The two newest members of the EU are the eastern European, former communist nations of Romania and Bulgaria; they joined the European Union on the 1st of January this year and prior to their entry there was huge speculation, especially among the British and Irish, about whether an investment made into the real estate property markets of either country was a good investment.
Now that both countries have joined the EU, and many have already made a commitment to invest in property in Bulgaria and Romania, it’s time to review their decisions and look at the future projections for new investors examining the prospects of the property markets in both countries.
Leading up to EU entry many investors sought to target property in Romania and Bulgaria because they had already witnessed the positive returns that other investors had derived in the property markets of previous entrants such as Hungary and Poland for example. As a result, Bulgaria in particular developed an active property market almost overnight. In fact it was completely due to EU accession that Romania and Bulgaria developed a property market at all, because if it was left to local demand to fuel the real estate sector neither country would have taken off.
This strong international demand for property stock in Bulgaria and Romania spiked the media’s interest and once the media became interested and began promoting the perceived financial benefits of investing in either nation, property investor interest surged even more. Meeting this demand for investment property stock was keen property developer activity, and because few restrictions were in place at that time (we’re talking 3 – 4 years ago), few regulations and restrictions were in place to prevent over development.
As a result certain areas such as Sunny Beach in Bulgaria are now over developed and many say spoiled, and property prices in these locations are now stagnant. Luckily the rest of Bulgaria and Romania has been protected from this over development with the benefit of hindsight, and so looking to the medium to longer term there is certainly room for property price expansion still.
Now that both Bulgaria and Romania are in the EU each will benefit from a period of investment which will help to improve some of the creaking infrastructure in both countries. The money will go towards such projects as road development and airport expansion meaning it will be easier to access and explore both countries which will boost tourism appeal. Additionally money is likely to be spent on renovating historic sites of interest as well as promoting the delights of both countries.
All this investment will hopefully boost the travel and tourism economy in Bulgaria and Romania and mean that investors have a growing market to let their real estate investments out to suggesting that not only is long term capital appreciation likely in both countries, but short to medium term rental yield is also possible making a return on investment quickly achievable.
Monday, February 12, 2007
Buyer confidence in house prices reaches high
Confidence in the growth of house prices has reached a 20-month high with 71 per cent believing that property values will continue to increase in 2007, according to research by Yorkshire Bank.
The new figure shows a drastic rise in the past 12 months as a year ago just over half (55 per cent) of buyers thought house prices would climb.
However buyers are still looking to haggle on properties to ensure they get a good deal.
More than a fifth (21 per cent) of buyers would make a low offer to start with, only raising it if necessary. That compares with only 12 per cent of keen buyers who would immediately offer over the asking price to get their perfect home.
A quarter of buyers are said to be looking for a property they can renovate and add value to.
Commenting on the growing trend, Gary Lumby, Yorkshire bank's head of retail, said: "Buyers who are now looking for properties they can do up are using this uncertainty to their advantage by trying their luck with a lower initial offer - and only raising it if necessary. Should these offers below the asking price be accepted by sellers then we may see prices levelling off."
The survey also highlighted that over three-quarters of those questioned do not intend on moving home, suggesting that the housing market is beginning to slow.
The new figure shows a drastic rise in the past 12 months as a year ago just over half (55 per cent) of buyers thought house prices would climb.
However buyers are still looking to haggle on properties to ensure they get a good deal.
More than a fifth (21 per cent) of buyers would make a low offer to start with, only raising it if necessary. That compares with only 12 per cent of keen buyers who would immediately offer over the asking price to get their perfect home.
A quarter of buyers are said to be looking for a property they can renovate and add value to.
Commenting on the growing trend, Gary Lumby, Yorkshire bank's head of retail, said: "Buyers who are now looking for properties they can do up are using this uncertainty to their advantage by trying their luck with a lower initial offer - and only raising it if necessary. Should these offers below the asking price be accepted by sellers then we may see prices levelling off."
The survey also highlighted that over three-quarters of those questioned do not intend on moving home, suggesting that the housing market is beginning to slow.
