Construction Costs Dropping

Tuesday, June 9th, 2009

Hi there,

As predicted, the costs for construction of real properties are dropping. There are two reasons for that, one is that the costs for materials are lower due to lack of demand and lower energy and transportation prices. The other is the lack of jobs for contractors and strong competition for the little amount of work available.

The second item – competition in the construction arena – will tend to even out over time. What we expect to happen is that the weaker (presumably marginal) contractors will be forced out of business on a financial basis. The buyers will (have) become more discerning, making sure that their contractor lives up to the contract and does the job properly the first time. The days of the “slap it together and get rid of it” are over, at least for the near to medium term.

Finally, the market prices will be limited by the partially-finished properties that were stopped due to the lack of money and buyers. It will be less expensive and faster to finish the better of these than to start from scratch. The less viable incomplete construction (with design and/or infrastructure problems) probably will be demolished over the medium term, which will reduce the pressure on the lower end of the price range.

Craig
for
Bulgaria Realtor

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What’s Happening?

Sunday, November 9th, 2008

Hello again,

There continues to be a lot of discussion about the influence of the world financial crisis and how it’s going to affect Bulgaria and the real estate market here. The problem is, it’s all discussion – NOBODY KNOWS what’s going to happen. We believe that the influence on the real estate market in Bulgaria will not be as catastrophic as in, for example, the Baltic countries (Latvia, Lithuania, Estonia), since the continuing purchase interest by the Russians and people from other eastern countries will tend to soften the blow. In October, we met some Russian families who were shopping for, and eventually bought(!) apartments in Sunny Beach. In addition, as long as they are able to retain their occupations (which is a critical factor), the ex-pat Bulgarians will also continue to invest in private residential housing, and this will provide potential bargains for them. However, the vacation apartments in large projects will likely continue to suffer as the non-Bulgarian owners try to recover their investments.

There are new clippings on the website, as usual. We also have a new RSS feed from Novinite, the Sofia News Agency (at the bottom of the right side bar) here on the blog, that was custom supplied to us by Novinite. Thank you!

That’s about all for now,

Craig

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