Dear Valued Stara Planina Properties Client,This newsletter features Sofia which is probably the strongest investment option in Bulgaria. Our director has also written a short piece discussing EU membership and some of its impacts. Finally we have included some short news items. We hope you enjoy this newsletter.
Cities, particularly those in emerging economies, are attracting investors as the safest bets. As multinational companies look for cost-effective locations for headquarters or major distribution outlets, central and eastern European cities often bag the business and are inundated with workers after temporary or semi-permanent accommodation.
The Bulgarian capital city Sofia is a typical example for this trend. The population of Sofia is 1.5 million according to the official data but some sources estimate that it exceeds 2 million. The city is the administrative, cultural and industrial centre of Bulgaria and the large portion of the economical activities are concentrated there. A number of major international companies have focused their attention on Sofia as an opportunity to move part of their activities. Recent entrants include Microsoft, Deutsche Bank, Google and Hewlett Packard.
Sofia is one of the oldest cities in Europe. There is data on its existence from 5,000 years ago, and the earliest written data for residents on its lands date back to the middle of the first millennium BC. Located in the fertile Sofia valley, in the very centre of the Balkan Peninsula, on the strategic crossroads between East and West, the town was an attractive centre for many tribes and nations, travellers and conquerors. This was why it repeatedly experienced periods of upheaval and decay, but always managed to revive anew from the ashes. In 1194 AD the city joined the confines of the Bulgarian Kingdom. There followed a period of long- lasting peace and renewal of the culture.
An important fact of Sofia’s history was its proclamation a capital of Bulgaria after the liberation from Turkish domination in 1879. Rapidly the city's image changed from an Oriental to an European capital city. Today many streets, buildings, parks, and even whole neighbourhoods preserve the architectural style from the turn of the century.
There are many places of interest in Sofia, some of them dating many centuries back and others - contribution of the city's modern development. Sofia is one of the very few places in the world where temples of three religions exist next to each other. It is within one square kilometre in the city centre where one can see the Banya Bashi Mosque, the Sofia Synagogue and several Christian churches.
The gold-domed Alexander Nevski Cathedral is one of the finest pieces of architecture in the Balkans and the biggest church in Bulgaria. Craftsmen and artists from 6 countries worked on the five-aisle church in the course of 30 years and created a real masterpiece of icons, frescoes, murals and huge chandeliers. The 4th century Rotunda of St. George in the courtyard behind the Sheraton Hotel adorned with finely preserved early medieval frescoes. St. Sofia church dates back form the 4th-6th century. It has survived intact with 1600- year-old mosaic details and towards the end of the 14 century gave the city its name.
Vitosha Mountain has become very much a part of Sofia owing to its accessibility by means of the gondola lifts. Cherni Vrah, the highest point, gives wonderful views over the whole region. The winter ski-resort Aleko lies at 1868 m and the ski season lasts from early December until late spring. The beautiful scenery makes the whole area attractive throughout the year.
Property in Sofia represents excellent investment opportunity as a lot of the country's economic activities are concentrated in the capital and there is significant demand for all types of residential and commercial properties. However it is important to consider the purpose of buying when you take decision on where to buy.
The most attractive and expensive are the properties in the city centre as well as in the Lozenets and Ivan Vazov Quarters. The prices in these quarters vary between 800 and 1,400 euros per sq m for residential apartments in new buildings. Typically these prices do not include finishing works such as parquet and tile flooring, painting and bathroom tiling and equipment. It is not easy to secure a deal in one of the new developments in the centre as most are sold even before the foundations are laid. Apartments in old buildings such as this ideal buy-to-let 2-bed flat are between 10% and 30% cheaper. Some of these properties represent excellent value for money even if they require work. One thing which can add significant value to a property in the city centre is a garage as the parking facilities are very limited.
Rental market for centrally located apartments is strong with average prices of 300 euros for 2-bed unfurnished apartment. Better rental income can be achieved for top-quality luxury properties as foreign organisations are ready to pay large rent for exceptional central apartments for their employees.
Some of the suburbs also offer good deals. This depends mainly on how well the transport links are developed. For example Lulin Quarter is quite away from the centre but is connected by one of the few lines of the Sofia tube. Prices in this quarter are 500- 550 euros per sq m on average in new buildings but apartments at 450 euros can be purchased in old buildings.
As a result of lack of land plots suitable for construction and high prices in the central quarters as well as the increasing demand, the developers start to focus on new areas which are not far from the Sofia city centre. Thus quarters which were not popular few years ago now see significant changes. Manastirsky Livadi, Reduta and others now are considered 'wide centre' and demand for apartments there grows quickly.
Many properties are being built at the foothills of Vitosha Mountain in the outskirts of Sofia in quarters such as Simeonovo. Whilst they seem attractive due to their proximity to both the city and the mountain we believe their potential is a bit overestimated. They do not possess the main value of the properties in these areas which is living in a house with spacious garden instead of an apartment block. On the other hand the access to the facilities offered by the city is difficult and thus they are not suitable for rental purposes.
After the fall of communism Bulgaria's middle and high class started to form. This can be seen mostly in Sofia with the luxury properties in prestigious quarters such as this beautiful recently refurbished three-storey house.