Incredible Bulgaria
More and more expatriates are attracted to Bulgaria each year. These expatriates are drawn by the climate, the safe sandy beaches, the incredibly low cost of living and low prices generally, the historical heritage that Bulgaria offers and the welcome they get from the friendly Bulgarians. Those choosing a new life in Bulgaria now are getting in ahead of the pack as this country is about to become very fashionable.
The biggest growth rates in terms of expat population increase are expected in the more desirable areas in and around the major resort centres of Varna and Burgas. With further population development expected in other selected ‘premium quality’ locations on the Black Sea coast.
On the whole Bulgaria is a peaceful, law abiding and trouble free country and Bulgarians are friendly, warm and welcoming people. Expatriates attracted to Bulgaria are rewarded with great beaches and attractions as diverse as wine tasting, aqua parks, ancient monuments, nature parks, music and flower festivals. And the cost of living is incredibly low.
Sunny Beach Property in Bulgaria has caused so much activity amongst all involved in the overseas property industry that you can easily get dizzy from the amount of information and property available in the region. One thing is for sure Bulgaria as an emerging market that is set to change the former member of the Soviet Union forever.
The biggest growth rates in terms of expat population increase are expected in the more desirable areas in and around the major resort centres of Varna and Burgas. With further population development expected in other selected ‘premium quality’ locations on the Black Sea coast.
On the whole Bulgaria is a peaceful, law abiding and trouble free country and Bulgarians are friendly, warm and welcoming people. Expatriates attracted to Bulgaria are rewarded with great beaches and attractions as diverse as wine tasting, aqua parks, ancient monuments, nature parks, music and flower festivals. And the cost of living is incredibly low.
Sunny Beach Property in Bulgaria has caused so much activity amongst all involved in the overseas property industry that you can easily get dizzy from the amount of information and property available in the region. One thing is for sure Bulgaria as an emerging market that is set to change the former member of the Soviet Union forever.
New horizons for first-timers
First-time buyers are being targeted by a growing band of property experts who claim that anyone priced off the ladder in the UK should consider buying cheaper houses abroad, in locations such as Poland, Turkey or even India. A new website, www.from55k.co.uk, from Parador Properties, one of the biggest British-owned property companies in Spain, promises aspiring homeowners the chance to buy a new two-bedroom apartment abroad for as little as £55,000. Another website, www.property.bg, also offers first-time buyers an overseas service. A survey by YouGov, the polling company, shows that nearly half of 18 to 29-year-olds plan to buy abroad, and two thirds of these say that this would be their first property purchase. The idea is alluring. This week the Royal Institute of Chartered Surveyors reported that some European housing markets enjoyed double-digit growth last year despite interest rate rises. An added bonus is that a plush flat in a sunny location could also bring rental income from holiday-makers, as well as providing a getaway destination.
Jonathan Burridge, of Quantum Mortgages, the mortgage broker, says: “This is still a relatively new concept and, as a pioneer in new territory, you can expect to meet bagmen and cowboys. However, there is gold to be had for the wise and the lucky.” But experts advise that buying overseas carries a host of unpredictable risks and costs. Ray Boulger, of John Charcol, another mortage broker, says: “I am not surprised that overseas consultants are targeting first-time buyers — the low prices look appealing. But for most first-time buyers, buying abroad is wrong for so many reasons that it is difficult to know where to start. The biggest mistake is assuming that the overseas market will perform in the same way as property in the UK.” There are predictions of a threefold increase over the next ten years on property in Prague and reports of high demand in Bulgaria. But Mr Burridge says: “This is speculative. The marketing literature looks attractive, but has yet to be proven right.” An important consideration is the property rental market in the country in which you are buying. A strong rental market can mean weaker capital appreciation. Residents in France, Germany, Italy and Spain traditionally rent their homes. A flurry of foreign investment pushed up prices for a while, but the market is not driven by a homeowning culture over the long term, as is the case in the UK. Even if the purchase price looks cheap, the initial costs of buying abroad are likely to be higher than in the UK, especially legal expenses. Mr Boulger says: “Legalities vary from country to country and prospective buyers should never sign anything they do not understand. This may mean hiring more than one solicitor, who will have to put in more work, which will mean higher fees.” Stamp duty is also likely to be higher abroad — in some countries it is as much as 10 per cent, compared with 1 per cent for the average first-time purchase in the UK. Despite ultra-low prices, particularly on new-build apartments, buyers should be aware that prices when they sell may not be as high as they had hoped. For example, the Spanish new-build market is active, but selling on apartments is becoming more difficult, meaning that sellers are having to accept lower prices. This could be a problem for those hoping to use the profits for a deposit on a home in the UK. Mr Boulger says: “If the purchase does not go well and you fail to make a profit, this may scupper plans to buy in the UK.” If you keep the overseas property while buying in the UK, it may be harder to find a willing lender because other mortgage commitments will be taken into account when deciding what risk you pose and how much you can afford. Anyone convinced that buying abroad is for them should do some research. Mark Bodega, of HIFX, the currency exchange company that spe-cialises in overseas property purchases, says: “Nothing beats pounding the pavements. Look at the rental income generated by similar properties in similar areas. Target places that you can rent out year-round, such as European cities, and note how easy it is to get there.”
