Real Estate Market Marks Highest Growth

Bulgaria's growing property market has reached another record breaking year of investment, managed by a group of property investment companies delivering selected UK and overseas property and investment solutions, Sofia news agency reports.

Around 250,000 homes are expected to be sold and finalized by the end of the year. "The figures mark the former Eastern bloc country out as one of the principal growth property markets in Europe. At a time when most countries are seeing the growth of the past few years ebbing away, Bulgaria expects this year to bring a 28 per cent increase on the number of homes sold last year - which had also been a bumper year with 196,000 properties sold." Properties are expect to raise 15% more year-on-year, making it one of Europe's highest growth markets.

Source: Sofia News Agency

Bulgaria breaks property records with bumper year

Bulgaria's growing property market has experienced yet another record breaking year of investment, with around 250,000 homes expected to be sold and finalised by the end of this year.

The figures mark the former Eastern bloc country out as one of the principal growth property markets in Europe. At a time when most countries are seeing the growth of the past few years ebbing away, Bulgaria expects this year to bring a 28 per cent increase on the number of homes sold last year – which had also been a bumper year with 196,000 properties sold.

Bulgaria was also singled out this week by leaders in the real estate market at a major international forum in Vienna. Although investors are set to see prices slightly down this year, properties are still set to raise 15 per cent more year-on-year, making it one of Europe's highest growth markets.

After years of economic struggles in the late 1990s after the country transformed itself into a market economy, Bulgaria has experienced a resurging economic profile. It joined the European Union last year along with nine other countries under strict targets set by the Union. In the past few years, it has seen the economy expand for the first time in years, unemployment fall from highs of nearly 20 per cent and inflation come under control.

Investors are now being encouraged to take advantage of property opportunities while supply is still strong. After an all-time low of property purchases back in 1998 when the number of deals was only 65,179, the market is soaring thanks to foreign investment and the return of the Bulgarian diaspora, who went abroad to seek work during more difficult times.

"Bulgaria, together with Romania, holds significant potential in the commercial and holiday real estate sectors, where it is joined by Croatia. These will be the most prospective sectors for the next three years," the Sofia News Network quoted Deyan Kavrakov, head of Bulgaria's leading full service real estate companies ADIS, as saying.

Analysts forecast that price growth in the residential sector will slow down and to around 15 per cent next year. "We believe investments in real estate property in Bulgaria are really good and secure investments," says Gerhard Engelsberger, CEO of Immobilien Anlagenl. According to its website, the company is also developing a business centre in downtown Sofia and plans further investments in commercial areas.

Bulgaria at The Big Deals 2005 Real Estate Investment Forum, Vienna, Austria

Deyan Kavrakov was a key note speaker at a real estate investment congress in Austria, titled The Big Deals 05 which took place in November.

The Southeastern Europe is one of the most perspective regions for investment in real estate, the foreign experts agreed at a major international forum in Vienna.

“Bulgaria, along with Romania, holds significant potential in the commercial and holiday real estate sectors, where it is joined by Croatia. These will be the most prospective sectors for the next three years,” said Deyan Kavrakov, FRICS, CRE, CLHMS, CIPS, CEO of ADIS Ltd.

“In the office sector, demand is getting stable and marks an increase in the multifunctional industrial buildings, which house offices, production facilities and logistics.” Kavrakov said.

The Big Deals 05 investment forum, Vienna, Austria, was held for the first time, bringing together over 50 companies from Western and Central Europe.

Investment Transactions With Real Estate Seen at 1 bln Euro in '05

The final tab for investment transactions with real state and land properties in Bulgaria will come up to a billion euro by the end of 2005, local advisory firm Elta Consult said at the ongoing Construction and Investment Forum in Sofia.

The value of office, commercial and industrial premises transacted by the middle of the third quarter stood at 120 mln euro, said Elta Consult executive director Valeri Leviev. The investment deals with land plots make up the balance to 1 bln euro, he said, estimating that the real estate market absorbs 25% of all domestic investment.

Two Bulgarian companies will invest in a 50,000 sq m mixed-use building in the center of Bourgas, on the Black Sea, said David Davidov from real estate consultancy Colliers International, withholding the names of the investors. The development will include an underground parking facility, a supermarket and multi-purpose commercial premises. It has not been decided whether the rest of the building will house offices or a hotel.

ERG Capital II, undergoing licensing as an investment company, said it intends to spend 8 to 12 mln euro on a retail center in Stara Zagora. The built-to-suit development will have an area of 18,000-22,000 sq m.

Eurocapital Finance executive director Christos Mouroutis announced the latest project for a mixed-use building to be constructed in Sofia. The 100,000 sq m development, to be sited on the Slivnitsa boulevard across from Zapaden Park, will incorporate retail outlets, 2 cinema theaters and a medical center.

