LM Legal Services Blog

NEW BUILDINGS

Boyan Yordanov — Mon, 18 Feb 2013 08:42:09 +0000

The number of new buildings that received Permission To Use in the last quarter of 2012 in Bulgaria are by 21.6% (or by 692) less on an annual basis. Among them, the new apartments and houses are by 16.9% (or by 2 875) less. The highest number of new buildings that received the permission is in Varna – 132 buildings with 476 apartments, followed by Burgas – 95 buildings with 880 apartments and Sofia – 80 buildings with 120 apartments. The total of the living area of all newly built apartments in the last quarter of 2012 was by 20.35 less in comparison with the last quarter of 2011.

LUXURY PROPERTIES

Boyan Yordanov — Mon, 11 Feb 2013 10:29:37 +0000

The expectations or 2013 on the Bulgarian property market are for an increase in the sales of luxury houses and apartments. This tendency is due to the increase of the number of foreign companies coming to the country, as well as the new tax on the bank deposits that decreased the profitability of the money kept at a Bulgarian bank. In the last year the average annual interest of bank deposits was 5% while the annual yield from renting a luxury property in Bulgaria was on the average 6.3%.

At the moment the price of luxury apartments has registered a slight increase from 1450 euros per square metre to 1500 Euros per square metre. The prices of houses remain the same – about 1650 Euros per square metre. At the end of 2012 there was a slight increase in the number of the sales. However, the sales of luxury properties in Bulgaria are under 10% of all property sales. Luxury properties are considered those with a larger living area exceeding 200 square metres and situated in an attractive area with nice view, well maintained gardens and luxuriously finished common parts. The prices of luxury apartments range from 300 000 to 1,5 million Euros, while the prices of luxury houses begin from 700 000 Euros. The rent of such properties is between 5 and 7 Euros per square metre but in some cases it reaches 12 Euros per square metre.

THE SKIING SEASON IN BULGARIA 2013

Boyan Yordanov — Thu, 31 Jan 2013 09:27:56 +0000

After a good start at Christmas, the skiing season in Bulgaria continues to be more successful than the last one. The harsh winter last season led to the closure of roads and many skiers could not reach the slopes and in January 2012 a significant decline of the number of skiers was registered in all Bulgarian ski resorts. However, this season the tendency is exactly the opposite. Despite the mild winter this year, there is plenty of snow in the mountains and the number of skiers has increased by 7%. The reason for this is the fact that the Bulgarian hotels were prepared with very attractive packages and all resorts diversified the ski lift cards and now offer cards for half a day. The most significant increase of the numbers is among skiers coming from the U.K. and Russia, as well as from neighbouring Turkey (a steady tendency in the last years). Only the numbers of Greek skiers continue to decline since last year due to the recession that has hit the country. According to the statistics 12% less Greeks ski in Bulgaria on an annual basis. The decrease of the hotel prices in the end of January is expected to lead to a further increase in the number of the skiers.

PROPERTY PRICES DROP STOPS

Boyan Yordanov — Tue, 08 Jan 2013 11:48:08 +0000

The decrease of the property prices in the Bulgarian capital Sofia has stopped in 2012 and the analysis expect this tendency to continue in 2013. In the last months the demand for good quality properties has increased however there are not many such properties on the market. If the property prices stay stable than the property market will be much more predictable. It is expected that the property market will be dominated by Bulgarian buyers and will depend on the economic recovery of the country and the access to bank credits.

ЕNERGY EFFICIENCY

Boyan Yordanov — Fri, 07 Dec 2012 12:16:14 +0000

The Bulgarian Council of Ministers approved the amendments to the Law for Energy Efficiency which have been made in order to include the EU Directive 2010/31 of 19 May 2010 concerning the energy saving requirements for the buildings. The Bulgarian government will develop a national plan for the increase of the number of buildings the energy consumption of which is close to zero. This plan will include technical requirements for these buildings and it will outline the national objectives for the improvement of the quality of the buildings depending on their classification. The energy saving qualities of a building will be certified during the granting of the permission to use which is the last stage of construction. After a detailed re-novation of a building, the energy saving capacity of the re-novated part will have to be al least the minimal required by the new amendments to the law.

