It begins on the plane from Britain: pick up a copy of the in-flight magazine of Bulgaria Air, and almost every other page carries an ad for the latest Black Sea apartment complex, each apparently more glittering, splendid and — above all — profitable than the last.
Pitch up in Sunny Beach, the brash heart of the coast, and the streets are full of estate agents peddling luxury flats and seaside villas. People go on holiday here, it seems, as much to snap up property bargains as to lie on the sand.
“There must be 40 or 50 agents here now, but very few of them have any experience or know what they are doing,” says Mihail Chobanov, 30, co-founder of Bulgarian Properties, one of the country’s best established agents, whose little office in the resort is already surrounded by several clones. “You get one kiosk selling clothes, the next one selling hamburgers and the one in the middle selling property.”
The Bulgarian property market is booming. Old-style communist resorts that were once the summer playground of Russian, Czech and Polish workers are being demolished and replaced by a Balkan version of the Costa del Sol. In scenes familiar from the Spain of the 1970s and 1980s, virgin coast is filling rapidly with apartment blocks and prices are climbing steadily. The price of land, meanwhile, is going through the roof: plots five or 10 miles inland are being snapped up even if the sea views are so distant that you need a telescope.
Curiously, though, the boom is being driven largely not by people looking for holiday homes for their own use but by investors lured by rock-bottom prices and the hope of rapid returns.
The Bulgarian coast, stretching for more than 100 miles between the Romanian and Turkish borders, certainly has much to offer. Those seeking sun, cheap beer and noisy nightlife will make for Sunny Beach or the slightly leafier Golden Sands — known respectively as Slanchev Bryag and Zlatni Pyasatsi to Bulgarians, they have been rebranded under English names for the British market. Other more upmarket resorts are also springing up in quieter coastal locations. And in the ancient city of Nessebar, about a mile south of Sunny Beach, the Bulgarian coast can boast a world heritage site that was already a Greek colony in the 6th century BC.
Golf, the great motor behind much Spanish property development, is also on its way. Gary Player, the South African veteran, is involved in developing two courses near Kavarna. Others are planned, with a mixture of foreign and Bulgarian backers. There is also talk of exploiting the country’s traditional spas and exotic mud treatments.
The growing interest is reflected in the tourist numbers, especially from the UK. More than 250,000 of us went on holiday to Bulgaria last year — 62% more than in 2003 and more than three times as many as in 2001. The overall number of visitors, at just over 4m, was up 14%.
Many Brits have been combining holidays with a little judicial home-buying, lured to Bulgaria by developers offering low prices and promises of high yields and double-digit growth. Much of the action is off-plan, with some investors already cashing in and selling on flats during the typical 15 months it takes to build them.
Despite 40%-50% increases in the past year or so, property remains remarkably cheap by Spanish, let alone British, standards. It is still possible to buy a studio in Sunny Beach for as little as £300-£400 per square metre, although the view from your window will be of concrete rather than sea or sand. Remember to check out the soundproofing, too: at the height of the season, the music in the open-air bars is still pounding at 3am.
Moving up the scale, Manchester-based Bulgaria Revealed is about to start selling flats in Emerald, a luxurious resort at Ravda, a few miles from Sunny Beach. Building began only this summer, but the developers are confident it will be ready in time for the high season next year. To sweeten the deal further, there is a guaranteed yield of 4.5% next year, followed by 7% in 2007.
“We are going to install a webcam so people can see, 24 hours a day, their apartment being built,” says Maria Chepova of Pioneer Development, which is constructing the complex, as she picks her way through the muddy building site with Mina Valcheva, one of Bulgaria Revealed’s property agents.
Near Kavarna, Bulgarian Properties is offering an even more generous 9% guaranteed annual yield — albeit only for an initial 18 months — on its Saint Nicola Lodge of 18 one-bed and nine two-bed flats. Due to be completed in May 2006, the units — all with sea views — range from £39,200 for a 73sq m one-bed flat (which works out at just over £540 per square metre), up to £88,750 for a 165sq m penthouse with two bedrooms.
