The Demand Defines the Market

Imam Imot Magazine, January 2010

It is true that the demand defines the market. However, according to Ilian Nikolov the demographic issues will be among the main reasons for the lack of demand. “2.5 million Bulgarians are pensioners – they are not property buyers but property owners. Where should we import people from – Moldova or Macedonia? People here must have good income and buy property. It is a financial injection for the market. Russians buy in Varna, Greeks buy in Bansko. What about in the other places?” asks the RE/Max Regional Director.

There is an increase in the number of deals with British buyers, says optimistically Mihail Chobanov – the Chief Executive Officer of company Bulgarian Properties. “Bulgarian Properties was an active participant on the market when a number of rural properties were purchased by foreigners. All the money that was received was invested exactly on a demographical principle – the smaller settlements grew and from the smaller settlements the resources went to the bigger cities. This is a serious factor which was a main driver of the residential property market. The new foreign buyers who started returning to the market looking for rural properties are a positive signal. They make up a big percentage of the total number of the actual deals we conclude. And not only that – there is also a kind of an awakening of the British press as well, of the most respected local editions – a recalling of Bulgaria through its inclusion in Top 3, Top 10 rankings. This is an invitation for these people to start buying” Mihail Chobanov says.

“If we think of the market in retrospection – the last 10 years of its existence – it is not a big period and yes, we made a lot of mistakes, but the market developed. During the five years of the property boom a lot of investments were attracted, people bought new properties. Therefore, one mustn’t think of this market as of some kind of an apocalypse. It will exist, it will develop, it will regulate itself and it will find some normal levels” – adds Polina Stoykova, Operations Director of Bulgarian Properties. “We cannot say what are the normal levels of a market that was at first completely closed, missing in some spheres (there was no rural property market until 6-7 years ago) so good things are yet to happen and we will mend the mistakes we have made”.

The holiday property segment was the first to feel the oversupply and some serious mistakes were made there but a lot of foreign investments were made in that segment which allowed some positive things to take place, an economic boom to take place”, Ms Stoykova states.

According to Mihail Chobanov Bulgaria is already a global player – in November buyers from 21 nationalities bought a property in Bulgaria through his company.

“If there is no business in the country, if there is no one to buy then even if we build something beautiful and advertise it who will buy it?” puts the debate down to earth Ivan Velkov. He backs up his statement thus: a couple of years ago we entered the EU but we did not turn into a EU country. Bulgaria with its quite feudal system in which we work is the most underprivileged EU member state. Everywhere there are very clear rules and regulations or the markets have a long-term policy. We only follow the drift of the waves. We don’t change anything. For the last few years many companies opened plants and regional headquarters in Romania but no such thing happened in Bulgaria. A company opened a 10,000-square-meter office in Romania and the same company was looking for an office of 150 sq.m. in Bulgaria. This is our big problem – we didn’t manage to become competitive on the big stage although no one forbade us. We continued to look into the small stuff from which we benefited in the short term, we benefited small things but didn’t invest in big things which would be more beneficial for the whole country in the long run.

There are no economic prerequisites for a more dynamic market in the cities. We can talk about Sofia and Varna but the big problem are not only the towns of Rousse and Stara Zagora but also those 20-30 towns in Bulgaria which had some economic life or at least hoped that in 2-3 years something good will happen to them as well.

Compared to the other European countries our distinctive trait was that in Bulgaria there was an equal economic and demographic opportunity for a specific production to take place. And if there is no production then we can’t want something good to happen because this limits the opportunities.

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