New Year 2010
Hello everyone,
I sincerely hope that your New Year will be more profitable, more enjoyable, and healthier than the past one. As you know, we have suffered a grave loss last year with the loss of our Elena.
Her loss was not only a personal one for the writer, but also a loss to the core substance of the company Good 2004 OOD. I have been trying to sort out how to go forward in the absence of Elena, and I think that the solution is to dissolve the company. We will continue with the website, but as a pure real estate consulting operation, potentially with support from and also in the interest of our lawyer, Nikola Ivanov, assuming conditions eventually will permit the resumption of construction on the Hypnotic apartment complex he was building in southern Nessebar when the real estate catastrophe struck. Assuming, of course, he decides to go ahead with the construction.
We will continue to update you with the latest news and developments on the Sunny Beach – Sveti Vlas – Nessebar resort area. As you probably already know, last summer was not exactly a disaster – that had already happened – but there was no noticeable recovery in terms of vacationers (one interesting statistic is that there were fewer visitors, but that they spent more money than in the year before). However, the prices of real estate continued to fall, in 2009 about another 25-35% compared to 2008 (it’s difficult to estimate the market when there hardly is a market to measure). That makes many units real bargains, and there is continued stirring on the part of the “vultures” who are looking for exceptional bargains. Most units owned by foreigners are selling under conditions where the original investor gets out from under his mortgage payments, generally losing all of his principle investment. There are also a number of relatively high-quality hotels available, ranging from 10-15 room private structures to major “tourist heaven” operations. The latter that are for sale generally did not have or have lost the support of a major tourist organisation (Tui, Cooks, HotelPlan, etc.), and consequently do not have any significant traffic.
All in all, it is not a pretty scene!
The residential real estate market in Bulgaria in general seems to be stabilising. Sales in November and December 2009 were very slightly ahead of sales for the prior month (on the order of 1 or 2%). That SHOULD indicate that the market is beginning to recover, but there are warm (definitely not hot) spots and some really frigid spots where there have been no sales or building permits at all in the last quarter of 2009. This appears to be a sign of domestic demand level in the face of a declining economy. It also considers that the Bulgarians working outside Bulgaria are also suffering and many are now unable to send extra money home, simply because there is no “extra money.”
The key indicator for our coastal real estate, of course, will be what happens starting next spring, as far as the vacation visitors on our beautiful coast is concerned. If the vacation plan pre-sales start to revive – and there is some slight indication that this will occur – that could signal the beginning of the recovery.
What is difficult to appreciate is the immense amount of real estate that is backlogged in the sales channel. It is difficult to imagine that all that which is either completed or in various stages of completion will ever be sold or occupied in any fashion. This occurrence will most likely eliminate the operations that are lacking in some manner – be it a question of infrastructure, location, “modern conveniences”, or something else, even simply attractiveness to the eye. What that, in turn, means is that there will be many “ghosts” out there that are never completed. What will happen here? I suppose that eventually the wreckage of the previous wave will be removed – maybe even with explosives and bulldozers, to make way for new structures – since much of the land is potentially too valuable to let decay set in.
Although many people will ultimately lose unimaginable amounts of money, I think this will strengthen the local real estate industry. There will still be those who “push the dream,” but I think that many of these people simply will be gone. No longer there. The industry will develop along a new path called “reason” and will begin to resemble, and maybe even improve upon the models from those countries farther west.
One thing that definitely will be different is the composition of the non-Bulgarian population in the area. The current buyers (yes, there really are some buyers out there) are predominantly Russian, Ukrainian, and FSU citizens, building their own view of paradise on the ruins of the “Western Disaster.” It is highly likely that the predominant non-Bulgarian language in the area will be Russian, but not to the extent that English was five years ago. Bulgarian is relatively for Russian-speakers to learn – the alphabet is almost the same, the grammar and syntax is similar. Of course, the older Bulgarians learned Russian in school, also, before the big political changes took place. The real question is whether the Russian-speakers will integrate into the Bulgarian population or not. I suspect not. The Russians are buying – and in some cases building – predominantly upper-level villas and separate houses isolated on relatively large pieces of land, and this will tend to keep them separate from the local population. Only time will tell.
I do not have the knowledge at this time to determine whether the small villages that were “invaded” by English or Germans or Dutch or other Balkan nationalities have remained more-or-less intact. I expect that the problems there were not as serious for two reasons – one is that some of these people became full-time residents, and the other is that the investment was considerably less in value, and probably did not involve any indebtedness. These should be more stable, but there are exceptions – I saw a television report about a similar village where the local Bulgarian mafia managed to drive the English and Dutch newcomers away by continual harassment. The foreigners sold their houses for a small fraction of their original cash investment.
Well, this has been a long, rambling discourse on what I anticipate will happen in the near to medium future. I hope it is not too boring, and, as always, I would appreciate your comments!
Jimmy Craig
for
Bulgaria Realtor Blog and
and Good 2004 OOD
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