Stephane Lambert, director of Stara Planina Properties, lives in Bulgarian since 1998 and has seen a lot of changes in the country during all these years. Below he shares his views about forthcoming Bulgaria's EU membership
Well, it is official at last Bulgaria will be joining the EU party in 2007! I believe that the impact in general will be positive – of course there are many struggles that will impact on the people of Bulgaria as the structural reforms accelerate but looking back at the experience of other countries such as Ireland, Portugal and indeed the central European countries that joined more recently one can fairly safely assume prospects for Bulgaria are looking good. Indeed some of the central European countries have annual GDP growth rates that rank them amongst the highest in the world – even above China!
Whilst the outlook is positive Bulgaria is still a country in transition. Key issues for Bulgaria to address remain, most talked about being corruption and organized crime. I think however these problems whilst existing are often over stated and do not impact on people’s daily life. For example 7.2% of the population of Britain is directly subject of criminal actions, while in Bulgaria it is 1.5 per cent. Cars are more than four times more likely to be stolen or broken into in Britain than they are in Bulgaria. As far as crime is concerned, Bulgaria has a much better position than most countries, including Britain. In fact I would say that the quality of life in Bulgaria is in many ways higher than in the UK. I am not talking about money in the pocket nor having the latest HD flat screen TV but about the quality of the way of life and the interactions between people and the values of the society. People often speak of this when they visit us and perhaps this is why so many of our clients are not just looking to buy an investment or second home property but to up sticks and relocate permanently.
So what will be the impact on the property market of the announcement of EU membership? Well to be quite frank I think that many people are trying to over hype the impact especially in saying that prices will increase dramatically. Do not panic! You still have not missed the boat. In many ways the joining of Bulgaria with the EU has already been factored into the current property market. It will undoubtedly lead to a fresh boost of interest as new investors who perhaps were waiting to see what happened with the EU entry issue will come into the market. But this will not dramatically impact on prices – except perhaps in key investment areas such as Sofia, the capital. What EU entry will bring is confidence in Bulgaria as a safe buying option (in fact I always considered it a safe option but many people may have thought otherwise). This will accelerate the flow of investments coming into Bulgaria both from EU bodies but more importantly from domestic as well as international businesses. We can expect that the standard of life (material aspects) will gradually catch up with the quality of life benefits of Bulgaria making it a winning package all round.
To finish with I thought to share with you some of the key facts that are circulating to support my confidence in Bulgaria.
We are pleased to present a new development which stands apart for its aesthetic style and excellent location. The Green Estates is being built on the edge of the town of Teteven on the northern slopes of Stara Planina Mountains. The town is spread along the Beli Vit River valley which meanders between beautiful mountain formations. Teteven has always been popular with Bulgarians as it offers excellent conditions for holidays in any season.
The town is located just over an hour drive from the Sofia International Airport and 90 minutes from the Sofia city centre. The major part of the trip is on a motorway excluding the last 15 km.
It is not a major resort like Bansko and would appeal ideally to those who wish to enjoy nature beauty, fresh and clean air, lovely scenery, and outdoor activities such as walking, cycling, horse riding, fishing, picking up wild berries and herbs. There is attraction for high mountain lovers with elevations above 2,000 metres over sea level as well as for families who would prefer less extreme activities. At present there are limited ski facilities but there is a plan for 12 km new slopes to be created in the next two years. This will increase the demand for quality accommodation and will boost the tourism in the area further. If you feel you might have missed the boat a bit with Bansko then this maybe a good opportunity in a resort that is destined to do well in the future.
The Green Estates development consists of two three-storey buildings and 22 apartments each with separate entrance from the garden, fire place in the living room and BBQ on the terrace or patio. There will be three maisonette 2-bed apartments, and nineteen 1-bedroom apartments. Even the one-bedroom apartments are spacious and can offer excellent accommodation for two families.
A cosy garden and a pool will complete the outlook and will create additional comfort. Private parking area and maintenance facilities are also foreseen. The complex is bordering the banks of the Vit River and an asphalt road.
The Teteven part of Stara Planina has always been popular but just at present starts to see the signs of its modern development. It will never be a large resorts and this is what makes it preferred place for many people who wish to stay away from the busy touristy places. The proximity of the resort to the capital city of Sofia and to an international airport, its gorgeous scenery and the excellent tourism development prospects make properties there excellent investment.
A number of low-cost air companies would start flying to Bulgaria from the year 2007, the Bulgarian National Radio said.
Four low-cost companies have already announced plans to start operations to Bulgaria after 1st January when the country will join the EU. Between those are the Ireland’s Ryan Air and the UK’s Easy Jet. They already have presented their flight schedules to the Sofia Airport. The coastal airport of Bourgas also has attracted the attention of several companies.
Hungarian Wizz Air was the first low-cost company which started flights to Bulgaria in September 2005. The low-cost flights were restricted by the Bulgarian government in order to strengthen Bulgaria's flag courier Bulgaria Air but these restrictions cannot be kept when Bulgaria joins the EU.
The Bulgarian Parliament approved the Law for Corporate taxation in Bulgaria for 2007. The law foresees the company profit tax to be cut down to 10 per cent which is one of the lowest figures in Europe.
The government is hoping to achieve two goals by this major step: firstly, to encourage most companies to declare their full income and, secondly, to attract more foreign investments in the Bulgarian economy.
The Match for the World Chess Cup between the Bulgarian Grand Master Veselin Topalov and Russia’s Vladimir Kramnik will be decided in a tie-break. The result is 6:6 points after the 12th game which ended in draw. Four games of accelerated chess will be played in the tie-break. Each player will have 25 minutes to think about his move.
A tie-break will be played on 13 October 2006 to decide the new World Champion. Vesselin Topalov is the present World Champion after winning the title in 2005.