Jonathan Burridge, of Quantum Mortgages, the mortgage broker, says: “This is still a relatively new concept and, as a pioneer in new territory, you can expect to meet bagmen and cowboys. However, there is gold to be had for the wise and the lucky.” But experts advise that buying overseas carries a host of unpredictable risks and costs. Ray Boulger, of John Charcol, another mortage broker, says: “I am not surprised that overseas consultants are targeting first-time buyers — the low prices look appealing. But for most first-time buyers, buying abroad is wrong for so many reasons that it is difficult to know where to start. The biggest mistake is assuming that the overseas market will perform in the same way as property in the UK.” There are predictions of a threefold increase over the next ten years on property in Prague and reports of high demand in Bulgaria. But Mr Burridge says: “This is speculative. The marketing literature looks attractive, but has yet to be proven right.” An important consideration is the property rental market in the country in which you are buying. A strong rental market can mean weaker capital appreciation. Residents in France, Germany, Italy and Spain traditionally rent their homes. A flurry of foreign investment pushed up prices for a while, but the market is not driven by a homeowning culture over the long term, as is the case in the UK. Even if the purchase price looks cheap, the initial costs of buying abroad are likely to be higher than in the UK, especially legal expenses. Mr Boulger says: “Legalities vary from country to country and prospective buyers should never sign anything they do not understand. This may mean hiring more than one solicitor, who will have to put in more work, which will mean higher fees.” Stamp duty is also likely to be higher abroad — in some countries it is as much as 10 per cent, compared with 1 per cent for the average first-time purchase in the UK. Despite ultra-low prices, particularly on new-build apartments, buyers should be aware that prices when they sell may not be as high as they had hoped. For example, the Spanish new-build market is active, but selling on apartments is becoming more difficult, meaning that sellers are having to accept lower prices. This could be a problem for those hoping to use the profits for a deposit on a home in the UK. Mr Boulger says: “If the purchase does not go well and you fail to make a profit, this may scupper plans to buy in the UK.” If you keep the overseas property while buying in the UK, it may be harder to find a willing lender because other mortgage commitments will be taken into account when deciding what risk you pose and how much you can afford. Anyone convinced that buying abroad is for them should do some research. Mark Bodega, of HIFX, the currency exchange company that spe-cialises in overseas property purchases, says: “Nothing beats pounding the pavements. Look at the rental income generated by similar properties in similar areas. Target places that you can rent out year-round, such as European cities, and note how easy it is to get there.”
SWEDEN'S TOP BANK BUYS INTO UKRAINE
BUDAPEST is one of the more promising locations for investment, according
fringes of the course.
All are being sold off plans, with Carr claiming a 10 per cent uplift in
price for buyers of the first phase. Housing completion is scheduled for end
of 2007, with the course playable in spring of 2008.
to Deirdre O'Regan. With a small portfolio of Irish properties, she felt future
returns would not match the past: "I know from my rents, which have hardly
moved in three years, that the best is over for the modest investor - so I
looked abroad."
Trawling the net and comparing prices and yields, she found Budapest
attractive, at least on paper. The reality was equally promising. "After two
visits, I bought an office owned by a travel agent. He paid two years rent
in advance, so I had that comfort. It was, as they say, a win-win deal."
