NEWSLETTER

2007-12-28

01.01.2008 Analysis of the beach resort market, Part 2

As we head into 2008 and our post-Christmas thoughts turn towards summer, we are pleased to bring you the concluding article in our four-part series taking an in-depth look at the property market in Bulgaria’s Ski and Beach resorts for 2007, 2008 and beyond.

In the previous article, we considered the key factors that have impacted on the property market in the beach resorts through 2007. This analysis showed that, while the mix of buyers has shifted from being predominantly British to a much wider spectrum of nationalities, including most of the EU, Eastern Europe and Scandinavia, the demand for off-plan properties in the beach resorts has never been higher. Moreover, there have been major changes in the requirements and expectations that buyers are now bringing to the market, with a much sharper focus on luxury, lifestyle choice, exclusivity and added value.

In considering the effect of these issues, we can note at the outset that Bulgaria’s traditionally low cost base, together with the long hot summers and the natural beauty of the Black Sea coastline offers an incredibly attractive package for the tourist market. The year-on-year increase in visitor numbers to more than 5.2 million in 2007, testifies to that. But holiday bargains, beautiful beaches and summer sun are not, in themselves, sufficient to drive the transition from the cheap-and-cheerful category to destinations of choice for the ever more discerning tourist. What is also needed is development of the supporting infrastructure - both internally, in terms of the facilities, the attractions, the environment and the overall ambience that make up the individual holiday experience and, externally, in terms of access, transport, communications and services, which form the framework that supports everything else.

Matching this critical infrastructure development with rising tourist numbers, rapidly changing customer requirements and commercial development pressures presents significant challenges within the property market - and these are challenges that are now being met. Some resort locations are still at the early stages of this transition; some have varying degrees of infrastructure lag; some have pockets of over-build fuelled by the high demand of recent years. But most importantly, today’s planners, designers and developers are putting together infrastructure and construction projects that stand comparison with the very best in any of the top Mediterranean resorts. The beach resorts are moving up-market and this can best be seen by considering current patterns of development in each of the three coastal regions

The Northern Coast: previously the least developed region, it is to the north of Varna, Golden Sands and Albena that we now find some of the most exciting new developments and the most rapidly developing infrastructure projects. The resort towns of Balchik and Kavarna, home to three world-class golf course developments and a wealth of superb front-line apartment complexes, are the primary focal point but there are also many other 4 and 5-star developments springing up all along this area of the coast. In general, there is less mass market tourism here than in other areas and development is best characterised as high profile and high quality, with correspondingly higher prices.

The Central Resorts: the central coastal strip from just above Varna down to Bourgas is where the biggest, busiest and most popular resorts of Sunny Beach and Sveti Vlas are located. This is the heart of the summer tourist market with some 35000 visitors arriving through Bourgas and Varna airports every week to soak up their share of sun, sea and sand. There has been intensive development in and around the main resorts in recent years and this has inevitably resulted in some degree of concern with over-building and environment issues. It is important to note, though, that the current planning and development focus is directed towards major facilities, such as marinas and shopping malls and to the upgrading and modernisation of the resorts, as much as it is towards improving quality in the design, construction and operation of new off-plan projects.

The Southern Coast: until just a few years ago, all of the resort areas from Chernomorets, south of Bourgas city, down to Resovo on the Turkish border, were little more than sleepy coastal villages frequented mainly by fishermen and, during July and August, by local tourists visiting one of the many camping sites dotted along the shore-line. Now, though, the camp-sites are being replaced by holiday homes, hotels and apartment complexes and the villages are fast becoming highly popular holiday destinations. Development along the southern coast is tightly controlled and the key strategy is to create holiday centres without the crowds, the clamour and the pressures of the bigger, more established resorts. Perhaps the best examples of how these strategies are working in practice are to be found in Lozenets and in the slender rocky peninsula that is Sozopol, two of the fastest developing resort areas which, importantly, are guarding their non-commercial status, their natural environment and their ecology with great care.

This analysis may appear to present a somewhat mixed picture, with various, disparate strands of policy and practice at work in different areas. However, the overall development of the beach resorts can be summarised in two simple concepts. Firstly, whether it’s an airport expansion, a motorway or a marina, a golf course, an off-plan apartment project or an individual holiday home … everything that is currently being developed needs to be considered within a framework of planned growth that is underpinned by both private investment capital and EU funding. And, secondly, at every level of investment within this framework, the property market in the beach resorts now offers something for everyone, from the first-time buyer to the seasoned investor. Because we are looking at a dynamic rather than a static picture, though, it is a medium to long term investment strategy, rather than the quick-flip purchase and re-sale, that will reap the best rewards.

This series of articles has taken an in-depth look at the property market in Bulgaria’s Ski and Beach resorts for 2007, 2008 and beyond. And it is within this timeframe that we can locate perhaps the most important outcome of our analyses.

While 2008 offers a highly positive purchasing climate in all of the resorts, the full benefit and value potential of a purchase today will not necessarily be realised by tomorrow. In other words, today’s best investment is for 2009, 2010 and into the future …

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