2014 Sofia property market:

The Sofia property market is by far the most buoyant and stable in Bulgaria: driven almost entirely by local residential demand, the need for property is consistent and growing. Although there are very few viable buy-to-let investments thanks to low rent and virtually no foreign interest, the consistency of the general public’s requirement for housing provides far greater stability than in previous boom years. Prices are down by 35% from their peak, the smallest loss anywhere in Bulgaria since the crash, a typical trend for any capital city. Average sale prices across the city is stable at 749 Eur /sqm (National Statistics Office), still just high enough for developers to build and sell with a marginal profit, thus fresh supply continues to come into the market. Although most of what is advertised is available at yesteryear asking prices these can be entirely ignored, the remainder of available property which is actually at or around the market level is now for the first time a dropping in volume.

Possibly this is connected with the bank’s steady reductions in depositor’s interest rates (from 11% in 2009 now down to 3% in 2014). Those cash rich who seek alternative forms of easy low risk return have slowly turned back to property to achieve 4-6% from tenants with prospect of future potential capital gains, thus adding to the steady demand. Possibly it has been helped by the return of liquidity in the mortgage market, but certainly the most staple trend remains whereby rural families collectively acquire a Sofia property for their son or daughter to live in during their studies or early career, this common culture show no signs of slowing and remains the most prevalent demonstration of stature and status. In any event, it is an entirely home-grown domestic recovery uninfluenced by influx of foreign money, support, marketing or buyers, thus the Sofia property market offers an exceptionally stable platform right now, no professionals are expecting or speculating on price decrease at this stage, but likewise few are suggesting prices are close to making any significant gains.

Typically the properties that sell the most frequently are the smaller less expensive 1 bedroom units in newly built buildings within the commuter zones, which are most commonly around 650-700 Euros /sqm furnished. Budgets of 40-55,000 Euros are commonplace and 1 bedroom properties falling within this bracket are quickly changing hands. Larger 2 bedroom apartments tend to stay available a lot longer, but do sell up to 65-70,000 Euros at best. Excessively large properties with higher values are seldom sold, those unique with huge open spaces, extremely central, with excessive balconies or gardens are miss-fitting with the current demand and generally cannot, at the moment, achieve their true worth on the open market. Any luxurious property that is above 900-1000 euros / sqm out of the central districts typically needs to wait for another era in this market before it can realistically sell for a value satisfactory for the owners.

Rental rates are generally steady, only in pockets have we seen increases where new metro stations or shopping malls have opened. Likewise we have seen a fall in areas such as Ovcha Kupel where new buildings are popping up every few months causing over supply and excessive choice in the area. A classic example is Capital Residence complex where tenants have strong positions to demand rent reductions, repairs, repainting etc, when declined by landlords the tenants quickly move given the considerable choice and high competition.

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2014 Bulgarian ski resort markets – Bansko, Pamporovo, Borovets:

The ski resorts have been the worst affected part of the Bulgarian property market: no recovery or improvement has been seen in the past 4 years. Prices in Bansko remain around 350 Eur /sqm by the gondola, 300 Eur /sqm in the town and 250 Eur /sqm on the outskirts. Prices by the golf course are static at around 200-250 Euros / sqm at best. The general rule of thumb is that in Bansko studio sell for 8-12,000 Euros, 1 bedroom apartments from 15-20,000 Euros and 2 beds from 22-25,000 Euros. Very little above 25,000 Euros gets any attention at all. Apartments by the golf course rarely sell, but when they do 1 beds are from 10,000 Euros and 2 beds from 20,000 Euros.

Generally, the volume of sales on Bansko is not thought to be more than 20-30 apartments per month, which is a collective figure from all local notaries. With thousands of units available the chances of selling quickly stack up against any one individual owner, but unlike other areas there are sales and so if you want to sell you must list with a proactive international agency with comprehensive Russian marketing. Unlike the rural areas there are almost no sales to local people, the demand type is entirely different in the ski resorts. There are still international buyers, the vast majority Russian seeking a second mountain property having already bought in the sunshine on the coast. There are a lot of rumours of Greeks buying a lot of property in Bansko, but in our experience these are only rumours and Greek sales represent no greater significant volume than any other nationality.

Sales in Borovets and Pamporovo are almost non-existent as far as we can see, at least the volumes in these areas are insufficient for any international firm to maintain a marketing coverage and capability in these areas. Should you be looking to resell in these resorts our best advice is to seek a small local agency, perhaps staffed by those who live locally and thus maintain minimal overheads needing only need a few sales per year to survive and continue business. That type of company setup is more likely to find passing buyers who enquire in the resorts for available property, rather than searching online as a result of expensive mass marketing. There are no professional valuation figures available for these resorts as there are so few sales to judge and compare by, best estimate is that you should consider the current value to be 80% less than what was originally paid and ask for not more than 200-250 Euros /sqm.

Certainly disbelieve any ongoing internet hype regarding additional gondolas in Bansko, extensions of the ski slopes or new local airport, similarly the restarting of the Super Borovets project and new money from Qatar to fund it. Sadly these are currently merely rumours backed by no real money or intentions. Ultimately there will be further development and prices will recover, but no one is seriously expecting that within the coming 5 years.

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One to watch if trying to sell your property in Bulgaria, interview with Christophe Gater of New Estate regarding the current state of the market for foreign owners.

