Expat Properties Plc created for the purpose of buying land, is the first plc of this type in Bulgaria which has returned its license. The general shareholders meeting will take place on 8 June 2009 when it is expected that the shareholders of the company will take the formal decision for its liquidation. It is also expected that the shareholders will give a deadline of 6 months for the liquidation and will choose a receiver. The last deal of Expat Properties Plc was on 16 April 2008.

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.

The rent of industrial plots of land in Sofia have increased by 8% or by 0,5 Euros (1 lv) per sq m in 2008 in comparison with 2007. The average rent of industrial land in the country is 6.5 Euros per square metres. This is by 1 Euros more expensive than the neighbouring countries. The reason for this situation is that more and more companies have been looking for industrial land while there have not been many plots on offer.

This year the tendency outlined by the recession is owners first to find tenants and only then to start turning their land into an industrial one. Estate agents expect that the demand for industrial land will not be affected by the recession, as it is expected that more companies will relocate from Western into Eastern Europe.

From February the new information system of the cadastre and the Land Registry will start functioning which will allow information for the  properties to be checked on the internet. However, these checks can be carried out only for properties which are on land included in the cadastre map, i.e. about 12% of the territory of Bulgaria. The rest of the land in the country must be included in the new registry by 2005 according to the government’s strategy.

Checks for the properties not included in the cadastre map shall be carried out using the old procedure – by the municipal departments for agriculture when it concerns agricultural land and by the municipal administration when it concerns urban territories.

The completion of the cadastre maps is in fact transfer towards a real system of land registry which consists of detailed information about the type of the land, the borders of the plot and its area.

The notaries at the Black Sea reported that the number of deals have decreased  sharply in comparison with last year. In the last 2 wees there have been days without a single purchase. The purchases for investment have almost stopped. Only people who need cash urgently sell. In such cases prices drop dramatically up to three times.

Purchases are made only of home to live. They have drop by 50% in Kavarna, while in Balchik by 10%.  Concerning the plots of land, the tendency is similar. Only agricultural land sells.  In some cases prices have fallen from 20 to 5 Euros per sq.m. due to the lack of buyers.

According to Credit Centre the most popular mortgage in Bulgaria at the moment is for a plot of land and a prefabricated house. More and more Bulgarians prefer to move in the outskirts of their cities and to build their own house, rather than to buy an apartment in a block, where two-bedroom apartments are in the same price bracket.

Another new trend is the increasing number of customers who restructure their debt, due to the increase of the interest rate. Many Bulgarians face difficulties repaying their mortgages and some even their utility bills. According to Credit Centre in September each sixth credit has been taken to pay old debt.

In general more than 79% of the mortgages are for the purchase of property and only 1.3% for construction.

Another tendency is that for a second consecutive month the average size of the mortgage has decreased to 43 000 Euros, while during the peak of the property boom it has exceeded 50 000 Euros. Customers freeze their purchase or redirect to a cheaper property. The change is more obvious among the most popular customers – the middle class ones – who used to take a 80 % mortgage for the purchase of one-bedroom apartments. Now these clients are seeking smaller apartments and try to pay a large proportion of the price with their own funds.

The assets of the property companies have increased in the first 6 months of this year. 26% of the assets is agricultural land, 20% are buildings and equipment and 17.7%  are off-plan properties. The number of these companies have increased to 68.

The price of the land by the sea has dropped. Because of the high prices of the land by the coast and the refusal of the banks to finance holiday developments, many investors used to accomplish smaller projects according to Nikolay Pehlivanov, the executive director of Green Life. Now they are worse hit by the world recession. Because of failed investment, the banks refuse to finance such projects and that is why the purchase of small plots of land by the sea has stopped. At the moment there is only demand for big plots of land for holiday developments with suitable infrastructure.

The prices of luxury developments have increased by 15% for a year, despite the property slump. After the British clients have pulled out, the small investors are on the verge of bankruptcy. Brits can hardly repay their mortgages and Bulgarian banks refuse to lend them money. That is why many of them lost their properties and their first instalments. Subsequently the investors had to re-sell the apartments. Seaside properties from the lower price brackets now sell for 600 Euros per square metre.

The sales of properties in Bulgaria have decreased for the first time in the last few years, according to the Land Registry. From January to June 2008 there have been 134 891 sales while for the same period of the last year their number was 136 457. The decrease is just by 1.1% but it is a fact. Since 2003 the number of the sales has been increasing by about 20% per annum and this has lead to a constant increase in the prices of properties. At the moment, the buyers are still active in Sofia, Varna, Burgas, Plovdiv and Pleven. The number of sales in these cities has increased, though insufficiently. However, in many regional centres like Shumen, Sliven, Smolyan, Pazardjik, Veliko Turnovo, Vidin, Vratsa and Gabrovo the sales have decreased, and in Ruse and Razgrad this decrease has exceeded 10%. Last year Ruse was the leader in the property price increase which reached 41% but the high prices have put off many prospective buyers.

On the Black Sea coast it seems that the buyers’ activity has moved south. The Land Registry in Nessebar which covers Sunny Beach, St. Vlas, and Ravda reported a decrease of 12.5% for the first half of this year. At the same time the sales in Tsarevo have increased by 50%.

The interest in agricultural land has not diminished at all, according to the activity of the most developed market of agricultural land in the country, which is in the area of Dobrich, Lom and Montana.

Despite this, Bulgaria is still in the first place in the world for the increase of property prices from June 2007 to June 2008. According to Knight Frank the prices of properties in Bulgaria have increased on average by 32.3%.

The Austrian steel producer Voest Alpine have been signing preliminary contracts with land owners in the area of Konstaza in Romania, according to the local press. For some time the company have been looking for a location for their new plant in Bulgaria, Romania and Ukraine. In June, due to the new restrictions on pollution enforced by the Bulgarian government, Bulgaria was excluded from this project which is expected to amount to 7 billion Euros.