increased inflation for some time to come as the producer price pressures feed through to consumer prices," said Arek Ohanissian, an economist at the CEBR. Grim Economists have been studying forward-looking information for signs that the US housing slump was past its worst. However, the Commerce Department data made for grim reading, with the number of construction permits issued - seen as a reliable sign of future activity - down 17.7% on an annual basis. And the number of new homes being constructed last month was down by 39.2% compared with July 2007. "The continued weakening of the housing market is an additional pressure and households will feel further squeezed in terms of real disposable income," said Mr Ohanissian. He said that "given this state of affairs and the general weakness of the economy" the Federal Reserve was likely to keep interest rates low at 2% - despite rising inflation.