An refreshingly honest interview on the Bulgarian property market with the Managing Director of NewEstate, Christophe Gater. Critical viewing for all vendors who are actively considering to sell their Bulgarian property. See below a synopsis of the key points.


Christophe, is it possible to sell property in Bulgaria in the current market

Yes, definitely, but really it depends on the location.  Urban areas such as Sofia benefit from consistent domestic demand,  although sales take longer in Varna as demand is lower, needs more time and more marketing. The touristic areas such as Sunny Beach and its surrounding satellite towns such as St Vlas, Nesseber and Ravda are absolutely buoyant with foreigners till buying a lot of property there.  Inland rural areas are suffering the most, sales there are static. Ski areas such as Bansko and Pamporovo are suffering considerably, but sales are still possible in Bansko

 There are many myths in the market regarding Russians buying everything, is this true?

We hear the same myths too and really many are not true. Certainly there are Russians buying Bulgarian property, but they are not necessarily buying in the same way as people might think. They are not multimillionaires and the vast majority are totally regular middle class people with budgets of 30-40,000 Euros. We see sales up to about 80-90,000 euros but rarely more than that. Of course we also have Russian clients who have millions at their disposal, but they too, like everyone else, only pay the market price and nothing above that. Even when buying a top end property, it is still only at the top end prices.

How are Russian buyers different to any others?

There are indeed considerable differences, the greatest is that they buy because they personally like and enjoy a property in Bulgaria, they buy to use the properties not for investment. The furnish the properties to a personal standard, they typically are not interested in renting them out and having random holidaymakers sleeping in their beds. They are making personal lifestyle purchases and not investments, they are not concerned with the increase in value or the expected future performance of the area. What the spreadsheet suggests is less significant to the current Russian demand for Bulgarian property.

You mentioned companies who charge for advertising, is that particularly common?

·         Firstly, NewEstate has no upfront fees, we follow the typical estate agency model and only charge a fee once we have done our jobs. If we  do not manage to sell your property then there is nothing at all for you to pay. Other companies have found the Russian market very difficult to enter, it takes a lot of marketing and funding, as such they have turned to charging vendors for listing and ‘marketing’ property instead. Sadly this is all that they sell, they do not actually sell any property, it is their only business.

What sort of advice or suggestions do you have vendors who are thinking about and researching agencies to sell their Bulgarian property?

I think vendors need to do their research thoroughly first before deciding on an agency to use, always ask for proven sales record and see what marketing power the agency actually has. Ignore asking prices and ask for sales prices, see what they invest into their marketing and if they are really able to performing when trying to sell your property in Bulgaria.

NewEstate has sold several hundred properties, it could be suggested that some have been sold for low prices, what is your response to this?

We get asked by owners a lot, so we are used to answering. It can be shocking for some owners to discover today’s values, especially if they have perhaps spent 5 years away from the market and thus are not up to date with current data. The reality is that the market sets the maximum achievable price, not us. Anyone can under sell a property, but no one can over sell it.

Our offer to all vendors is the same, we do not charge them upfront fees, we market the property at any price you decide, no charge if we do not sell it, we simply find offers from real buyers in the marketplace, relay them to owners for their consideration. If they decide it is sufficient to sell then they do so, if not then the retain the property and we continue marketing, either are fine by us.

Is it true that agents use high pressure tactics to convince vendors to lower their asking prices?

Truthfully, owners do their homework and always come to their own sensible conclusions, it is easy enough to see what is professional advice and what is a sales pitch. We do not practise any pressurised sales tactics, we simply relay offers. The reality for us is that the buyers are hard to find not the vendors, as such if a vendor does not want to accept an offer we will 9:10 continue to sell that buyer another property anyway, so for us it is the same, hence why pressure is not needed and not applied. Other agencies do use high pressured tactics to get vendors to lower their prices, but this is of a limited effect and can only work on a small number. Our company requires a large volume of sales to continue operations, it is not feasible to apply so much attention to lowering prices when we can simply apply the same efforts to finding more buyers with a greater range of affordability and tastes, thus match them to at least one of our available Bulgarian property offers.

How did you see the market changing looking to the future?

·         It is still entirely a buyer’s market, but things are changing and we are not seeing prices continuing to drop as we have done over the past 3 or so years. There are green shoots of recovery and things will ultimately get better, but definitely not immediate, next year or the year after. We still see too much available stock for sale and still too many new vendors coming into the market, it still far outweighs the limited volume of buyers.  The good news is that we are seeing a greater diversity of buyers coming from different countries, with them comes a great diversity of tastes and requirements, which ultimately enables a greater range of people offering different sorts of property a better chance to actually sell.

So if I was looking to resell my property, how should I go about that?

Definitely do your research, 20 minutes on Google will present you all the serious players in the market. Take a look at each and make an informed objective decision between them. Consider that if you are a Russian looking to by a property you will naturally search a Russian search engine online such as google.ru or Yandex in your own language, you will not be likely to search goole.ie or .co.uk in English. As such, the sites you find as a vendor searching in English are not the sites the buyers need to find in Russian. If the company you find lacks real Russian capability, just move on, there are many out there who have it.

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Price of Bulgarian Holiday Property hits new low.

