Bulgaria Real estate : limits and potential
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Bulgaria Real estate : limits and potential
BUILDING a big house in the mountains, as a place of refuge from the stress of city life, has long been a dream in the hearts of many in Bulgaria.
Prospects of realising the dream appear to have shrunk, after the Cabinet decided on April 21 to impose a ban on new construction on the territory of Vitosha Mountain.
Vitosha Park, as it is also known, will be off-limits to new construction, extensions of ski runs and facilities and expansion of accommodation, according to a management plan adopted by the Cabinet on Thursday April 21.
Mihail Mihailov, head of the Protected Areas Directorate of the Environment and Waters Ministry, said renovation and rehabilitation of existing hotels, and maintenance and modernisation of ski runs and ski tows, would be the only works that would be allowed under the new regulations.
Vitosha Park has a total area of 27 079 hectares. Its land and forests are 68 per cent state owned, 17 per cent municipally owned, and 14 per cent privately owned. Other facilities include 300 km of lanes, accommodation for about 4000 people, 10 km of rope way and 200 hectares of ski runs.
The plan approved by the Cabinet allocates 1.5 billion leva for the period up to 2008. Although it is a 10-year plan, the allocation has been set only up to the point of 2008 because changes may be needed. External financing may also be used.
The park is divided into three areas: strictly protected reserves where any human activity is banned, apart from transit by tourists along marked trails; a zone of limited management of the environment (53 per cent of the park), where chalets, ski runs and lanes are located; and a zone of active management of the environment comprising areas degraded by human activity, such as quarries and third-class roads, where land reclamation is planned.
The new limitation is certain to spoil the plans of some developers to make money out of building luxury houses on the slopes of Vitosha, where real estate prices have been constantly on the rise. However, prices continue to grow all over Bulgaria.
Housing prices rose by 10.6 per cent in the first quarter of 2005, compared to the last quarter of the previous year, the National Statistics Institute (NSI) said on April 21.
The average apartment price rose to 700.5 leva a sq m in the first three months of the year, up from 633.1 leva in the previous quarter.
Apartment prices were the highest in the Black Sea city of Varna, which is also among the major holiday destinations. An apartment there cost an average 1200.5 leva a sq m in Q1, up 10.8 per cent.
The capital Sofia, where housing prices have been traditionally the highest, came second with 1159.5 leva a sq m, a rise of 5.9 per cent.
Another Black Sea port and resort city – Bourgas – was third with 1069.5 leva a sq m, an 11.2 per cent increase.
The most significant rise in housing prices in the first quarter – 36 per cent – was in the Danube town of Silistra. The north-western town of Vratsa posted a 30.5 per cent rise in average housing prices and the north-eastern town of Shumen showed a 30 per cent growth.
Bulgarian housing prices rose by 47.5 per cent last year to an average of 540 leva a sq m.
Housing prices were lowest in Kyustendil, Vidin and Lovech in the first quarter of 2005. Housing prices in Plovdiv, Turgovishte and Stara Zagora registered a three per cent Q1 rise.
Real estate professionals believe that the prices of real estate in Sofia have reached a ceiling and are not expected to grow at a high rate any further. They say that supply of housing is three times higher than demand.
Over the past two years, the trend has been that there is stronger supply than demand in March. However, this year, the number of houses on offer is 466 per cent higher than the same month in 2004. Owners have hiked prices unreasonably and are insisting on incredibly large amounts of money even for dwellings under construction.
Recent International Real Estate Federation (FIABCI) data, based on the supervision of 23 countries on a monthly basis, indicated that house prices recorded an average increase of 8.7 per cent by the end of 2004 and in the first few months of this year, reported New Europe, a weekly newspaper published in Athens.
From the fourth quarter of 2003 to the fourth quarter of 2004, Bulgaria recorded an average increase of 31 per cent in a 12-month period.
Deyan Kavrakov, president of FIABCI-Bulgaria and head of ADIS Ltd, Bulgaria’s major full service real estate company, was quoted by New Europe as saying that ordinary Bulgarians, by ignoring calls about “bursting bubbles”, were continuing to demand residential property to purchase, and not only in Bulgaria.
Kavrakov said that investing in “bricks and mortar” continued to be more attractive than securities and bonds. He said there was no bubble on Bulgaria’s property market, but because of its stage of development, there might be inappropriate prices in some segments. However, Kavrakov predicted that this year the price increase of residential property would be a double-digit figure in percentage, but considerably smaller than the previous year. He said that around 2007, prices would gradually decline.
sofiaecho.com
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