Chill of winter descends on Bulgarian property market

Bulgaria's property market is suffering a steep decline with desperate owners selling at huge losses and developers halting work on major projects.

Holiday properties are experiencing the worst of the decline as the market is saturated and developers struggle to find buyers for big projects, according to Dobromir Ganev, managing director of Foros real estate agency.

Developer Terra Trans Consult has suspended work on a €200 million holiday village project due to the severe economic conditions. The company's Balchik Paradise complex was to deliver houses, a hotel, a spa centre, a conference hall and a cinema hall.

Four Bulgarian banks have recently raised the interest rates charged on loans and the country's leading local-currency mortgage lenders have revised their mortgage loan terms.

In Pamporovo, a once popular winter tourist resort, recently built apartments have declined sharply in value, according to Yavlena GEOS, a real estate agency based in Smolyan. They are selling at €475 for a square metre compared with €900 a year ago.

The drastic decline in prices is put down to a sharp decrease in demand from foreign property investors, a spokesman said.

Until recently the British were the main buyers in the market, followed by Irish, Russian and Spanish investors. 'There are fewer foreigners interested in buying, instead there are now cases of foreigners re-selling previously purchased property in order to reclaim as much as possible from their initial investment,' the spokesman said.

It is not expected to be a good winter season for the resort. The major British tourist operators have suspended charter flights to Plovdiv, which is where the bulk of Pamporovo holiday-makers land.

There are fears about a lack of snow as the dam that fed the resort's snow guns has been re-organised.

Other ski resorts like Bansko and Borovets are expecting lower than expected numbers of visitors this winter season and thus lower rental yields for property investors.

According to Luchezar Iskrov, chairperson of the National Real Property Association, the Bulgarian market is still to experience the worst.

Market speculators, loan borrowers and property developers are desperate to offload properties as quick as possible and turn them into cash before any further slump in their value comes about, claimed Vladimir Lafchiev, manager of property agency Viel.