Whilst there are good signs that Russian demand remains steady, with indications of increase, the real catalyst continues to be the ever dropping prices of property offered by British and Irish vendors. Speculative reports suggesting that ‘market recovery has begun are overly optimistic’ says NewEstate, a professional Bulgarian property consultancy.  It is misleading to think that because more Russians want to buy cheaper property that Bulgarian property will suddenly become more expensive, the demand pattern is entirely down to the price and truly disconnected from the raw value of land, rental returns or profit from property investment etc. Much like the Christmas sales, people will buy more when stock is available ‘cheap’, when the price goes back up the demand slows and normal spending returns. Pockets of Bulgaria’s holiday property market are in such a ‘sale’ right now, with British and Irish owners controlling the ever lowering prices as they fight each other for sales, the trouble is that it is on a macro scale and could last years rather than seasons.


In this buyer’s market, it is apparent that the wide spectrum of Russian property media concurrently and heavily promoting the availability of Sunny Beach region property at entry prices; studios at 10-15,000 Euros, one bedroom apartments at 25,000 Euros and two bedrooms from 35,000 Euros. As with any marketing, it only exists to have a commercial impact, in this case and at these prices the result are floods of individual enquiries all amassing to collectively and repeatedly ask for property options only at these levels. Agencies relay the demand patterns to the British and Irish vendors and as with any market where supply is bigger than demand only the lowest priced vendor wins. In this market, this lowest bid has become lower than 6 months ago, simply put apartments sold 12 months ago in early 2011 could not achieve the same values today.


Bulgarian property market shifts show that 80% of property transactions are now below 40,000 Euros. Anything grand, impressive or more expensive will be within the minority of deals above 55,000 Euros, which is seemingly the revised ceiling price for ‘bigger spenders’.  Above 55,000-60,000 Euros the chances of selling are unfortunately minimal, even if your property is worth that much by todays’ lower rates it nominal value puts your property into the scope of less than 15% of buyer’s affordability.

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Bulgarian Property Prices drop further in 2011.

According to the National Statistical Institute, prices of property across the nation dropped by 6.1% on average throughout 2011.


Amongst the most severally effected districts were:  -6.9% in Pernik (just outside of Sofia), -8.3% in Motnana (north of Sofia) and -4.9% in Yambol (Southeast Bulgaria).


As a whole, the average per sqm prices in the major urban areas are now:


Sofia:                     745 Eur / sqm

Varna:                   747 Eur /sqm

Bourgas:              597 Eur /sqm


Data relevant to foreign owners of property in tourist areas of Sunny Beach and Bansko are less clear, however these are expect to as follows:


Sunny Beach:     475 Eur /sqm

Bansko:                                330 Eur / sqm

So how is Bulgaria’s property market faring by comparison to other European nations?

  • Netherlands -5.20%
  • Portugal -6.77%
  • Slovak Republic -7.94%,
  • Warsaw, Poland -7.95%
  • Spain -8.41%

Prices are expected to decrease further still in 2012. Foreign owners can expect the same level of Russian property buyers to prop up demand along the coast. However, the volume of competition / new vendors shows no signs of slowing, thus the chances of selling decrease as the volume of supply, stock and desperate vendors continues to climb.


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Letting in Sofia-Market Report 2012

Sofia Lettings Market Report 2012

Through the course of 2011 we have witnessed a welcomed stabilisation in the lettings market, a return to more regular market forces and a healthier consistency in the rental rates. Although most owners still find returns disappointing it is clear to us that the rates have stopped falling for a variety of reasons, indeed in some areas we have seen gratifying and long awaited increases.  This article considers the recent shifts and trends in the Sofia lettings market, the effect of migration and population changes, recent occupancy rates, the benefits of basic furnishing to cater for the current demand, why tenants rent instead of buy and all the key impacts these factors have upon foreign landlords.

Mortgages and affordability of buying, its impact on the lettings market:

In most parts of Europe the culture of owning one’s home or getting your ‘foot on the property ladder’ is commonplace, family-centric philosophy regards it as key to personal financial stability and future financial gain. However, to take example in Sofia; the cost of buying a 50,000 Euro 1 bedroom apartment apartment based on a 10% deposit and a 25 year mortgage, repayments would be in the region of 350-380 Euros / month + maintenance costs. Whereas to rent this same property, furnished, with no further outlay and no risk to the occupier, the cost is 250 Euros /month. One might argue that any tenant’s real risk is that not having ownership denies them any chance of capital appreciation or profiteering. However, by costing an additional 40% per month it is hard to see the benefits of ownership right now, between the extra expense and the risks it is not commonly regarded as beneficial by younger first time buyers. The end result is fewer tenants ‘progressing’ to become owners, thus their rental demand doesn’t evolve into buying demand and over time this causes natural growth in rental demand.

Naturally the situation was different before; the same apartment cost 450 Eur / month to rent in 2006 and thus investing and owning made much more sense, but today’s rental climate is wildly different and a lot more affordable. With a constantly growing pool of tenants with minimal incentive to own, this is unlikely to change until prices go up (allowing landlords to sell and exit the rental market, incentivising the benefits of ownership above tenancy) or lending goes down (making ownership more affordable to current tenants by comparison to renting). Combined with the expected migration trends (see below), the lettings demand looks to be definitively progressive in both the short and medium term.

