LM Legal Services Blog

The forecast of Bulgarian and American analysts for the future of the real estate business in Bulgaria are absolutely different.

According to the National Revenue Agency, the business climate in Bulgaria has got worse by 1.1 points. According to 69% of the interviewed industrial and construction business managers, the sale prices will not change in the next three months, 20,5% of them expect a decrease, while only 10,5% predict an increase. The unstable business environment and the lack of qualified workers are the reasons for the decrease by 2.5 points of the business climate in the construction industry in July alone. The increasing competition and the rising prices of materials make the business more difficult. At the same time more clients delay their payments. Despite this developers expect price rise in the next three months.

According to the US analyst Nouriel Roubini, Bulgaria’s future is bright due to the good financial policy and the high level of the foreign investments in the country. However, he expects slowing down of the Central and Eastern European economies in 2008 which is in tune with Western Europe. The new EU-member states are tied to the West as 65% of their export is in the Euro zone. It is expected that Bulgaria and Romania will show steady but stable progress.

Having in mind the current account deficit of 20% of the GDP and the frozen EU funding it is difficult to predict Bulgaria’s future.

The number of planning permissions issued in the first half of the year have decreased by 6%. 4300 new buildings with total area of 2,8 million square metres have been approved for construction, 62% of them are new apartments. The number of the new office spaces have stayed the same, while there has been a sharp decrease in the number of all other types of buildings.

The highest number of planning permissions have been issued in Sofia, Plovdiv is in the second place, while Varna is in the third. Plovdiv heads the list with the highest number of planning permissions for new office buildings.

A Bulgarian ecological organization informed the European Commission about scandalous swaps of property as result of which the energy boss Christo Kovachky has acquired s formerly state owned forests in Rila Mountain at prices 24 times lower than the market prices. These forests have been included in the regulation plan of the new ski resort Iskrovete-Govedartsy-Maliovitsa. The administraste of the State Agency for the Forests have accepted that the Rila forests should sell to Kovachky for 5 levs (2.50 Euros) per square metre, while at the same time the market price is 120 levs (60 Euros) per square metre. According to the ecologists, the agency has not protected the interest of the state and has not adhered to several EU directives by not making the necessary evaluation of the plans for the new ski resort and its suitability. The new ski slopes and lifts will cut deeply in the National Park Rila. Brussels has launched sanctions procedure against Bulgaria for illegal construction in the national park.

The Bulgarian banks have increased the mortgage interests in July by half percent. Some banks have increased their commissions. Out of 15 commercial banks, now not less than 9 banks have worse offers for their clients, an all time record. Among them are the largest commercial banks in the country – Raiffeisenbank, Postbank, DSK Bank and UniCredit Bulbank.

According to the Greek press, Bulgarians, Russians and Ukrainians buy  property on Halkidiki in Northern Greece in great numbers, despite the slump of the property market in Greece. The construction has not slowed down. Currently there are 20 000 new apartments on the market. The prices of new properties on Halkidiki are similar to those in expensive parts of Salonika. Houses by the sea sell for 2500-3000 Euros per square metre, while those inside the peninsula sell between 750 and 1000 Euros.