Raising the Bar for the Smart Set in Cheap'n'cheerful Bulgaria

British buyers might be missing out on some of the best investment opportunities

European and Russian investors have been flocking to buy luxury newbuilds on the Black Sea and in Borovets. Zoe Dare Hall suggests British buyers might be missing out on some of the best investment opportunities.

Loved or hated for it, cheapness is the reason you go to Bulgaria. Cheap beach holidays, cheap skiing, cheap flights and cheap food and drink. Even in Bulgaria's number one restaurant, Musala Palace in Varna, two people can indulge themselves in style for less than 40.

The country's property market has evolved in a similarly budget-minded way. Search for Bulgarian property on Primelocation.com and you plough through 20 pages before you even reach 10,000.

Try to spend more than 100,000 and you are hard-pressed to find anything. As home to many of the country's 200,000 millionaires, Sofia, the capital, naturally has a higher number of top-end properties. But even there, only a quarter of the 130 homes shown on Primelocation hit six figures.

On the Black Sea coast, which includes Sunny Beach, the resort which has seen half of all coastal newbuild in Bulgaria, less than a sixth of the 675 properties for sale exceed 100,000. Bansko and Borovets, the main ski destinations, are even more slanted towards budget buyers. Of 280 properties, 258 cost less than six figures.

The current price range for Bulgarian property is 550-1,170 per square metre, putting it on a par with Albania at the lowest level and Budapest at its peak. So does all that mean that there is no such thing as "upmarket Bulgaria" - that good quality is hard to come by or is it possible to find real quality with unusually low price tags? Brian and Michelle Jones left Bristol last year for Bansko, in south west Bulgaria, and found the log cabin they were building for their retirement sparked interest from an unexpectedly wealthy spectrum of house-hunters.

In response, they're building large, contemporary log cabins with floor-to-ceiling glass frontages, costing up to 200,000, around Bansko in the Pirin mountains and Pamporovo in the Rhodope mountains. The latter is considered the country's most upmarket ski resort, 80km from Plovdiv airport where Ryanair are negotiating for flights to start next year.

"We've had Majorcan millionaires and French bankers wanting to buy," says Brian. "Your average plumber or taxi driver buys in Bulgaria for investment and rental returns, but well-to-do buyers want something for their own use and this is a way to get a high-quality home in the mountains for about a fifth of the price of France or Austria."

St Vlas, near Sunny Beach, is an example of attractive, contemporary design, in a prime beachfront position - yet with apartments from 35,000. Frontline properties with views of the new marina and Nessebar Bay start at 92,000. The area is in its infancy, but shops, restaurants, a five-star hotel and a ferry service across the bay are coming.

"St Vlas is in an ideal location for rentals because it's near Sunny Beach, but comparing the two areas is not comparing like-for-like," says the selling agents. "St Vlas is a quieter, more relaxing place with a mountain behind and the sea to the front, leaving little room for over-development." Since Bulgaria's EU accession this year, foreign buyers' confidence in the country has grown.

Where once the demand was purely for small, cheap investment flats, now buyers are looking for bigger, more luxurious, frontline properties which they can use themselves.

"The resale market has really picked up in the past six months - and resale buyers aren't typically looking to get in and out of the property market quickly.

"We're finding that people who have held on to their property for a couple of years in a good location, such as beside a marina or a ski slope in a good resort, are seeing returns of about 50 per cent when they sell."

Further north, near the 2,000-year-old town of Balchik, 35km from Varna airport, the BlackSeaRama Golf and Country Club is the sort of gated golf resort you expect to see in the Algarve or Costa del Sol. It raises the bar for Bulgarian newbuild villa prices, with four-bedroom cliff-top homes costing up to 330,000, set among vast landscaped gardens and with the complex's own mineral spring feeding a five-star spa.