WEB SITE AGAINST PROPERTY FRAUD

Boyan Yordanov — Thu, 29 Nov 2012 08:20:21 +0000

The new web site of the Inscription Agency aimed to fight property fraud in Bulgaria was presented by the Prime Minister Boyko Borisov and the Minister of Justice Diana Kovacheva at the Council of Ministers. The Bulgarian government has spent 30 000 levs (15 000 Euros) for the creation of the site that will help the ex-pats who are buying property in Bulgaria. The site gives detailed information about the process of purchasing a property in Bulgaria bought to individuals and companies. The ex-pats now have the tool to send signals about property fraud directly to the competent institutions. The site is trilingual – it is in Bulgarian, English and Russian.

PROPERTY PRICES IN SOFIA

Boyan Yordanov — Thu, 18 Oct 2012 10:25:32 +0000

For the first time the prices of the most popular among the buyers property in Sofia – one bedroom apartments – have dropped under 700 euros/sq.m. according to the official statistics. Now the one bedroom apartments are cheaper by 1,6% than the two bedroom ones that sell for at least 711 euros/ sq.m. At the same time the rents of one bedroom apartments have gone up by 2% which raises their yield by 5,7% and makes them the best investment on the property market at the moment.

The most expensive one bedroom apartments are situated in the are of Ivan Vazov where their selling prices start at 1 119 euros/ sq.m. The cheapest one bedroom apartments are in Obelya where they sell for 452 euros/sq.m.

LYNN GRANTED PERMANENT RESIDENCY IN BRAZIL

Boyan Yordanov — Thu, 04 Oct 2012 09:42:36 +0000

Michael Lynn, the Irish solicitor who defrauded thousand of British and Irish buyers of properties in Bulgaria have been granted permanent residency in Brazil, according to the Brazilian Embassy in Dublin. It is believed he was granted a permanent visa for Brazil because he has a child who was born there. Lynn is facing about 50 charges related to an 80 million euros mortgage fraud. He was initially reported to be living in Bulgaria and then Portugal.

RUSSIAN BUYERS

Boyan Yordanov — Thu, 13 Sep 2012 12:10:03 +0000

Hotels and the plots of land suitable for warehouses and plants are often offered to Russian investors at prices that are up to 40% higher than their real market prices. Many Russian companies monitor the property market in Bulgaria and when properties at real prices appear on the market they immediately buy them. There is serious Russian interest towards plots of land in the area of the resort of Kamchia but most of the properties on offer are unattractive and without any infrastructure. Many Russians buy holiday apartments about 60 000 Euros believing that they can acquire Bulgarian citizenship easier.

COMPANIES INVEST IN LAND

Boyan Yordanov — Wed, 05 Sep 2012 08:20:10 +0000

According to the National Statistics Institute, the purchase of land by companies in Bulgaria has increased in 2011. Generally, the acquisition of assets has increased by 9.5% in comparison with 2010. The highest level of investment was in industrial production – about 5, 5 million levs (apprx. 2,7 million euros) and in services – 3,9 million levs (1,95 million euros). Only in the construction industry there is a negative tendency in the purchase of assets and there was a decrease by 16,2% on an annual basis.

According to the type of investment in assets, the highest increase is in the purchase of land and in the purchase of vehicles .

BULGARIAN PROPERTY MARKET

Boyan Yordanov — Wed, 22 Aug 2012 09:37:29 +0000

Foreign tourists in Bulgaria keep showing a steady interest both towards properties in the resorts and in the cities. However, about 85% of the buyers are Russians. The major part of them are looking for low cost properties, usually studios or one bedroom apartments within the 20-40 000 Euros price range. In the Bulgarian Black Sea resorts these are properties located away from the sea front where properties keep a much higher price of about 1300 Euros per sq.m. This summer on the southern Bulgarian Black Sea cost each day on the average of 90 sales have been completed.

PROPERTY SALES AND RENTS IN SOFIA

Boyan Yordanov — Fri, 27 Jul 2012 08:25:38 +0000

The buyers of properties in the Bulgarian capital Sofia are looking for smaller apartments this year. In the first half of 2012 51% of the buyers were looking for apartments with a total area between 50 and 80 sq.m. The popularity of the bigger apartments with total area between 80 and 120 sq.m. has decreased by 10%.
This tendency is connected to another one – decreasing of the budged of the prospective buyers. In 2011 most buyers were planning to spend between 50 000 and 80 000 Euros for a property, while in the first half of 2012 only a third of them are prepared to do so. Another third of the buyers now are prepared to spend between 30 000 and 50 000 Euros.
The demand for more expensive apartments with prices exceeding 120 000 Euros has decreased in favour of the demand for apartments under 30 000 Euros.
The greatest demand is for apartments located in the central parts of Sofia, followed by apartments in Borovo and Manastirski Livadi.

