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03.10.2008 Brokers: The Financial Crunch Cooled Down the Property Market

Dnevnik Daily, 03.10.08, Zornitsa Markova

The financial crunch has had its positive influence on the real estate market in Bulgaria because it protected it from overheating and even from a real estate bubble. This is what some experts and consultants working in the property sector think.

The crunch has reached every market segment – both real estate and the commercial projects. The results are obvious – some developers gave up their investments in mountain and seaside resorts. Another sector that is endangered – that of the commercial centers, is also to cool down. Currently there are a number of projects for malls all around the country but only some of them will be actually realized, experts say.

“As a whole we find this situation more of a healthy one than worrying. This means that only projects in which the investor has solid capacity, good concept and long-term strategy will start being realized”, says David Davidov, one of the managers at Colliers International.

“I still think that the global financial crunch came to Bulgaria just in time as our market needed cooling down in order to avoid the real estate bubble we witnessed in Ireland, Russia, Romania, Kazakhstan and Latvia’, says Mihail Chobanov, executive director of real estate agency Bulgarian Properties.

According to Sergey Koynov of Forton International the financial crunch is felt in all sectors. This is true for the office sector where there are projects for construction of 1.5 million square meters in the months and years to come. This is a few times more than the existing office spaces and exceeds by far the demand on the market. “Quite a few of the projects, however, will not be realized that fast or will not be realized at all. The good projects will continue to be built but in phases. We hope the investors will not allow an oversaturation of the market”, Mr. Koynov said.

All these issues and the new trends in the sector will be discussed at the BalREc conference to be held on October 9th at the Sheraton Sofia Hotel.

Survey

To what extent can the Russian buyers compensate the reflux of British buyers and who are the new potential buyers?

Mihail Chobanov, Bulgarian Properties

- I can explicitly state that the Russian buyers cannot make up for the lost British and Irish buyers. The Russian clients are more timid, more demanding, they are looking to buy ready and quality properties therefore they cannot be compared the English who bought the property without ever seeing it. Currently there is no one to replace them as the situation on the other traditional markets is not all that good either and this leads to a withdrawal of the buyers from Poland and Latvia as well. The fear of a global crisis was a kind of a brake. The awaited Romanian buyers were not as many as they were hoped to be because they are scared by the speculatively inflated real estate bubble in their own country. I can say without any doubt that there is no huge Greek market for Bulgarian real estate. However, I think that the financial crisis came to Bulgaria just in time to cool our property market down.

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