The Hungarian owner got a lump of money and the Irish investor got a
property with a yield of about 7 per cent. Current Irish returns are about
3-4 per cent on similar properties. She did it all on the net, without an
agent - "found the property, corresponded with the seller and came out to
meet him".
The tale did not surprise Odran Young, owner of a medium-sized estate agency
in Dublin. He came out to live permanently in Budapest four years ago, lured
by the promise of bargains in a country weaning itself away - at a fast
pace - from a failed Communist system. Now he controls the only Irish agency
with a full-time complement of staff in the Hungarian capital.
We were in a restaurant in Liszt Ferenc, an enclave of boulevards and
restaurants. There is gaiety and business and music - it's an aria away from
the fabled Opera House whose baroque splendour has been restored with
dollops of eurodosh, a mere three years after Hungary emerged into the
eurofold of favoured nations.
Already, he can see the signs of creeping prosperity, a re-run of the
experience of the Irish republic. "When I came first, most of the cars were
old bangers, Ladas on their last legs.
Now most cars are hardly more than two years old. The cafes are full of
well-dressed young people. Then, there was only one restaurant on Ferenc
returns would not match the past: "I know from my rents, which have hardly
moved in three years, that the best is over for the modest investor - so I
looked abroad."
Trawling the net and comparing prices and yields, she found Budapest
attractive, at least on paper. The reality was equally promising. "After two
visits, I bought an office owned by a travel agent. He paid two years rent
in advance, so I had that comfort. It was, as they say, a win-win deal."
The Hungarian owner got a lump of money and the Irish investor got a
property with a yield of about 7 per cent. Current Irish returns are about
3-4 per cent on similar properties. She did it all on the net, without an
agent - "found the property, corresponded with the seller and came out to
meet him".
The tale did not surprise Odran Young, owner of a medium-sized estate agency
in Dublin. He came out to live permanently in Budapest four years ago, lured
by the promise of bargains in a country weaning itself away - at a fast
pace - from a failed Communist system. Now he controls the only Irish agency
with a full-time complement of staff in the Hungarian capital.
We were in a restaurant in Liszt Ferenc, an enclave of boulevards and
restaurants. There is gaiety and business and music - it's an aria away from
the fabled Opera House whose baroque splendour has been restored with
dollops of eurodosh, a mere three years after Hungary emerged into the
eurofold of favoured nations.
Already, he can see the signs of creeping prosperity, a re-run of the
experience of the Irish republic. "When I came first, most of the cars were
old bangers, Ladas on their last legs.
Now most cars are hardly more than two years old. The cafes are full of
well-dressed young people. Then, there was only one restaurant on Ferenc
and four customers - me and three in our group."
A lot has changed since then, for both Budapest and Young. They have been
agents of each other's change. From his penthouse overlooking the musical
square, he counts 16 restaurants and cafe bars.
He is selling some of those refurbished baroque buildings and uses the
Hungarian capital to trawl for developments in Eastern Europe, notably in
neighbouring Ukraine.
Hungary has been good to him, turning him from a medium-sized player in
Irish property to a major wheeler-and-dealer of European property. Currently
he has several new developments on the go in Budapest, including a block of
"new build" apartments in the university district.
Of the 144 apartments, 80 have been sold off-plans. Not surprising given
that prices range from 60,000 for one of about 37sq m (400sq ft). A Dublin
equivalent, in quality and location, would cost upwards of 325,000. His
buyers are mainly Irish, with British and South Africans as runners-up in
the investment stakes.
Expanding his Budapest office this week to cater for the demand, he is
bullish about Hungary's economic prospects. Well, he would be, wouldn't
A lot has changed since then, for both Budapest and Young. They have been
agents of each other's change. From his penthouse overlooking the musical
square, he counts 16 restaurants and cafe bars.
He is selling some of those refurbished baroque buildings and uses the
Hungarian capital to trawl for developments in Eastern Europe, notably in
neighbouring Ukraine.
Hungary has been good to him, turning him from a medium-sized player in
Irish property to a major wheeler-and-dealer of European property. Currently
he has several new developments on the go in Budapest, including a block of
"new build" apartments in the university district.