Source: Dnevnik a.m.

Coastal Construction Will Push Down Bulgarian Property Prices

Spending on property maintenance on Bulgaria's Black Sea coast during the past year has risen at a pace faster than the rate of increase in real estate prices. In one year, the price of property in the Varna region increased on average by 25 per cent, and maintenance expenses by 29 per cent. Specialists warned that excessive construction will push down property prices, making ownership unprofitable.

Tourism agency analysts said that Bulgaria has always been and will remain a destination for less wealthy West European tourists. Some of these foreigners might be interested in buying Bulgarian property. But if the tendency of high expenses continues, owners might be forced to sell their new apartments. Bulgaria remains an attractive real estate destination. The property sector has strong prospects, and transactions are likely to continue at the same frequency in the next year. Most of the investment, however, will be focused on business and industrial parks, rather than housing, Sega newspaper reported.

German tourists remain the biggest foreign group that visits the Bulgarian coast. The average tourism growth rate is 13 per cent, tourism agencies analysis shows.

Source: The Sofia Echo

Maltese realtor to market Bulgarian properties abroad

Maltese real estate agency Dhalia is vetting the Bulgarian market and building up a database of properties for sale, company executives said at a presentation held in Sofia on Monday, November 7.

The exclusive focus of the company's business in Bulgaria will be on selling properties like apartments, villas, country houses, land plots and finished buildings to foreign buyers, said CEO Franco Valletta.

The agency will start doing business in earnest here in early 2006, said Dhalia Bulgaria director Tanya Gocheva.

Dhalia will open a separate office for corporate clients in Sofia in the spring of next year. The company then plans to branch out into Varna and Bourgas, on the Black Sea, and Plovdiv, Bulgaria's second biggest city, setting up smaller offices in touristy areas with upside property market potential like Borovets, Pamporovo, Bansko, Balchik, Nesebar and Sozopol.

Over the longer term, Dhalia plans to expand into the whole Balkan region and beyond with an eye on the real estate markets in Turkey, Croatia and Morocco.

Source: Dnevnik a.m.

Greek Companies Turn to Bulgarian Real Estate

WIDELY represented in Bulgaria, Greek business has been turning to the real estate sector lately, realising the potential for investment in this field in the country.

Bulgarian Internet service provider Bitex, owned by EuroCapital Finance, in early October said it would get involved in real estate transactions and development. Thus, the company surprised analysts who might have doubted that an IT company would take on such a challenge.

Resources for the acquisition of property are being gathered by raising the company’s capital by 20 million leva through selling shares on the Bulgarian Stock Exchange – Sofia, where Bitex is traded.

EuroCapital Finance holds 87 per cent in Bitex and is taking steps to restructure the company into an investment vehicle. EuroCapital Finance itself has been active on Bulgaria’s real estate market with a property portfolio worth 10 million euro.

Bitex was registered in 1996 under the name BIT. In 2000, it was bought by US-registered Worldfast Communications Inc and renamed Bitex.com.

The strongest believer in Bitex’s future as a real estate company is Christos Mouroutis, who has been present in Bulgaria since 2000.

In 2002, he created EuroCapital Finance, where he is the controlling shareholder. With this company he succeeded in becoming the main consultant and investment manager for Greek investors in Bulgaria.

Mouroutis has managed about 100 million euro of new investment in 2004 and 2005 alone, and has created some of the most successful deals in the real-estate sector.

Today he is working in transforming the public company BITEX into a real estate investment company with about 20 million leva in new capital. He also aims to create a real-estate fund for investments in Sofia, together with other investors from Greece.

“When I came to Bulgaria and started dealing with Bitex, I already had good experience after being a major shareholder in e-Globe, a Nasdaq-listed company. The market in Bulgaria at that time, though, did not allow the investment to be deployed the way that my partners and I planned. So, it was by chance that I found myself creating new opportunities,” Mouroutis said in an interview with The Sofia Echo.

Mouroutis was the first Greek businessman to detect that property development would be a success in Bulgaria. The first project with which he was involved was the acquisition of around 150 000 sq m near Sofia Airport, by Promota Bulgaria. After acquiring the plots from more than 1100 small owners, he financed the acquisition, transformed Promota Bulgaria to a public company and organised the regulation of the new larger plot.

In May 2005, Mouroutis sold the company to the US-German company Tishman Lindner, which recently announced they would build the Sofia Airport Centre.

“The return for my investors after 26 months of efforts was more than 400 per cent on their equity, which was definitely worth it,” Mouroutis said.

Now, he is completely focused on Bitex’s plans to deal in real estate.