Migration, Population trend shifts and its impact on rental demand:

Bulgaria has the most negative natural growth rate of all countries in the world, according to the 2011 report by the United Nations Population Fund (UNFPA), it is expected to average just 0.7% until 2015 (2.4% is the minimum to achieve a sustained population figure). The population at the fall of communism in 1989 was just over 9 million, according to the 2011 census it is now 7.3million, however the UN projects that the Bulgarian population will be a mere 5.4 million by 2050.

So what does this mean for landlords? At first glance it is frightening; less people means less demand and a future dominated by stagnation or an oversupply of properties. However, the most likely scenario is that rural decline will account for much of that population shift. Unless agriculture begins to re-employ people in rural areas, many villages across the country will become ghost towns similar to those resulting from America’s gold rush era.  With an aging rural population and very little reason to improve rural infrastructure and opportunities, young people will continue to migrate out of Bulgaria entirely or be drawn to the opportunities and lifestyle of the bigger cities within Bulgaria, with Sofia being the main recipient of this movement.

Two thirds of Bulgaria’s population now live in cities; Sofia’s population grew by 10% in the last decade as a result.  Sofia is now the 12th largest city in Europe, larger than both Milan and Munich.

All of this is good news for property owners in this capital. These are the shared reasons why so many new shopping malls continue to be built and heavy foreign direct investment keeps coming, surprising to some but actually Sofia is a much larger and more populace place than many expect. With any young population comes rental demand, typically at lower levels of affordability but solid demand nonetheless. The outlook for long-term rental stability for Sofia is excellent, any new and well positioned property is very unlikely to suffer vacancy if offered at the going market rate.


What has changed: supply or demand?

Simply put, the volume of fresh stock coming to Bulgartian property market has decrease dramatically. In any market, when the supply booms and the demand stays the same, the price inevitably falls. That is the succinct synopsis for the Sofia market for much of 2009 through to the end of 2010. The past year has seen that boom tail off as each owner came to their own conclusion; either to sell at the current rates and make a loss, to become a landlord and make a smaller than expected return or to leave it empty and accept the annual maintenance costs. Over the past 24 months almost every owner accepted one of these scenarios, as such less and less now rush to the lettings market which has notably stemmed fresh supply. Very few are still pitching at yesteryear prices in order to hold out for that allusive ‘breakeven buyer’, regardless of which their numbers are now insufficient to have a significant market impact.

We are no longer seeing ‘price jockeying’ within complexes; during a 9 month period from 2010 to mid 2011 we saw prices plummet due to the process exemplified below,  fortunately this is now rare.

Whilst owners remained in disbelief and the market in shock, price jockeying would take place on a micro scale within each and every complex. An apartment that once rented in the peak times for 450 Eur / month would become available and only rent for 300 eur / month, within a few weeks the tenant would complain that the apartment next door is available for less and they will move there if their rent isn’t lowered to match. They move, the original apartment remains empty and after a month or so an effective loss of 10 Eur / day motivates the landlord to lower his rate to 230 Eur / month, which will cost him less over the course of the annual tenancy than holding out for more. A new lower rate for the building is set and its impact is soon felt by all landlords, much to the pleasure of the tenants.

Meanwhile, these unheard of rates for newly built and newly furnished properties provided a considerable pull factor for new source of tenants across the city. Those who previously hadn’t been able to move out from their parent’s homes, from older communist buildings or who simply couldn’t afford the previous higher rates were suddenly able to afford options. Tenant enquiries increased dramatically within the low price bands, with so much new demand the market found its new balance at these revised lower levels.

However, it is also true in some cases that a number of tenants are still paying 2007-2008 rates. Most likely they are out of touch with current rates, disinterested or happy paying more, but whatever the reason there are many fortunate landlords who rented earlier and are still achieving yesteryear prices as their tenants continue to renew their tenancies at the original rate.  If you are such a landlord, be sure to address any and every minor complaint, repairs or concerns, keep them happy and accept that you are amongst the lucky ones achieving above what is possible if they moved out.

Have rental rates increased?

In short, in some cases yes they have. Unfortunately it is not true in the majority of areas or for the vast majority of landlords, however we can say with absolute certainty that in 2011 no rental rates decreased and 12% of owners achieved an increase. Of those rental rates that increased most were tenancies signed in early to mid 2010 when the market suffered over supply and subsequently bottom end rates, an average of 8% nominal increase was achieved for these owners bringing them out the worst of the dip up to today’s rates.
There is no real consistency in which apartments benefited from the above, some were at the top end, some at the bottom; the rule of thumb is better gauged by the date or period of the let rather than the amount or the property itself. In any case, tenants were served notice and rates increased within 30 days, around a third moved out refusing to accept the rate change, all were swiftly replaced with higher paying tenants.

The question everyone asks is when will market rates go up as a whole? Without a crystal ball is impossible to say with any certainty, the best indications are that prices will stay as they are with only pockets of increase for the next two years at least.  Such areas are only likely to be those below the average right now; areas dominated by incomplete building sites and poor road networks, or those that don’t currently have a local metro station but will soon. These infrastructure improvements naturally increase rates and are separate influencing force to those of the actual marketplace.

Occupancy Rates:

Looking at the past 12 months of our own data of more than 150 managed properties, we can see that at no point in the year did we have less than 97% occupancy. In real terms this meant that we never had more than 5 properties vacant, under notice or available on the market at any one time, the rest were always occupied and rent being paid.

