Property prices in Bulgaria, which have already fallen by 30% in the last 12 months, could fall another 20% this year, according to experts in the real estate industry.
According to agencies such as Foros, Colliers, Address and Bulgarian Properties, real estate values will continue to fall in the next few months. The more optimistic hope they will start stabilising in the summer months but others think that no recovery is likely until well into 2011.
A spokesman for Aristo said there could be a 10% increase in values towards the end of the year but few are that bullish. According to Tsvetelina Tasseva, chief executive of Address, real estate prices could suffer another collapse if banks start putting repossessed properties onto the market.
There is growing concern about anecdotal evidence that some buyers are opting for off plan apartments that do not have full permission as they are being sold extremely cheap. But if they don’t get full permission the new owners risks having a property that could be demolished for being built illegally.
Some authorities are becoming stricter in terms of planning but there is growing concern about the demolition of illegal properties along the Black Sea coast as some believe that decisions are not being made fairly.
While the bulldozing of some properties such as illegal permanent sheds attached to condominiums in the town of Nessebar are welcomed, others such as a pair of two storey houses built without appropriate paperwork on the south beach in Obzor should be legalized instead.
Campaigners also think that four single storey buildings in the Kladeri region near the village of Emona, and a swimming pool at the Delta Hotel on Sunny Beach, should also be re-considered.
‘There is a big difference between illegal huts and a house where the paperwork is not straight. Rather than spending money demolishing perfectly good buildings there should be further discussion to see if the planning issues can be regularised,’ said a spokesman for one group in Obzor.
There is also growing concern that new laws introduced this year to outlaw cash payments which were widely believed to be linked to corruption in the industry, are not making the market more transparent.
The property industry has also suffered from a severe fall in the number of foreign buyers. According to Industry Watch, real estate values are likely to drop by another 10% due to the decrease in foreign capital and delayed bank credit in Bulgaria. During 2006 to 2008, foreign investment in Bulgarian real estate accounted for more than €2 billion while in the preceding three years it was about €300 million. Since then it has been severely restricted by the global economic downturn.
‘Bulgaria is poor in locally generated capital, and most major projects here were financed by foreign capital investment. Readily available cash on the Bulgarian market continues to shrink and while this continues there will be little opportunity for flexibility on the market,’ said Luchezar Bogdanov, managing partner in Industry Watch.