[size=75:330grcug]Dnevnik daily 13 November 2009
The big question
If one had to make a list of keywords dominating the public debate on Bulgaria’s real estate sector, these would be variations on the riff of "
stirring awake"
, "
enquiries"
and "
first deals"
.
Or so participants in the latest edition of the BalREc real estate conference on November 6-7 said, unanimous in the opinion that the real estate market has begun thawing despite the coming winter, but remains far from the boiling point reached in the summer of 2008. No one, however, would take the risk of forecasting when the sector would heat up once again.
Residential goes cheap
The residential real estate segment is the busiest one, compared to the rest of the market. The customer is king: a rich choice of offers, plenty of opportunities to haggle the price down by up to 30 per cent, more variety in financing options. Times are difficult for investors, but good for buyers, who can make an acquisition at a profitable price, according to Yael Arnon, head of business development and regional director at real estate developer AFI Europe.
But despite the existing supply of residential real estate, more effort was needed to develop some parts of the segment. "
There is a need to stimulate the construction of homes for the low end and middle class,"
Georgi Shopov, general manager of engineering and construction firm Tobo, said.
Plamen Andreev, general manager of construction firm Planex Holding, said: "
Homes at affordable prices would be difficult to build without state support."
His proposal was for the state or municipalities to offer construction companies land in exchange for a contractual duty to build blocks of flats, apartments which would then be sold at a fixed price, possibly no higher than 650 euro a sq m.
"
The residential market depends not so much on the price of the real estate, as it does on its affordability,"
according to Miroslav Beikov, chief executive of real estate investment fund Status Imoti. Bulgaria needed to improve in that area, he said, citing Serbia, where young couples did not pay value-added tax on their first home, and Belarus, where the state guarantees that construction is finished if the building company goes bankrupt.
Other companies took advantage of the current situation, as was the case of Home for You, a company buying residential real estate in bulk, at prices ranging from 390 euro to 650 euro a sq, in Sofia, Varna, Bansko and Black Sea resorts. The company then sold the properties to wealthy Russian customers from Siberia and the Ural region at a profit margin of 20 per cent, general manager Ivan Goranov said.
Prices of residential real estate developments presented at the BalPEx property exhibition, held at the same time with BalREc, started at 900 euro a sq m.
Holiday homes for Russians
Russia and other countries from the former Soviet Union are the main markets for Bulgarian holiday homes and Bulgarian real estate would become an even more attractive destination if visa requirements were relaxed, according to BalREc participants.
As for the reasons why Bulgarian holiday homes were so popular, architect Stefan Dobrev said that it was the high environmental standards of construction and the low degree of construction density. According to Dobrev, one holiday homes development, a fair distance from the beach in Slunchev Bryag (Sunny Beach) Black Sea resort, sold for prices comparable to beach front properties.
Office space – Mercedes for Volkswagen price
"
On the office market, now is the time for tenants to get a Mercedes for the price of a Volkswagen,"
according to Anton Slavchev, manager for office and business parks at Colliers International.
High supply and low demand has even prompted some potential tenants to look for deals that would be the equivalent of buying a Mercedes for the price of a Lada, but there were no takers for this kind of deal just yet, he said.
Tsarigradsko Chaussee Boulevard in Sofia was becoming the new office area of the Bulgarian capital, with 300 000 sq m in the pipeline, he said.
"
Now is a unique time on the Bulgarian market for tenants, because owners are ready to pay for the moving in and even furnish the offices to the tenants’ specifications, something that was unthinkable a year ago,"
said Tanya Kosseva, executive director of European Trade Center, now under construction on Tsarigradsko Chaussee.
Vesselin Genchev, executive director of Benchmark Fond Imoti real estate company, which is developing its own office space building on Tsarigradsko Chaussee, said: "
Even if we offered a grace period of one year with no rent, I am not sure that I would find tenants."
Rents have fallen so low that a company can now rent an office on a major boulevard at prices below 13 euro a sq m, which was not the case in 2006 or 2007, Slavchev said.
Deals were being struck at 12 euro a sq m for office space in central Sofia and seven euro a sq m on Bulgaria Boulevard, according to Stefan Kossev, manager of Regent’s Property advisers.
Commercial space dilemma
Developers against retailers, or how to fill shops with customers, was the crux of the debate on commercial spaces. Good management was key for the success of any shopping centre, according to Iglika Yordanova, manager for commercial spaces at Colliers International.
Miron Gerassimov, operations director at Coffeeheaven’s Bulgarian subsidiary, said that marketing could not be a panacea when there was a problem with how rental prices were being calculated in Bulgaria. While the practice in Western Europe was for retailers to spend no more than 10 per cent of turnover on rent, low consumption in Bulgaria kept rents much higher.
Industrial land for cheap
Investor interest in industrial real estate and logistic centres was low because land prices were several times more expensive than in Central and Eastern Europe, according to Simeon Mitev, managing director of real estate advisers Shans 96. Prices in suburban Sofia, next to the ring road, are about 60 euro a sq m, compared to similar locations in
Poland, where land sells at about 20 euro a sq m, or Romanian capital Bucharest, where the prices are about 25 to 30 euro a sq m.
Still, some municipalities had success attracting investors by offering land plots at a price of one euro a sq m, architect Tsvetan Petrov, who manages an architectural firm, said. In Lovech, Litex Commerce secured a plot for its future car plant and Slovenia’s Lek Pharmaceutical is building a production facility, settling on the town because of the low land price offered by the local authorities, Petrov said. In Pleven, mayor Naiden Zelenogorski intended to follow suit.
Big investment in Sofia
At least five large investments were being planned in Sofia in 2010, according to the city hall’s chief architect Petar Dikov. He declined to give any names, but said that the municipality was checking the application for a construction permit, lodged by an investor who planned to build a mixed-type development featuring residential and commercial areas, on which the company had already spent three million leva.
At the same time, city hall made all efforts to root out property fraud in Sofia, he said. The key was transparency of decisions, he said, citing a 20 000 euro fine levied on the owners of a plot who claimed to have a building permit for a residential development. The permit was proven to be counterfeit after a verification of the online records of the city hall architecture and construction department.
Sat Nov 14, 2009 6:43 pm