In this buoyant tenant market there is absolutely no reason for any rentable apartment to be left empty, every property has its price and Sofia’s tenant spectrum covers every type of demand. If your agent is excusing vacancy due to market conditions, change them quickly.

From our industry perspective the strongest indictor for real occupancy rates is the ‘time to let’; the length of days that we have stock available from listing to rental tells us either that demand has changed unexpectedly or simply that the price is wrong. Hitting the right price and filling immediately is a constantly moving target for agencies and is entirely dependent on their knowledge, experience and marketing budget. In reality, this is why they have a purpose and a place in the market beyond the day to day management etc, to achieve the most possible income with minimal vacant days to get the maximum possible return for the owner and of course make a fee themselves in the process.  Any agent that is motivated by ancillary services, by furniture or kitchen sales, by exclusivity contracts, by the keeping the apartment empty to encourage you to sell or by making a management fee when the apartment is vacant is never going to achieve high occupancy.

Occupancy rates in 2010 were lower at 90%, time to let was greater at around 14 days average. It is a micro scale survey of an otherwise enormous market, but subject to the efficiency of a lettings company we believe it should be reflective of the whole market.

Top quality furniture, does it achieve top rates of rent?

It is logical to think that if a property is furnished to a high standard that it will rent for more. Nominally it stands true, but the reality is that it still proves wildly inefficient in terms of return on your extra investment. To take a real example of two neighbouring apartments in one high class complex:

Same size, same kitchen, same view; one contains 10,000 Euros worth of 5* furniture, a full complement of household items and electrical equipment, it rents for 350 Eur / month. The other is only furnished to 3* standard, total cost 2,500 Eur, it rents for 300 Eur / month. Accepting that rates will increase in tandem over time, the difference will still take 12.5 years to pay off and reach breakeven, only after that will it become viable to have invested 7,500 Eur extra. Not only has this amount been out of your pocket for the duration, not making any interest gains etc, but the furniture is likely to need replacing anyway. Furthermore, not many foreign landlords intend to own a Sofia property for much more than 5-10 years at best, the vast majority would decide to sell long before this point.

The real advantage of superior furnishing is that a tenant is much more likely to stay (costing less in agency placement fees), to look after the apartment, to pay on time and not want to leave because they can’t find the same standard for the same price. Whilst these are certain benefits, the financial return isn’t worthy.

Naturally, when pitched to an owner by an agent or furniture salesman on percentage commission, it does sound logical and make complete sense, ‘buy good furniture and see 16% increase in rental income’. However, they will always fail to mention that the ‘good furniture’ will cost you all of the first 2.5years of income and take more than a decade to pay off. It simple doesn’t fit the market right now, not enough people can afford to pay extra for quality and thus it is not worth your extra investment. Much better is to match your investment with the demands of today, increase your yield by sticking to what the bulk of demand can actually afford; 3* new furniture will more than suffice in almost every case for the Sofia market and return the highest available yield.  Don’t forget, your taste doesn’t count, you won’t be living there and even if the tenant would prefer ‘nicer’ looking furniture it is how much they pay you and how much the furniture cost that actually matters here.

We offer to finance all the furniture needed for any new rental apartment, thus no outlay is needed from the landlords’ pocket. Typically, any one bedroom apartment finished to 3* standard will cost 2,500 Eur in total. Furniture prices have tumbled in the past two years, in some cases from some producers by as much as 50%, this once expensive furniture market is no longer. However, for the high end complexes we can of course supply smarter Ikea style items to achieve the ultra-modern look, which costs around 30% more and is entirely up to the owner. Not only does this tact have the advantage of the owner not having to spend any money, but it also provides them with the complete reassurance that we too have invested in the success of their property, thus we are equally keen to get the property rented so that our costs can be recouped.


Expats and short-term lets:

The myth of wealthy ‘expats’ spending more than the real market price to rent a flash property that meets their ‘higher standards’ has never been less true. The available data suggests that there were 24,000 foreigners working in Sofia on a short to medium term basis in 2006, six years on and that number is now under 5,000. Of those that remain, it is largely accepted that these are now immigrants rather than ‘expatiates’ and most are likely to have settled for the longer term. In any case, they are much less likely to be the typical 6 month tenant willing to pay 1000 Eur / month because ‘that seems cheap by comparison to London’. Whilst there are of course some international tenants seeking higher class property and they have the deeper pockets to pay for it, they simply take the apartment for 350 Eur with the nice furniture, as given in the example earlier, instead of the one for 300 with the more basic furnishing (see above for the details of this point).

When a diplomat or a MNC manager does require an affordable apartment instead of an expensive hotel room, there are indeed some fortunate landlords who get to rent to them at higher rates. However, the chances of them staying for more than 3-6 months are very limited. Generally the months of having a vacant property, waiting for the next expat to pay top dollar, will mean that over the course of any year your average net income is either the same as or less than renting at a market rate to a full time domestic resident. During that time your risk is larger as higher spending expats are inconsistent as a source of tenants, you never know when the next one is coming, not to mention your cash flow is effectively on or off which is never ideal for anyone with a mortgage or loan repayments.

The article is prepared by Christophe Gater one of the directors of the leading Bulgarian estate agency New Estate Bulgaria.

New Estate Bulgaria contatcs here

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Selling Bulgarian Property; from British and Irish vendors to Russians buyers, Sunny Beach 2011.