“The company has a business plan of acquiring high co-efficiency lands, regulating them and then giving them in contribution schemes to developers. We estimate risk close to zero, while the return in three to four years will be more than three times the equity involved. The property-investment fund is planned to entail 50 million euro and will invest in Sofia and Varna only,” Mouroutis said.

But, Bitex is not the only initiative by EuroCapital Finance and it will only add to other on-going and success-promising projects.

One of them is for building a large shopping mall on Evropa Boulevard in the western suburbs of Sofia. The company already owns 21 000 sq m there and is preparing to build around 100 000 sq m of commercial and office space. The architectural firm Chapman Taylor, together with local architects, will also be involved in the 35-40 million euro project. Another project on which EuroCapital Finance is working will be an office and hotel building near Sofia Airport.

“We can build around 30 000 sq m there and we intend to propose to Tishman-Lindner to co-operate on the site, while they develop the rest of the land with their Sofia Airport Centre,” Mouroutis said.

His confidence in the success of the many projects is backed also by other initiatives he has had in Bulgaria and by his strong belief in the country’s economic development.

“In Greece, as in many other EU countries, we have a serious problem – we can not find workers for the production facilities. Instead of using immigrant workers, many Greek producers have decided to look for relocation of their facilities. And what better place than neighbouring Bulgaria,” he said.

Mouroutis believes that in doing this, they are also helping Bulgaria to deal with the country’s unemployment problems. In 2005 alone, he and his partners have succeeded in moving five production facilities to Bulgaria, to create more than 1000 jobs.

Source: The Sofia Echo

BTC to Build Communications in Leading Realtor's New Complex

BTC, Bulgaria's former telecom monopoly, will be building the on-site communication system of a new construction development of ADIS Ltd. (Domestic Diplomatic Properties Agency). The company, Bulgaria's leading full service real estate company, will be one of the first clients of BTC EasyLink, a relaxed procedure for execution of telecom infrastructure in construction projects that BTC launched a couple of days ago.

BTC will equip Sofia's most luxurious resident complex Embassy Suites, an exclusive gated community project of Immofinance and full service real estate company ADIS Ltd. at the foot of Mt Vitosha.

This will give opportunity to all habitants of the apartments to use integrated telecommunications services. The integrated telecom services provided by a single operator cuts costs and facilitates communication management in subsequent rental.

The residents of Embassy Suites will have at their disposal ADSL high-speed Internet connectivity, private client networks offering low-price calls in a business group (IP VPN and VPN FIX), data transfer through a high-speed local and long-distance optical-fibre network, and wireless Internet access.

Embassy Suites consists of 2 areas: Park Zone (4-storey residential buildings) and City Zone (8-storey building, comprising 2 000 sq m of retail space and six residential floors). The habitants of the 80 apartments in the complex will be served by the commercial area with its bank office, restaurant, coffee bar, hairdresser, dry cleaning, video store, and a fitness hall.

Source: Sofia News Agency

All-Time High in Bulgaria's Property Sales

This year is expected to be the most successful yet for real estate sales on the Bulgarian property market. For the first nine months of 2005 208 000 real estate were concluded. The number is 196 000 for the entire of 2004. Most real estate agencies experience increased interest toward their offers at the end of the year. Thus, sales are expected to intensify further. If the same transaction rate is maintained, the number of concluded deals will exceed 250 000 in December.

More than 100 000 property sales were finalised for the first time in 1996. Unfortunately a period of economic crisis and hyper-inflation followed, which did not allow for a fast recovery of the market. An all-time low occurred in 1998 when the number of deals was only 65 179.
Experts said that the tendency to raise prices was starting to wear off and that the market was stabilising. Only prices in small cities continue to grow. Foreigners and the Bulgarian diaspora are becoming increasingly important market players. Experts predict intense transactions in 2006 as well. The prices of luxury apartments will continue growing. Experts see the intense construction works on Bulgaria's coastline as the main threat to the property market, Trud newspaper reported.

Source: The Sofia Echo

Varna leads Bulgarian property market price-wise

The value of homes in the coastal Varna area outpaced the residential market in the capital Sofia in Q2, said the Address Real Estate agency, citing data of Bulgaria's National Statistical Institute.

The value of homes in the big cities has slowed versus the same period last year when it was rising at twice the current rate, said Address, forecasting a 15% increase in the price of luxe homes for 2006.

Data of real estate agency ADIS shows that the return yielded by residential properties in Bulgaria has fallen by 3% in year to around 8.5%.

ADIS noted the increasing popularity of gated residential communities with at least 30 such developments currently under construction in the Sofia area. Upon completion, they are expected to place on the market some 5,000 apartments.

