Bulgarian real estate sees Russian way out of crisis

Bulgaria’s crisis-hit real estate sector is pinning its hopes on Russian holiday-home buyers rediscovering one of their favourite communist-era travel destinations.

Russians with money to burn are replacing British property buyers who rushed to buy second homes on credit several years ago and are now re-selling at half-price following the economic crisis, according to Antonia Wirt, Bulgarian section chief of the International Real Estate Federation FIABCI.

“In the past three or four years, over 200,000 Russians have bought property in Bulgaria, worth over a billion dollars (726 million euros)” in total, FIABCI president-elect Alex Romanenko told AFP on the sidelines of a conference in the ski resort of Bansko.

“Bulgaria occupies a dominant position in the real estate market in the Balkans, which has a great potential,” he added.

The similarities of the Bulgarian and Russian languages, which both use Cyrillic script, close cultural ties and the common Orthodox religion facilitate contacts and make Russians feel quite at home in Bulgaria, real estate agents say.

“Bulgaria is a familiar country, part of the former Soviet sphere, where our parents traditionally spent their holidays,” said Marina Nekrasova, head of the Russian real estate agency Best.

If not formally part of the Soviet Union, Bulgaria used to be one of Moscow’s staunchest satellites during communism.

The “excellent” quality-to-price ratio offered in Bulgaria’s holiday resorts has also made it a top property investment spot for Moscow and St Petersburg’s middle class, Nekrasova added.

Antonia Wirt of FIABCI meanwhile highlighted “the accessibility and relatively low costs of high-end services such as spas and golf.”

The Russian wave is welcome news for Bulgaria’s real estate sector.

A boom in sales to British buyers before Bulgaria joined the European Union in 2007 led to ballooning prices and massive construction, explained Galina Maximova, head of the Bulgarian property agency Sofconsult.

But in the following years, the crisis caused drastic drops in the sector.

While the total value of real estate deals in 2007 was 1.9 billion euros, this figure slumped by 33 percent year-on-year in 2008, before shrinking by an additional 45 percent in 2009 and by 51 percent in 2010, according to data from the Invest Bulgaria Agency.

Abundant offers have also lowered prices.

“Apartments in luxury mountain resort complexes are selling at unbelievably low prices of less than 750 euros per square metre,” Maximova said.

Five years ago when these complexes were built, prices would have been over 1,000 euros per square metre.

Targeting a well-off clientele, these closed complexes on the outskirts of popular holiday spots have emerged in recent years as an alternative to the wild construction that ruined once-picturesque resorts like Bansko or Nesebar on the Black Sea.

However, with current prices from 875 euros per square metre in Black Sea resorts further south, the Yavlena real estate agency is now forecasting a 300-percent rise in sales along the coast this year compared to 2010, with Russians again dominating the market.

Russians — along with Germans, Greeks and Romanians — make up the majority of tourists both in Bulgaria’s summer and winter resorts and their number is expected to rise further this winter.

In 2010, Bulgaria attracted some 8.4 million tourists, up 6.4 percent from 2009. The Balkan country also saw a 13-percent rise in incomes from summer tourism between July and September last year, official statistics showed.