International developer ignores oversupply in Bulgaria and announces major new residential project

A Spanish developer is ignoring the current analysis that the property market in Bulgaria is near saturation and has announced a major new development near Sofia.

Hercesca International said it will invest €500 million in the building of a gated residential property development between Sofia and Pernik. The plan envisages 2,000 apartments.

It will also include a railway station which will allow residents to commute to either Sofia or Pernik with trains stopping every 15 minutes. The first phase is due for completion by the end of 2012 with the whole project completed by 2016.

Nikolina Nikolova, chief executive of the Bulgarian arm of Hercesca said she believed the Bulgarian residential property market still has potential to grow. 'We have 33 years of experience on the international property market, and what makes us different from the rest is the quality of our products,' she said.

'The most important feature for us is securing an adequate infrastructure, together with a sense of security for our clients. We are not a typical Spanish investor and developer. Our board of directors includes representatives of five major Spanish banks and that means financial stability,' she added.

But the announcement comes as real estate agents in Bulgaria confirm what the analysts have been saying for some time – the Bulgarian property market is suffering from an oversupply of properties with falling demand and low client confidence.

Mihail Chobanov, managing director of Bulgarian Properties agency, said the only sector seeing price increases is the luxury residential sector.

Teodora Dimitrova, a managing partner from the real estate agency ERA Bulgaria, said that the future of the property market would depend on persuading more buyers in the domestic market to buy a home in a modern building.

The market is collapsing in seaside resorts on the Black Sea and in ski resorts as those buying tend to on the five largest Bulgarian cities of Sofia, Varna, Plovdiv, Bourgas and Rousse, where property prices remain high.