Most of the rents are focused on apartments with a total area between 50 and 80 sq.m. The share of the large apartments for rent exceeding 120 sq.m. is growing. Half of the tenants are prepared to pay a rent above 250 Euros per month. At the same time the number of tenants looking for rents under 150 Euros per month is steadily decreasing.

INFLATION IN BULGARIA

Boyan Yordanov — Tue, 17 Jul 2012 08:19:09 +0000

In June 2012 Bulgaria remained one of the three EU countries with the lowest inflation. According to Eurostat the inflation in Bulgaria was 1.6%. In comparison, it was 1,8% in May. In the first place with the lowest inflation is Sweden with 0.9% and in the second is Greece with 1%. The highest inflation in June was in Hungary – 5.6%, followed by Estonia and Malta with 4,4%. Generally, in the EU the annual inflation has dropped in 8 member states, it has remained the same in 8 and has increased in 10. For the Eurozone the inflation in June was 2,4% annually.

BULGARIA – CHANGES IN IMMIGRATION

Boyan Yordanov — Mon, 09 Jul 2012 09:38:30 +0000

Bulgaria decided to facilitate the granting of visas for Russians, Ukrainians and Moldovians as part of its strategy to compete with its neighbours Greece and Turkey for tourists from the former Soviet Union. As result now Russians can receive one year multiple entry visas if last year they have received tourist, business or private visit visas. Until now, Bulgarian visas for Russians were for 30 days. This is yet the second change in the Bulgarian immigration rules since January of this year when the Bulgarian government allowed non-EU citizens with Schengen visas to enter Bulgaria. After this changes Bulgaria expects the number of the visitors from the former Soviet Union to grow by 20%.

BULGARIA’S ECONOMY

Boyan Yordanov — Fri, 06 Jul 2012 07:37:59 +0000

Published in The Economist

In a rough region
Once Bulgaria hoped to be like Greece; now it just hopes to survive

ACCORDING to Ivan Krastev, a Bulgarian analyst, optimistic forecasters had the big hope 20 years ago that Bulgaria might become like Greece. That is to say, “moderately democratic, but moderately corrupt”. Now, he says, they hope that Greece may become like Bulgaria: poor, but financially disciplined and not making too big a mess for others.
So far Bulgaria has weathered the economic and euro crisis. Unemployment has crept up to 12%, but that is half the levels in Greece and Serbia. Over a million Bulgarians are thought to live abroad, working especially in Spain and Greece. Some have lost their jobs and come home, but the value of remittances sent back through banks has actually risen. In 2008 the official figure for remittances was €694m; last year it was up to €774m.
Bulgaria’s GDP grew by a modest 1.7% in 2011 and is expected to slow this year. A recent study suggests that as much as 30% of the economy is unrecorded. Bulgarians are also miserable. A poll by the Open Society Institute found that more than two-thirds of them expect the economy to stay the same or deteriorate in the next 12 months; and fully 56.7% find the situation in the country “unbearable”.
Bulgaria is the poorest country in the EU. Average wages are €3.50 an hour and average monthly salaries are just €360. As 10% of Bulgarian exports go to Greece and Greek banks hold 40% of all loans, it is hardly surprising that Bulgarians are on edge. What makes them especially nervous, says Vassil Vassiliev, a businessman, is their past experience that, whatever happens in western Europe, “comes here a year or two later.”
Mr Vassiliev sends organised groups of workers to other EU countries, especially for seasonal work. He worries that political pressure on companies to replace his workers with the domestic unemployed could affect his business and thus Bulgaria’s economy. Mr Vassiliev thinks the country needs a plan to steer away from excessive dependence on the euro zone.
In one area the market is already changing. The crash of 2008 left huge numbers of unsold holiday flats along the Black Sea coast. When the builders went bust, many of these ended up in the hands of banks. Since then, middle-class Russians have been buying them, says Tzvetelina Borislavova, a banker left with thousands of flats.
Many Bulgarians who do not like the government of Boyko Borisov, a populist prime minister (who once lived with Ms Borislavova), fret about fraying democracy. Parliament has become a “rubber stamp”, complains Borislav Tsekov, an analyst, echoing a belief that business lobbies secure laws favourable to themselves. Several thousands took to the streets recently to protest against a law on forests that was welcomed by builders of ski resorts. The government is backtracking.
Perhaps most worrying is the state of the media. Mainstream newspapers are owned by banks or powerful companies. There is little investigative reporting. Advertising by the government and by state-owned companies is a big source of revenue for newspapers; because of that, self-censorship is the order of the day, argues Valeri Tsenkov, an editor. But Nikolay Mladenov, Bulgaria’s foreign minister, says that what he finds most annoying is “the continual decline in the quality of journalism”. He does not see the link with self- censorship.

