LM Legal Services Blog

The ex-pats who have moved to the Bulgarian Black Sea coast are selling their properties and leaving Bulgaria in great numbers. They have lost their hope to make a profit by renting their apartments. They offer their properties for sale at prices which are 20% lower than in the last year. Studios are for sale for as little as 38 000 Euros and two-bedroom apartments are on offer for about 60 000 Euros. The second-hand car markets are full of British cars which sell at half the price of the ones with a left steering wheel. Many of the Brit who have settled in Bulgaria are pensioners and some of them find it hard to cope during the recession and sell their apartments, houses and cars.

According to the State Agency for Tourism (DAT), three-four hotels go bankrupt every week in Bulgaria. They are unable to re-pay their mortgages. Many hotels are put for sale but there are no buyers and banks repossess them but it remains unclear if the banks will be able to sell them.

It seems that Bulgaria follows the road of Spain where the state buys the bankrupted hotels and demolishes them, in order to create parks.

According to the statistics, in the first half of the last year, 820 new hotels have opened on the Black Sea coast. As result of the construction boom the number of hotels and holiday properties is much higher than the number of  the tourists.  Many hotels can not sell all their beds and their owners suffer losses. All this makes it impossible for the hoteliers to repay their mortgages and other credits and go bankrupt.

From the end of 2008 the number of new buildings in Bulgaria has decreased by 432 and the number of the apartments in them has decreased by 42.8%.

The greatest number of new apartments still are completed on the Bulgarian Black Sea coast. Only in Burgas district 1136 new apartments have been finished this winter. In second place is Varna district with 727 newly finished apartments, followed by Sofia with 580 and Plovdiv with 265. There are no new apartments in Stara Zagora and Kyustendil.

The area of the newly finished apartments in the first quarter of 2009 is 294 000 sq m which is a decrease by 16% in comparison with the same period of 2008. The size of the average living area has also diminished from 78.3 to 75.5 sq m in the same period.

The estate agents expect a real drop in the number of purchases of holiday homes at the Bulgarian Black Sea resorts. Some expect a decrease of 20%, others a much higher drop of 40 – 50% in comparison with last year.

If in previous years most of the buyers were British, now it is expected that the market will be 100% Russian. However, the devaluation of the Russian Ruble means that despite that fact that Bulgaria is one of the most popular destinations for the purchase of second homes, it is likely that the property market will shrink by 40%. Some estate agent even think that the boom of the Russian market was last year and this year the results will be less encouraging.

Property prices of holiday homes at the Black Sea have dropped by 20% and for the new season and now they start at about 650 EUR per sq m.

The Bulgarian ski resort Bansko was a typical example of the “hot market” in Easter Europe. Now, the small town is an example for the exactly the opposite.
The balloon has burst and the market of holiday properties in Bulgaria has collapsed. With this, sank the dreams for fast returns of many investors who have poured money into the region. Bansko is an emblem of the end of the hot market of holiday properties in the region. Most often the investors in the region are Brits and Irish who relied on the rental market or on the sharply increasing prices. The locals have earned some cash by selling their land, but the charm of the small town with small houses and narrow streets has disappeared forever. Now there are huge hotels and the roads are either made wider to cope with the traffic or are under construction. The holiday property market has suffered more than any other during the recession. The number of purchases has decreased by 10% at the end of the last year. The property boom in Bulgaria started in 2002 and the pivotal points were Bansko and some Black Sea resorts like Sunny Beach.
Now, when the market has collapsed, the biggest advantage of the situation take investment funds which buy properties in great numbers in the resorts at low prices and wait for the market to recover, the buyers to return and the prices to start going up again. There are buyers who are not so happy. Many British owners who bought their apartments at the Black Sea a year ago at prices exceeding 1000 Euros per square metre are ready to sell them now for as little as 500 Euros per square metre.