11.12.2007 Analysis of the Beach Resort Market, Part 1
Adrian Musgrave, BulgarianProperties
In our two previous articles, we considered the factors that have impacted on the property market in the ski resorts through 2007, followed by an analysis of current developments and key market indicators for the future. Now, we turn our attention to the beach resorts …
As in the ski resorts, where sales were more or less static through 2007, beach resort properties experienced a similar sales plateau through the latter half of 2006 to the spring of 2007. Since then, though, there has been a marked increase in interest and a greater number of off-plan property sales than in any previous year. We can identify three contributory factors behind this.
• Changes in the nationality mix of buyers
• More diverse and sophisticated buyer expectations and requirements
• Improving infrastructure and major investments in high-quality developments
Through 2005 and 2006, around 80% of foreign buyers for beach resort properties were English and Irish, with most of the remainder from a number of other western European countries, together with relatively small percentages from Scandinavia, South Africa and the USA. But this buyer mix has now changed with a decrease in the number of British buyers, who currently account for only around 35% of purchases and a significant rise in the number of purchasers from Scandinavia, the EU, Russia and other Eastern European countries and from the Middle East, together with an increasing number of local purchasers as Bulgaria’s new-found affluence continues to translate into rising income levels and living standards.
Holiday homes still top the property buyer’s list of priorities but, today, those seeking their traditional place-in-the-sun on the Black Sea coast, with the associated investment returns from tourist rental and capital appreciation, are being joined by a growing wave of buyers with an entirely different set of purchasing objectives and criteria, including: high-status homes in exclusive development areas, permanent residence in Bulgaria, portfolio building and long-term investment for retirement purposes. The current proliferation of commercial tourism projects, world-class hotels, leisure complexes and golf courses has opened up a wave of new longer-term investment opportunities and there is now an increasing demand for the continuing development of high-quality properties, with off-plan apartments in the best locations, villas and townhouses in purpose built developments such as golf courses and individual designed luxury properties, fast becoming the preferred purchase options for both new buyers and more established investors. Luxury, lifestyle choice, exclusivity and added value are the new watchwords - and this is driving a significant shift in the market.
None of this would be possible, of course, without comparable levels of investment in the underpinning infrastructure. This traditionally lags behind the more visible and profitable commercial projects and, to put it generously, there is still a considerable way to go. A number of key development projects, though, such as the direct motorway link with the capital, Sofia, the re-construction and modernisation of tourist facilities and services in the existing resorts and the doubling of capacity of the airports at Burgas and Varna, are attracting major injections of both private investment capital and EU funding which, in turn, is forming a framework for sustainable capacity growth and re-shaping the real estate market in the beach resorts.
Bulgaria is a country in transition and, in summary, we should note that nowhere is this transition more evident than along the Black Sea coast. Today’s visitor will witness a scale of commercial and infrastructure development matched only by national projects such as the regeneration of London’s Docklands. But this is all part of the process that the beach resorts must go through in their transformation from the low-cost, quick-return buying patterns of previous years, towards a stable and mature property market, with extended customer choice, added value and sustainable return on investment as its defining features.
Logically and geographically there are three distinct area of the coast to consider: the central resort strip between Bourgas and Varna, the rugged headlands, cliffs and coves north of Varna and the hidden bays and beaches to the south. These areas all have their own particular characteristics and in our concluding article next week we will explore the ways in which each of these three separate market sectors is currently evolving.
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Polina Stoykova MRICS, Executive Director of BULGARIAN PROPERTIES
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