BULGARIAN STATE BONDS

Boyan Yordanov — Tue, 03 Jul 2012 08:01:34 +0000

Bulgaria has sold state bonds to the value of 950 million levs (425 million euros) on the international market with interest of 4.5% which is much lower than the interest of the Italian and Spanish state bonds. The number of the buyers was five times higher than the number of the state bonds. The market profit of the bonds is 4.436% which is higher than the one of the German state bonds that are considered to be safe and not risky. Most of the buyers were German investors, but there were also some from Europe, the Middle East and Asia.

SOFIA AND ATHENS – A COMPARISON OF RENTS

Boyan Yordanov — Mon, 25 Jun 2012 08:41:29 +0000

The rents in Sofia have dropped by 20% in the first six months of 2012 while in the crisis stricken Athens the rents have dropped by 12%. The annual yield of properties in Greece however has dropped by 50%. While in Greece the drop of the rents was due the crisis and is a continuous trend since the autumn of 2011, in Sofia the drop of the rents was due to the construction of the second line of the underground that took place in the major central streets and boulevards of the Bulgarian capital.

CONSTRUCTION INDUSTRY IN BULGARIA

Boyan Yordanov — Fri, 15 Jun 2012 12:40:56 +0000

Although the production of the construction industry in Bulgaria has dropped to 43% of the volume DURING the peak of the boom in 2008, in April 2012 the National Statistics Institute registered an increase of 0.2% and an annual increase of 4%. The increase of the construction of apartment buildings and offices was 0.2% in April 2012 and 0.1% on an annual basis.

CONSTRUCTION INDUSTRY IN BULGARIA

BULGARIAN PROPERTY MARKET

Boyan Yordanov — Fri, 01 Jun 2012 09:45:52 +0000

The number of the properties for sale in Bulgaria exceeds the demand by 50% and in such kind of situation it seems very unlikely that the property prices will rise. In Sofia there are on the average 37 property purchases per day and the first feeling is that the market is getting livelier. However, this number is by 9% lower than at the same time last year.
Unlike a few years ago it is cheaper to rent a property than to buy a property. The yield of the property is much lower than the interest acquired from keeping money at a bank’s savings account. Most likely those who buy properties for investment in the next 1-2 years will lose money. For example, a two-bedroom apartment bought at 60 000 Euros can be rented for 200 Euros per month and the yield is about 4% annually. In a bank savings account the same amount can acquire an annual interest of 6% without any additional expenses like maintenance and repairs. The situation in the destabilized Greece has also its impact on the property market. Only a high inflation can change this and can turn the purchase of a property into a profitable operation. At this stage this does not seem to be possible in the near future.

BULGARIAN ECONOMY

Boyan Yordanov — Mon, 14 May 2012 14:31:44 +0000

Although that according to the official statistics the construction of buildings has decreased by 1,4% on an annual basis, the index of the construction has increased by 2.1% in March 2012 in comparison with March 2011. The production of the construction industry in March 2012 has increased by 7.1% annually. This is mainly due to the increase of the volume of civil and engineering construction.
In comparison with February 2012 the retail index in March 2012 has increased by 3.9%. The highest increase was in the sales of home appliances and hi-fi, furniture and home ware. However in comparison with February, the online and phone sales have decreased, as well as the sales of medicines and perfumes.
The industrial production in March 2012 has increased by 1% in comparison with February 2012. The index of the industrial production has decreased on an annual basis by 3.2%. The production and the supply of electricity, heating and gas have decreased.

