Bulgaria banking on skiing, sun and snow

Europeans looking to invest their money are turning to the East, writes Caroline O’Doherty

You are in a valley between two beautiful mountains,” Mihail enthuses reassuringly although the thick wall of cloud and fog obscures the view to the end of the street, never mind the alleged 2,500 feet of ski slopes beyond. “Trust me.”

Lawyer and businessman Mihail Chobanov is one of the growing number of agents in Bulgaria vying for the trust - and cash - of western European customers looking for a place to invest in property.

The ongoing IRA money laundering investigation has put the spotlight on the business for what most agents would consider the wrong reason but Mihail is not bothered.

“All advertising is good advertising,” he says cheerily. Besides, he adds, if Ted Cunningham or Phil Flynn - by now household names in Bulgaria - were intent on putting money into Bulgarian bricks and mortar, he could not fault their wisdom of their investment.

Property prices in Bulgaria have soared in the last two years, increasing by up 100%, but they are still ridiculously cheap by Irish standards. For 2,500 Euro will get you a 1,000 square feet rural house in need of complete renovation in an isolated region with few facilities nearby.

For 10,000 Euro you can have a better located rural house in need of a further 10,000 Euro in renovation works - the favoured option for British and Irish buyers. Come up with 25,000 Euro and you can get a studio apartment along the coast in one of the less popular resorts while 50,000 Euro will buy a two-bedroom apartment in one of the better resorts.

The rental market is buoyant thanks to a booming tourist industry which has seen visitor numbers increase by a third in the past two years. The winter ski and summer hiking resort of Bansko where Mihail strides about willing the clouds to disperse is a good example of the phenomenal growth in business.

Always popular with Bulgarians, in the last two years it has been “discovered” by British tour operators and the number of Britons skiing on its slopes has rocketed.

All around the sleepy town, new tourist apartments are going up, along with restaurants, bars and outdoor equipment shops. A golf course is planned and there are talks of an airport being built to cut out the two and a half to three-hour drive from the capital, Sofia.

Business is good. Mihail, 30, and Nic, 31, started their Bulgarian Properties company only two years ago but already have 14 franchised offices scattered all over the country.

They are coy about their earnings but do not try to hide the fact that they have discovered a highly profitable, if demanding, business.

Neither do they pretend that the customers they attract have motives higher than making money and making it quickly.

Most Irish clients, like the British who make up 99% of their customers, simply want to see a fast return on their investment.

In Bansko, Mihail and Nic are showing a two-bedroomed tourist apartment of 80 square metres in a newly built complex for 64,000 Euro.

Estimated rental income would be 80 Euro per night with full occupancy during the skiing season from mid-December to mid-May and slightly less with less occupancy the rest of the year.

In two years’ time, they estimate, the value of the property could rise to 100,000 Euro but they warn that two years is as far as they feel confident to make predictions.

“Bulgaria joins the EU in 2007 and no one knows what will happen then,” says Nic. “If we follow the model of the Czech Republic, then prices will rise very quickly up to joining and then they will go stable.

But what of the long-term effects of the foreign buyers property frenzy on Bulgarian society?

Some commentators have complained that foreign investors pushing up prices in Sofia have scuppered the chances for local people to own their own home in a country where home-ownership is as highly valued as in Ireland.

The social consequences are also bound to be felt in rural areas if the local population is displaced by foreigners or if every quiet old mountain village is turned into a giant après ski lounge.

However, Mihail says the rural homes are too large and dilapidated for their elderly owners who survive alone on a pension of 30 Euro a month and rarely see their offspring.

“If they can sell their house for even 7-10,000 Euro, they can buy a flat in the old socialist buildings in the next village or town. There, he says, they can be near to other people, to a store, and see their family more often.

Nic agrees. “I am helping firstly to give new life to semi-abandoned villages and secondly, to give the old people a chance to live in dignity.”

They don’t recall ever being asked about their philosophy on this subject before, at least not by any potential Irish customers who, they say, are more cautious about sinking their money into Bulgaria.

“We get enquiries every day. But 99% of our business is still British buyers so I think the Irish are only now beginning to think seriously about Bulgaria,” Nic says.