As the 2011 summer draws to a close it is possible to offer preliminary analysis of recent property market movements. New sales trends can be seen across the Sunny Beach region, the impact of which is directly relevant to vendors who are looking to sell their Bulgarian properties now or in the near future.  This article describes the changes in current demand and considers the reasons behind it, the key difference between Russian buyers and British/ Irish owners and their resultant property choices.

Current Supply and Demand:

It is widely reported and commonly accepted that the significant majority of buying demand is from Russia and ex-soviet states such as Armenia and the Ukraine, meanwhile the vendors are largely from the UK and Ireland. In our experience, very few sales happen for Bulgarian developers / vendors at this time and as such the market is now dominated by international resale rather than for ‘new / offplan’ properties. Whilst prices are down by as much as 50-60% from their peak, buying trends are now very different from before and this is likely to explain why a property is or is not selling at the current time.

The Shift in Demand by location:

Despite great effort and vast marketing expense, there is currently a minimal level of demand for central Sunny Beach properties; less than 8 in 100 enquiries ask for apartments in the main built up area. Although this encompasses a considerable range of quality and complex types, the overwhelming truth is that Russian demand is seldom interested in buying there. Much more common is the request for waterfront properties, or at least those with a sea view in the quieter, lower density, more family orientated zones.  St Vlas, Nessebar and Ravda are the repeatedly sought after locations where good properties can again be considered as liquid assets (when available at the market price). Areas such as Pomorie, Aheloy and Sarafovo come notably further behind, but still ahead of central Sunny Beach.

We have seen the stabilisation property price that fit current demand, i.e St Vlas marina side properties for 600 Euro /sqm, meanwhile those in central Sunny Beach fail to attract attention at 450 Eur /sqm, thus continued price decline and increased availability in that area is inevitable.

Russian buyers have different motives, cultural traits and desires:

Because almost all vendors are from the UK and Ireland they share many mainstream cultural norms. Most were driven by the same key motives of buying cheap in a purportedly emerging market for investment purposes, to make money from rental income and achieve growth in value. As such, purchase decisions were made according to fiscal aspects of the property as a priority rather than the aesthetic appeal, views, comfort, longevity, quality etc. Very few owners actually use their properties, many have never seen them at all.

The Russian demand is naturally keen to always pay the best price, there is no doubt that the middle market that Bulgaria caters for is a long way from the rumours of oligarchs and multimillionaires;  average budgets are 35,000 -55,000 Euros and seldom more. Rarely are these buyers interested in rental income, growth or future potential value, nearly all Russian buyers are purchasing a lifestyle product to use and treat as a second home and never solely for investment. This means that the specific property has to meet the personal requirements, desires and tastes of the buyer and that this always comes before the cost. Whilst price, rental income and expected growth are relatively easy to feature on a spreadsheet, compare and sell (which largely formed the process for selling to the British and Irish), it is not the same methodology for the Russians. Outright blind buying does not exist, almost all come for viewings and many come several times before finding what they want. This pushes up the cost of selling and means that any one property is likely to be seen many times before finding a new owner who wants to pay for it.

Beyond these properties being second homes, the Russian demand often views such acquisition as future family security. Frequently regarded as a doorway to life within the European Union, Bulgaria does not only offer a nearly comprehensible language, affordable property, similar culture and sunshine, it also offers extended visa rights to those who own property and thus extended time within the EU. Our experience shows that almost every buyer also enquires to achieve fulltime residency, many proceed and attempt to achieve a ‘right to reside’ despite the expense, in many cases it can be 10% of the property value per person.

Nearly every Russian enquiry specifies ‘not ground floor and not top floor’. Although many owners paid high prices for ‘penthouse’ views, the reality is that top floor locations are tough to sell to Russians (and Bulgarians alike) as they not considered so desirable and worth less according to their tastes. Whereas the Brits typically find Victorian loft conversions and top floor locations endearing, generations of Russian communist style blocks with notorious leaky roofs, damp and intruding sloppy ceilings have been a catalyst for the opposite opinion. The result is that top floor properties often sell for less, much to the dismay of current owners. Ground floor is a similar story and whilst generally acceptable to most holidaymakers for a week at a time, Russian owners buy to spend 3-6 months at a time and thus often rule out ground floor straightaway.

The enormity of the buyer’s market that is the Bulgarian Black Sea at the moment means that no matter how particular a buyer’s demands and requirements, for sure they will have multiple options, a healthy choice and competitive selection at low prices. Unfortunately, this is the reality of the market at the current time.

Your opinion of your own property is irrelevant, the buyer is always right:

The vast majority of listed properties are advertised at a price of the owner’s choosing. In many cases this is because the agency is only selling ad space and not properties, thus the price is whatever will keep the owner happy, in other cases the price is set by ‘what the property owes’ the owner. Neither have any connection to the reality of actual achievable sale price, both are determined by personal desires rather than actual demand and market forces. The result is a vast ocean of overpriced adverts which never sell and only serve to confuse new owners who come to the market and use them for comparison.

It is worth keeping in mind that any advert/ website you might see in English is only there to attract more British and Irish vendors, not Russian buyers. Don’t be fooled by self-professed pricing, certainly no agents are investing their own money into marketing your property in Russia if it is not at the real market price, what would be the point.