Of the 144 apartments, 80 have been sold off-plans. Not surprising given
that prices range from 60,000 for one of about 37sq m (400sq ft). A Dublin
equivalent, in quality and location, would cost upwards of 325,000. His
buyers are mainly Irish, with British and South Africans as runners-up in
the investment stakes.
Expanding his Budapest office this week to cater for the demand, he is
bullish about Hungary's economic prospects. Well, he would be, wouldn't
he?, given his own investment of time and monies.
But external factors support his projections, with rents and wages rising at
about 20 per cent in the past 18 months, while land values do not yet
reflect that surge.
"Property prices are cheaper here than in most of the neighbouring
countries - I can sell Budapest residential from 1,350 to 1,800 a sq m (32
to 167 per sq ft), whereas Sofia (Bulgaria) is 2,000 a sq m (185 per sq ft),
Ukraine is about 4,000 a sq m (371 per sq ft, payable in dollars) and
But external factors support his projections, with rents and wages rising at
about 20 per cent in the past 18 months, while land values do not yet
reflect that surge.
"Property prices are cheaper here than in most of the neighbouring
countries - I can sell Budapest residential from 1,350 to 1,800 a sq m (32
to 167 per sq ft), whereas Sofia (Bulgaria) is 2,000 a sq m (185 per sq ft),
Ukraine is about 4,000 a sq m (371 per sq ft, payable in dollars) and
Krakow has gone very expensive at 5,500 a sq m (510 per sq ft)."
Still smarting under the rigour of communist control, major Hungarian banks
accept existing properties as collateral for further loans, "rolling-over"
the values, which was the financial base of the historic Irish property
boom. "It took some lobbying, but finally the forint dropped," Young
recalls. Some banks will now fund 70 per cent of a prospective purchase.
His forays into commercial property include shopping centres, entire office
blocks, former government departments - bought by syndicates of investors
whom he describes as " typically two or three Irish blokes, aged mid-30s to
mid-40s, punting with some spare cash". (His definition of "spare cash", is
elastic, given one buy of a shopping mall for 8 million).
THINKING big also drives the plans of Marty Carr, whose golf services
company is a significant partner in Zala Springs, about two hours drive from
Budapest.
On a greenfield site in the wine region of Balaton, the 18-hole course is
trumpeted as of "championship quality" with 7,200 yards of drives off the
tees, and around 468 acres of playing.
Why Hungary for golf? "Because it was there!" is Carr's succinct answer,
before supplying some figures. "Hungary has only seven golf courses, about
one course for every 1.5 million of population; the comparable figure for
Ireland is a course for every 12,000 people.
Scion of the golfing family - "I have the name but not the game" - Marty's
company, Carr Golf Services, manages six courses at home and partners
investors to develop major courses overseas.
"Golf, wine and baths" is the working motto for a spa market that is
currently fashionable. Zala Springs exploits the very Hungarian capacity for
enjoying bathing in thermal waters (sometimes outdoor in winter!) as well as
the region's vineyards.
Using golf as lure, investing partners have funded a new 397-unit resort.
Family apartments and townhouses range from about 60-215sq m (645-2,217
sq ft) costing from 128,000 to around 350,000 for detached golf villas on theStill smarting under the rigour of communist control, major Hungarian banks
accept existing properties as collateral for further loans, "rolling-over"
the values, which was the financial base of the historic Irish property
boom. "It took some lobbying, but finally the forint dropped," Young
recalls. Some banks will now fund 70 per cent of a prospective purchase.
His forays into commercial property include shopping centres, entire office
blocks, former government departments - bought by syndicates of investors
whom he describes as " typically two or three Irish blokes, aged mid-30s to
mid-40s, punting with some spare cash". (His definition of "spare cash", is
elastic, given one buy of a shopping mall for 8 million).
THINKING big also drives the plans of Marty Carr, whose golf services
company is a significant partner in Zala Springs, about two hours drive from
Budapest.
On a greenfield site in the wine region of Balaton, the 18-hole course is
trumpeted as of "championship quality" with 7,200 yards of drives off the
tees, and around 468 acres of playing.