It would be foolish, though, to base a long-term strategy on rent guarantees that are limited in time and difficult to enforce if things go wrong. With most purchasers buying to let, everything depends on the ease of finding tenants and how much they are prepared to pay. The holiday business in Bulgaria is largely package tour-based, so this normally means finding an agent dealing with Balkan Holidays or other operators, who will rent your flat for the season.
Unlike Spain, with its mild winters, the Bulgarian season lasts a maximum of 120 days; the beaches that seemed so welcoming in July and August can be dusted with snow in January and February. So just a few weeks empty during the season can cut quite sharply into your return.
But, as Jeremy Leach, 34, an IT specialist from Reading, has discovered, there is certainly money to be made. Since spotting Bulgaria’s potential two years ago, he has invested more than £110,000 in two flats on the coast, a village house in Nikolaevka, 14 miles inland, and some land — and reckons to have doubled his money already.
Whether this will continue to be the case remains to be seen. After selling on the first flat, in Varna, in April for a healthy profit after just over a year, he has tried to repeat the trick with a second apartment he bought for £46,000 in the Fort Knox development in Sunny Beach. Three months later, it is still on the market.
“In the past year, so many builders have been flooding Sunny Beach with new off-plan apartments that the level of competition has gone up drastically,” says Leach, who is asking £55,000 — about £3,000 less than the developers want for finished units.
“It seems easier for people to sell off-plan apartments than real ones, because they have huge marketing campaigns for them and everybody is trying to grab them before they go. But if they do have some flats left over once the building is finished, the development companies don’t have so much to spend on the marketing.”
Although Leach remains bullish, the difficulty he is having in disposing of his latest apartment is seen by some experts as a warning sign of trouble ahead. According to this pessimistic scenario, the bargain prices that are Bulgaria’s main selling point will gradually converge towards European levels, especially once the country has joined the EU, likely in 2007. If this in turn dampens the growth in tourist numbers, they warn, then the tour operators will cut the amount they pay to rent flats, squeezing yields.
Patrick Berger, who has analysed the Black Sea property market for CA-IB, an investment bank that specialises in emerging Europe, is concerned at the sheer size of the flood of British and other Western money pouring into Bulgaria in search of investment projects. He fears the result could be the kind of overbuilding that has blighted much of the Costas.
“If you want to make a profit, then invest now, but you need to monitor developments and time your exit from the market carefully,” Berger says.
“It’s not something where you can invest and then just go to sleep at night, because overnight they might start building a mega-complex next to you.”
Jonty Crossick, co-founder of Brighton-based Ready 2 Rent, which has already sold more than 130 flats off-plan in Bulgaria for other developers and is developing three complexes at Kranevo, Obzor and Akutino, has little time for such doom-mongering.
As Crossick sees it, high economic growth and foreign investment, rising tourist numbers, a stable currency and political system and impending EU membership make for an irresistible combination. A further boost is likely to come from the eventual arrival of low-cost airlines that will bring in individual tourists alongside those on packages.
“Once Ryanair and EasyJet get in there, it will be a whole different ball game,” says Crossick. “We wouldn’t let our investors go into these off-plans unless we felt there was real demand. There has actually been a flattening off in the supply of developments, while tourist numbers are still going up. It’s like Spain just before it joined the EU.”
- flytolet@sunday-times.co.uk; www.ready-2-rent.co.uk; www.enjoybulgaria.com
On the market
One-bedroom flats with 420sq ft of floor space are on sale in Kavarna for £15,500. The flats, in a seaside resort, are with Bulgarian Properties, 00 359 886 080 808, www.bulgarianproperties.com
Prestige Apartments, near Sunny Beach, has one-bed (from £41,000) and two-bed flats (from £72,000) available, all with air conditioning, through Buy in Bulgaria, 0845 056 8629, www.buyinbulgaria.com
These one- to two-bed flats are available furnished for £58,000-£69,000 and are located between Sunny Beach and Nessebar, 300m from the beach. Property Frontiers, 0870 429 2884, www.propertyfrontiers.com
Eldermere Gardens is in Yunetz, about five miles from the Black Sea. Villas cost from £24,500 per plot, plus building expenses of £260 per sq m. Bulgaria Revealed, 0845 054 8697, www.bulgariarevealed.com