BULGARIAN PROPERTY MARKET – REVIEW

Boyan Yordanov — Thu, 10 May 2012 10:27:43 +0000

Although that according to the estate agencies, the number of property sales in Bulgaria has increased by 22% in 2011, it must be underlined that this includes the sale of Mall Sofia for 100 million Euros which in fact was about 55% of the investments in the last year. In the last quarter of 2011 the investments in property have reached 186 million Euros which was the highest level since 2008. The Bulgarian market has shown vague signs of recovery but in practice the property prices in 2012 remained the same as last year. The British and the Irish buyers have almost disappeared from the Bulgarian market and the hopes that Russian buyers will enter the market in their place proved to be ungrounded. The property sector is not the major driving force of the Bulgarian economic growth and thus the direct foreign investments are not plenty in it at the moment. This is why the expectations are that the property prices will further decrease by 10-20%.

DECLARED INCOMES AND TAXATION

Boyan Yordanov — Wed, 02 May 2012 08:56:03 +0000

According to the Bulgarian Inland Revenue Agency about 177 million levs (85 million Euros) have been declared as income from rent of property. The total amount of the declared income that also included the income of free-lancers was 587 million levs or 290 million Euros. In the second largest Bulgarian city Plovdiv, despite the recession, the highest capital gain tax for 2011 was paid by an estate agency and it exceeded 425 000 levs (270 000 Euros). The second highest capital gain tax for 2011 was paid by yet another estate agency. The twenty richest Bulgarians have declared incomes from work that amassed 16 million levs (8 million Euros).

PROPERTY PRICES IN SOFIA

Boyan Yordanov — Fri, 27 Apr 2012 07:21:21 +0000

According to the Land Registry, the property sales in the Bulgarian capital Sofia have increased for a second consecutive quarter reaching 3324 sales in the first three months of 2012. On the average in Sofia have been completed 37 sales per day – an annual decrease of 8.8%. The property prices in the capital have increased on the whole and now properties in Sofia are more expensive than properties in Varna, Bulgaria’s Black Sea capital, where for years property prices have been the highest in the country. The average price in Sofia is 1 453.30 levs (appr. 750.5 Euros)/square metre, while in Varna it is 1439.00 levs (appr. 740 Euros)/square metre. In third place are property prices in the second largest Bulgarian city on the Black Sea – Burgas – 1158.83 levs (appr.592 Euros)/ square metre.

PROPERTY PRICES IN BULGARIA

Boyan Yordanov — Mon, 23 Apr 2012 10:07:48 +0000

In the first quarter of 2012 the property prices in Bulgaria have decreased in 17 regional cities on an annual basis, while price increases have been registered in 10 cities. In 2011 the property prices have dropped by 6.1% on average and at the end of last year the average property price in Sofia was 750.5 Euros per square metre.
In the first quarter of 2012 the average property price for the whole of Bulgaria was 477 Euros per square metre. The properties in Sofia remained as the most expensive ones in the country, closely followed by the properties in Varna and in Burgas. On the average the property prices in the first quarter of 2012 have dropped by 0.4% in comparison with the last quarter of 2011.

SOFIA – THE PROPERTY MARKET

Boyan Yordanov — Mon, 09 Apr 2012 11:13:02 +0000

In the last year the property prices in Sofia continued dropping. The sharpest decrease was of the prices of studios – which have dropped by 6.9% in comparison with April 2011. Now they sell for less than 700 Euros per square metre, while in 2011 their price was 733 Euros per square metres on average. Last year one-bedroom apartments used to sell for 770 Euros per square metre but now they sell for 723 Euros per square metre, a price drop of 6.1%. The prices of two-bedroom apartments have dropped less then the rest – by only 4.6% from 754 Euros in 2011 to 719 Euros now.
The one-bedroom apartments are the most popular ones and buyers prefer them to the two-bedroom apartments. The cheapest one-bedroom apartments last year could be found in the area of Tolstoy, 552 Euros per square metre, while this year the cheapest one-bedroom apartments are located in Malinova Dolina and fetch a price of 468 Euros per square metre. The most expensive one-bedroom apartments last year have been located in the affluent area of Ivan Vazov with an average price of 1286 Euros per square metre. This year, the most expensive one-bedroom apartments are located in the central area of Oborishte with average prices of 1167 Euros per squre metre which is a price drop of 9.3%.