Source: Dnevnik Daily

Tishman fund buys new building near Sofia airport for 1.5 mln eu

Investment fund Tishman Lindner Bulgaria Real Estate will buy from German construction company Lindner a new built-to-suit property near the Sofia International Airport that will house mail, express and logistics services provider TNT, said Julian Edwards, CEO of London-based Tishman International Management Ltd.

Tishman Lindner Bulgaria Real Estate is a joint venture between Lindner and the Tishman International real estate company.

The 3,500 sq m building will be transacted at 1.5-1.6 mln euro in early 2006, said Edwards. TNT is expected to move into the new property within the next month, said Lindner Bulgaria manager Rosen Plevenliev.

Tishman Lindner Bulgaria Real Estate, registered earlier this year, is developing another 2 projects in Sofia.

The first phase of Residential Park Sofia, located in the vicinity of the Lindner-owned Business Park Sofia, should be completed by the end of 2006, said Edwards. The development will consist of 250 apartments and groundfloor retail and recreational premises. The construction of the entire residential complex will be finished in 3 to 5 years at a cost of 50 mln euro.

The construction of Sofia Airport Center, estimated to cost 65 mln euro, will begin in early 2006 with delivery seen within three years. The complex will house office and logistic properties on an area of 115,000 sq m.

Tishman also announced it will incorporate a consulting firm in Bulgaria within months. The new company will provide management services for residential and business properties.

Source: Dnevnik Daily

Bulgaria's Real Estate Trusts Lure Investors to the Black Seabfjccpv

By Kerin Hope and Theodor Troev
Financial Times

Popular television programmes have encouraged thousands of UK investors to buy a holiday apartment on Bulgaria's Black Sea coast or at a ski resort for half the price of a similar property in Spain.

But the country's fledgling real estate market is moving beyond the second-home construction boom.

Bulgaria, which is due to join the European Union by 2008 at the latest, has launched eastern Europe's first US-style real estate investment trust (Reit). These trusts are tax-friendly property funds that have to pay out most of their income to shareholders. The aim is to broaden and deepen the real estate market.

Already well established in France and Turkey, Reits are likely to be introduced as early as next year in the UK and Germany. In both countries, concerns about possible tax losses have delayed the legislative process.

Reits may be listed or non-listed, and are not liable for corporation tax. Tax is only paid on the shareholders' dividends.

Bulgaria's finance ministry has opted to give up tax revenues in favour of persuading investors to accept professional management of real estate assets. Its Reits legislation, part of financial market reforms launched by a liberal government, is based on similar frameworks in the US and France.

"As long as the appetite is there for people to buy these things, one of the attractions for government is that you create transparent and free-flowing equity in and out of property markets," says Mike Prew of Citigroup.

Bulgaria's fledgling Reits market is still too small to attract attention from big international players. But Reits have become popular with Bulgarian pension and mutual funds, as well as increasing numbers of retail investors, according to local brokers.

The 10 funds listed on the Sofia stock exchange have a combined market capitalisation of around Lev100m, equivalent to about 1 per cent of the bourse total.

"Reits are a bridge between the capital market and the booming real estate market. It's a narrow one for the time being but this is just the start of the process," says George Draychev, the bourse executive director. Another six Reits are preparing to list, he says. The sector has gained 44 per cent this year, with daily trading volumes sometimes exceeding Lev2m.

"These funds give good downside protection because of the real assets they hold," says Vassil Karavainov of BAC-IP, a Sofia-based investment group. The two biggest funds, Prime Property and Bulgaria Reit, both with net asset values of about Lev20m, have already attracted strategic investors from abroad.

Immoeast, a subsidiary of Austria's Immofinanz which has more than €500m of investment in central and east European real estate markets, acquired 42 per cent of Prime Property earlier this year. Prime Property was set up as a joint venture between Israel's TBIH, which owns pension funds in Slovakia and the Balkans and Balkan Advisory Company, a Bulgarian investment banking firm.

"Asset prices in Bulgaria are lower than central Europe, so there's a decent amount of room to grow," says Alex Bebov, portfolio manager at Prime Property.

Estonia's Hansa Bank and Danski Bank of Denmark have both taken stakes in Bulgaria Reit, which was set up by First Investment Bank, a Sofia-based private bank.

Todor Breshkov, the chairman, says the fund decided to build a broad-based portfolio, including agricultural land and sites for industrial development "because in a small economy like Bulgaria it's risky not to spread the investment".

The local construction industry's focus on resort developments means that, in contrast with Reits elsewhere, Bulgarian vehicles allocate funds for residential as well as commercial and retail investment.

"Property development in Bulgaria will continue to be based mostly on coastal and ski resorts. But there's growing demand for modern commercial and office space in Sofia and other cities," says Robert Jenkin of Bulgarian Dreams, a UK-based property company with resort projects on the Black Sea coast and office developments in Sofia.

Source: Sofia News Agency