Why Hungary for golf? "Because it was there!" is Carr's succinct answer,
before supplying some figures. "Hungary has only seven golf courses, about
one course for every 1.5 million of population; the comparable figure for
Ireland is a course for every 12,000 people.
Scion of the golfing family - "I have the name but not the game" - Marty's
company, Carr Golf Services, manages six courses at home and partners
investors to develop major courses overseas.
"Golf, wine and baths" is the working motto for a spa market that is
currently fashionable. Zala Springs exploits the very Hungarian capacity for
enjoying bathing in thermal waters (sometimes outdoor in winter!) as well as
the region's vineyards.
Using golf as lure, investing partners have funded a new 397-unit resort.
Family apartments and townhouses range from about 60-215sq m (645-2,217
fringes of the course.
All are being sold off plans, with Carr claiming a 10 per cent uplift in
price for buyers of the first phase. Housing completion is scheduled for end
of 2007, with the course playable in spring of 2008.
Wednesday, February 7, 2007
Bansko Council to Invest 19 Million Leva In Local Infrastructure
The Municipal Council of Bansko in Bulgaria has approved a BGN 19 Million investment in to the towns infrastructure, which is the biggest investment program in the south region of Blagoevgrad.
The main part of the money to the amount of BGN 12 million will be invested into sites in Bansko and 7.8 million are allocated among the town of Dobrinishte and the six villages, which are also a subject to investment interest – Kremen, Obidim, Osenovo, Gostun, Filipovo and Mesta.Also in other investment new for the Bansko are the construction of a drinking water reservoir with a capacity of 17000 cubic meters above Motikata. In 2006 around ten apartment complexes remained closed due to lack of water supply. After many efforts made for providing enough resources, the construction of the main sewerage collectors 1 and 7 of the new south resort zones started, as these zones are situated to the north up to the place of the planned new Waste Water Treatment Plant. The installations are to the amount of BGN 13 million, as the resources are provided by the Ministry of Environment and Waters.
BUY PROPERTIES IN BANSKO
The main part of the money to the amount of BGN 12 million will be invested into sites in Bansko and 7.8 million are allocated among the town of Dobrinishte and the six villages, which are also a subject to investment interest – Kremen, Obidim, Osenovo, Gostun, Filipovo and Mesta.Also in other investment new for the Bansko are the construction of a drinking water reservoir with a capacity of 17000 cubic meters above Motikata. In 2006 around ten apartment complexes remained closed due to lack of water supply. After many efforts made for providing enough resources, the construction of the main sewerage collectors 1 and 7 of the new south resort zones started, as these zones are situated to the north up to the place of the planned new Waste Water Treatment Plant. The installations are to the amount of BGN 13 million, as the resources are provided by the Ministry of Environment and Waters.
BUY PROPERTIES IN BANSKO
BULGARIA, POLAND AND ESTONIA HAVE BECOME ONE OF THE MOST POPULAR PROPERTY DESTINATIONS
Some European countries saw steady increase in property prices in 2006. Among these countries are Estonia, Bulgaria, Denmark and Poland.
The Royal Institution of Chartered Surveyors analysed price growth in 26 European countries. Among these European countries Poland is the one that registered steady price increase of over 33 per cent over 2006.
Poland’s “ancient royal capital” of Krakow saw the larges price increase , where the price hike reached 58 per cent.
A high number of West European investors have been moving eastward and seeking property there, The Guardian reported.
Countries in the Scandinavian region also saw an increase in the property prices. The average hike in Denmark reached 22 per cent in 2006.
Polish agents said that the market is expected to remain active in the coming years.
The Royal Institution of Chartered Surveyors analysed price growth in 26 European countries. Among these European countries Poland is the one that registered steady price increase of over 33 per cent over 2006.
Poland’s “ancient royal capital” of Krakow saw the larges price increase , where the price hike reached 58 per cent.
A high number of West European investors have been moving eastward and seeking property there, The Guardian reported.
Countries in the Scandinavian region also saw an increase in the property prices. The average hike in Denmark reached 22 per cent in 2006.
Polish agents said that the market is expected to remain active in the coming years.
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