Many vendors make the mistake of considering their property from their own point of view with a bias towards believing it was their best choice at the time of purchase, thus someone else must agree and pay for it. A fair point of view if you are assimilated with the likely buyers your property, but unfortunately when the demand is from a vastly different culture, buying for very polar opposite reasons with wildly different motives and thus so are their tastes and subsequent property choices. The obvious truth is that one’s personal opinions of properties mattered (as far as sales go) when deciding which property to purchase, however as an owner and a vendor these opinions are irrelevant and surpassed by those who are spending today.

For any questions relating to this article or the market as a whole, please contact the author; Christophe Gater, www.newestatebg.com , +442079934197.


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Irish and British owners desperate to sell their properties in Bulgaria

According to a recent survey by leading property consultancy NewEstate Bulgaria Ltd, approximately half of all British and Irish property owners are considering the resale of their Bulgarian property. On average NewEstate is contacted by three hundred Bulgarian property vendors every month, most hear for the first time that their property is now worth less than half of what they paid, says Christophe Gater of NewEstate Bulgaria Ltd.


The bulk of enquiries come from coastal owners where Russian demand allows vendors the opportunity to offload their assets at the currently low market price, unfortunately the same is not true for the ski and rural areas where sales are still seldom and prices considerably depressed. This year, 95% of NewEstate’s sales along the Black Sea have been to Russian buyers, who form only about one third of the original market demand that the British and Irish did in the peak of 2007. The result is a vast buyer’s market where there are thought to be one hundred properties for sale for every one serious buyer.


Whilst the whole market awaits price increases and signings of forward progress, the reality is that with such vast stock availability and excessive volumes of ‘distressed vendors’, it is unlikely to happen soon as supply is likely to far outweigh demand for the foreseeable future. Owners face a simple choice; sell now at the current market rates, or hold on for several more seasons and hope the Russian demand continues to prop up the market.


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Looking to sell your Bulgarian Property to a Russian? Is the Russian demand real, what are they buying and how much longer will the wave last?

Everyone connected to or interested in the Bulgarian property market has heard of the elusive Russian buyers, who are said to be acquiring swathes of top end property. From comprehensive first-hand experience, this article allays the myths and offers the direct honest truths of the Russian demand; why it exists, what is keeping it going and how long it might last. If you own property or are considering selling, this article will help inform you of the current market conditions, movements, trends and catalysts behind this property bubble.

First and foremost, the wave of Russian interest in Bulgarian coastal properties is not marketing hype, it is absolutely real and currently the only positive movement propping up the Bulgarian holiday property market. Sadly it is not true for all areas, only the Black Sea region and some rural parts inland from the coast are in demand. Although many sales agencies will conveniently stretch this truth to also cover Sofia, the ski resorts and rural villages to encourage vendors to buy their advertising services, it is actually not the case as only 5-10% of Russian enquiries are for areas away from the coastline.

Quick overview of demand shift and price movements:

Bansko is an unfortunate example of what happens when steady demand suddenly leaves a property market and is not replaced, prices plummet and regardless of extremely low values it can be impossible to sell as there are simply no buyers. The coastal areas of Sunny Beach, Varna, Bourgas, Byala etc have all experienced the same sudden exodus of British and Irish interest. However, the Russian demand has replaced much of it and whilst prices are down they are not rock bottom as they are in the ski areas. The key fact to consider and accept is that whilst property losses feel bad for all of us, it is at least still possible to sell coastal property and collect a return. Ultimately, the situation would be calamitous if Russian demand hadn’t suddenly swept in and saved the day, at least in part anyway. This shouldn’t be taken for granted; if you are looking to sell anytime soon it is worth considering your losses now could be minor by comparison to the potentially greater losses in the near future if the Russian demand fades too.

For a fuller understanding, it is worth noting the critical differences between the bygone era of British and Irish demand by comparison to the new wave from Russia buyers of Bulgartian properties: 1) they are in significantly lower numbers, approximately a third at the very most 2) the demand is almost entirely for coastal finished properties, nothing off plan or semi complete 3) the market now hosts foreign private vendors (for the first time) in their thousands eagerly competing to sell at lower prices than ever before.

All of these factors have led to a typical ‘buyer’s market’ where prices are low and anyone with the money and intention will find themselves a choice of bargains. Furthermore, we have seen the rate of new properties coming to market at consistently lower values increase month on month from the start of 2011. The volume of private British and Irish vendors is so vast that it actually acts as a market catalyst; the constant flow of cheaper properties continuously replenishes the marketplace encouraging more Russian agents to sell less expensive properties, subsequently more is invested in advertising, more Russians become aware they too can afford a cheap sunshine property and hence the demand bubble expands.

Normally when demand increases there is a lag and prices soon follow, not in this case as the supply (property stock) is excessive and thus massively disproportionate to the demand. Furthermore, the bulk of foreign owners are predominantly driven to sell at any price due to financial constraints in their country of residence. This inescapable macro level motivation has impacted owners and their families on a nationwide scale, as such what started as a trickle of vendors has become a torrent. The end results is that the real transaction prices come down across the board (not just in one or two cases), as ‘distressed vendors’ come to the marketplace in bulk and take whatever they can get to offload their overseas asset and fulfil their financial priorities back home. The overall impact is increased market movement, an escalation in the volume of sales and thus an improved opportunity for vendors to sell, but no increase in actual values.