BULGARIA – FINANCIAL ANALYSIS

Boyan Yordanov — Fri, 06 Apr 2012 10:04:54 +0000

According to leading Bulgarian banks, the value of the properties owned by Bulgarians has decreased by 3 billion levs (1.6 billion Euros) to 208 billion levs (106 billion Euros) in the last quarter of 2011. At the same time the savings held in bank accounts have increased by 1.4 billion levs and at the end of last year they have reached 30.9 billion levs (16 billion Euros). The debt of the Bulgarians has decreased and currently is under 52%. The loss from investments in shares has increased to 285 million levs (190 million Euros) at the end of 2011, an all time record.

BULGARIAN BANKS

Boyan Yordanov — Mon, 02 Apr 2012 08:18:28 +0000

At the end of 2011 the profit of the Bulgarian banks has reached 586 million levs (270 million Euros). In the last three years the Bulgarian banks have saved their profit to create a buffer zone of capital for emergency situations. Thus at the end of last year in the banking system there was a surplus of 2.9 billion levs (1.5 billion Euros) on top of the required capital.
The volume of the profit of the Bulgarian banks has been shrinking until the beginning of last year due to the expenses for servicing bad credits and due to the high interest on the deposits. However, during 2011, the banks managed to turn this tendency around. In January and February 2012 they recorded an increase of their profit. In January 2012 the increase on annual basis was by 19.2%, while in February 2012 it has reached 34.7% or 118 million levs (60 million Euros).

THE BULGARIAN PROPERTY MARKET – OVERVIEW

Boyan Yordanov — Fri, 30 Mar 2012 10:28:59 +0000

It is clear that the foreign buyers are the most influential on the property market in Bulgaria. Currently, the most active buyers are the Russians and the Russian speaking citizens of the former Soviet republics with share exceeding 40% of all buyers. They mainly buy holiday apartments in ready developments at the Black Sea (90% of them) at prices ranging between 20 000 Euros and 40 000 Euros. Most of these buyers come from the European part of Russia, the area of Moscow and the other large Russian cities. The interest of the Russians is based on the better property prices and the lower costs of living in Bulgaria. French, Italians, Germans and Dutch also buy properties in Bulgaria but there isn’t a specific nationality of buyers who have a significant impact on the market.

The Brits who have been the engine of the property boom in Bulgaria in previous years are not in the role of sellers. Many of them would like to sell their holiday homes due to the recession and the shortage of cash.

The property mark in the once popular Black Sea resort of Sunny Beach is almost dead and the prices have dropped by 50% since 2008. The most popular mountain resort of Bansko is full of empty developments and although the property prices have been slashed to 500-600 Euros per square metre, they still do not attract buyers. Fully furnished apartments are on the market for 18 000 Euros.

AGRICULTURAL LAND

Boyan Yordanov — Tue, 27 Mar 2012 06:52:50 +0000

The sale of agricultural land in Bulgaria has peaked up in March 2012 after two months of stagnation due to the winter. The areas of Vidin, Stara Zagora, Razgrad and Haskovo are the most attractive for the buyers. In 2011 the number of sales of agricultural land has increased by 10-13% on the average and in same areas has reached 25%. In 126 000 purchases the buyers have acquired 1,185 million decars of land. The secondary market has a share of about 50% of the purchases and the expectations are in this year this share will grow to about 70%. The increase of the rent of agricultural land has been significant.

NEW LAW

Boyan Yordanov — Fri, 23 Mar 2012 10:31:42 +0000

The National Union of the Bulgarian estate agents will propose to the parliament to pass the drafts of the new Law for the Work of the Estate Agents. This project has the support of the Notary Chamber, the Surveyors Chamber, the Builders Chamber and the Confederation of the Customers in Bulgaria. Such kind of law will regulate the business of the estate agents in the country and will impose clear rules and obligations. The new law aims to provide quality service and to establish professional ethics. All members of the union have expressed their readiness to cooperate with the state in its attempt to block all opportunities for money laundering through property purchases and sales.