"BlackSeaRama is a high-quality, low density golf development, more in sympathy with the environment, in a location that will remain attractive with high-spending tourists well into the future," says Lance Nelson.
Nelson points to some equally lavish ski developments taking place in the mountains - the 345m Super Borovets project, with ski-in, ski-out projects such as Semiramida Gardens, and Barco in Pamporovo. But he thinks that spa tourism is the way forward for a more upmarket Bulgaria, with genuine all-year letting potential.

"The spa town of Sapareva Banya, under an hour on a new road from Sofia and surrounded by lakes and high peaks, offers an unspoilt, year- round destination. It also has the hottest spring water in Europe and the only active geyser in Balkans," he says. One-bed apartments at Savoy Lodge in Sapareva Banya cost from 36,800 through Jet2Let.

The problem, Nelson thinks, is that Bulgaria's cheap and cheerful associations have attracted Brits in search of bargains, and they are missing out on the best investment opportunities. "Of all foreign buyers in Bulgaria, 67 per cent are British and most are attracted by the cheap properties. Quality and location are often uninspiring and prices in the over-developed resorts have dropped by up to 10 per cent this year. But many UK estate agents do not promote the expensive end of the frontline Black Sea market," says Nelson.

"There is only one frontline, as wealthy buyers and tourists know, and good quality, frontline beach apartments on the Black Sea have risen in value by 30 per cent in the last 12 months," he adds, citing Santa Marina in Bourgas Bay, 35 minutes from Bourgas airport, as a good, low-density beach development with two-bedroom apartments from 52,000. "Coastal projects like this are generating strong rental returns of 8 to 10 per cent a year, mainly from Russian tourists, but also from UK, Irish and Norwegian tour companies," he says.

Demand from international buyers working for multinationals in Sofia, and from the emerging Bulgarian middle class, is pushing up quality levels in new developments.
"Luxury properties are still within the affordable range of many overseas buyers compared with more traditional markets such as Spain or Portugal," says Prior, who is selling two-bedroom, Alpine-style villas from 115,000 at Seven Lakes in the spa town of Dolna Banya, an hour from Sofia.

Bulgaria may still largely be an investment rather than holiday home destination in British buyers' eyes, but the rest of Europe feels differently, says Robin Barrasford.

"Bulgaria was a popular holiday destination long before the UK investment market 'discovered' it over four years ago, and that isn't going to change," he says. "UK buyers' interest may wane in favour of the next big thing, but other Europeans will continue to see Bulgaria as their preferred destination. Eventuall,y the UK market will settle more into the role of long-term lifestyle buyers there."

Boutique bargains

Bulgarian property may be seeing a gradual shift towards good design and build quality, but outside of Bansko, where Savills are selling Mountain Residences for 39,000- 160,000, you will still be hard pressed to find familiar, reputable British agents selling there.

In the Black Sea resort of Obzor, 55km from Varna airport, has apartments from 49,000 and huge, two-storey penthouses costing a more Western European 250,000. But then they do have a unique beachfront position (new laws mean there can be no more frontline building in Obzor) and phenomenal, uninterrupted views of long, sandy beaches and blue - despite its name - sea.

The apartments come with large decking terraces, boutique chic bathrooms and optional Philippe Starck extras for a price. Adding upmarket endorsement to the glamorous brand, the UK selling agent is Knight Frank, who are tentatively dipping their toe in the Black Sea for the first time. So far the vast majority of buyers are Russian.

With plans for future developments around Kavarna and Byala, he says he is there for the long-term. "I'm really pro Bulgaria and I'm consistent with my pro-ness," he says. "We'll be here for at least 15 to 20 years."

Obzor's utilitarian seaside blocks may betray its past as a holiday resort for the old Eastern bloc, but Hitchcox sees great potential. "It's so close to Western and Central Europe that it's only a matter of time before it picks up and appeals to a wider market."

John Hitchcox draws parallels with Bulgaria and the Spanish property market. "Both ebb and flow with the economy and perception," he says. "Bulgaria's image to British buyers now isn't what it was three or four years ago but I think it will improve again. There's an awareness of quality now and the notion that it doesn't have to offer the cheapest solution." 

Text source: Daily Telegraph

Image source: Mirela Real Estate