To put it in the favoured terms of British newspapers; only those distressed vendors willing to sell at ‘below market value’ will succeed in finding a buyer at this time, those holding out for ‘market value’ or for what they originally paid will still be holding out for possibly years to come. The simple reality is that in Bulgaria today the real market price is the ‘below market value’ and actually if you have a property in Sunny Beach you are not giving away a bargain at 500 Eur / sqm, you are selling at the highest achievable market value today. If this is no enough for you, keep it, rent it and forget selling for the time being.

Future for the Russian demand:

Whilst there is no exact science for predicting these market movements, any active agent, owner or vendor would be foolish to think that it will carry on indefinitely. Much of the industry believes that 2011 will see the peak of Russian demand (and thus the best opportunity for vendors), whereas very few believe 2012 will produce the same influx of buyers and thus a level of decline is expected.

Like any growth curve of any product; we first see the pioneers who trigger interests and start trends, then the masses follow in bulk creating a boom or bubble, which is typically followed by numbers falling away and plateauing to a sustainable constant level or dropping and ending the product life cycle. If anyone could accurately predict this with complete certainty we would all be millionaires, but by following some general models, lessons from experiences and carrying out analysis of current market data we can come to a general conclusion. NewEstate believes that this year is likely to be the best opportunity to sell as the demand for the coming 4-6 months is almost certainly the highest it has been since 2007, whereas anything heading into next year is uncertain and at best suspected to be less. In addition, for UK owners the currency rate will play an essential role in your financial return, see below.

Currency exchange and the impact of the Pound on your Euros property.

Accompanied by the uncertainty of future demand we must also consider the currency variation for owners who have bought in Euros and will sell back into Pounds. To take a classic example; in 2006 a 2 bedroom property in Sunny Beach was purchased for 75,000 Eur which was then ?50,000 as the rate of exchange was 1.5 Euros to the Pound. Today the price of this same property is now 55,000 Eur following the drop in the market, however the exchange rate has dropped too. The rate is currently 1.1 Euros to the Pound, which means that if this apartment is sold for 55,000 Euros today then it would return ?50,000 to the owner’s bank account, thus no actual value loss in encountered.

The above is true when the Pound is weak against the Euro, as it has been for the past six months or so. Whilst currency traders could speculate forever over ‘true value’ the general feeling is that the Pound is worth 1.2 – 1.25 to the Euro, let us assume this is true for the purpose of this example. If Bank of England increases interest rates before the end of 2011 (which speculators agree is likely) then the Pound will become a more attractive investment, its value will increase and it will again become stronger against the Euro. If we assume it reaches 1.25 to the Pound (as it was just 12 months ago) then this same apartment will still sell for 55,000 Euros (the market sets the price, not the chosen currency of the owner), which will only return ?44,000. This is a 12% loss on the original investment and has nothing to do with the property market, this is exclusively down to currency rates and macro scale economies, yet the impact is absolutely on an individual scale and in this example shows that you could be 12% (?6,000) better off by selling this summer by comparison to next year when the Pound is reckoned to be stronger.


In this buyer’s market the phrase ‘your property is only worth what someone else will pay for it’ couldn’t be more true. The Russians are prepared to pay the current market price, it is up to each owner to decide 1)if this is enough for them to part ways with their property 2) if they can afford not to resell and review in 4-5years from now 3) if they would like to gamble on the Russian interest lasting until next Summer or the Summer after etc  4) if they would prefer to wait for their property to be worth 10% more when the market does recover, but risk potentially getting 20% less than toady’s rates in Pounds.

This article has been produced by NewEstate for the purpose of public information, for any questions relating to the content please contact the author, Christophe Gater at www.newestatebg.com .


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Valuation of Bulgarian Assets for Legal or Official Purposes.

There are many reasons why owners of property will not just require guidance on what their property could sell for, but actually an official written detailed valuation. These are frequently required from owners by numerous bodies including HM Customs and Revenue, divorce courts, tax accountants, insurance companies etc. NewEstate is a registered evaluator of Bulgarian assets and can provide the necessary stamped and signed written report to best represent your property’s value. Naturally, the figures will still reflect our opinion, experience and current market conditions, but the format will be official and has proven to meet the requirements from the institutions who demand it.

The Service:

We will visit your property to carry out a detailed inspection, take photos and report back to you with not only the amount it could be sold for but also an explanation of this value, local market activity, recent sales values and comparable offers in the area. Unlike our regular valuations, this will not be an email discussing the best advertised price, this will be a hardcopy report available in PDF and posted to wherever you would like.


Valuations and resale in the event of Divorce:

Most commonly we are contacted by lawyers or individuals involved in divorce cases where a settlement is being reached and a value established for a jointly owned or claimed against property. Should you be in this situation then it is worth noting that your solicitor should acquire the full consent of the other party if the property does not have your name currently on the Bulgarian title deeds. Despite being awarded the property in UK courts, you will need to go to additional expense in Bulgaria to have sole selling rights according to Bulgarian law. There is a legal process that can be undertaken to achieve this without the involvement of the other party (ex-husband or ex-wife), however it costs some 600 Euros and is unnecessary if the other party will consent to signing documents and cooperating with the selling agent / solicitor when a buyer for the property is found.

For all questions and enquiries relating to this matter, please visit our main wbesite www.newestatebg.com


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