News For Bulgarian Estates and Property Market

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Jun. 2008 300M euro gated community to rise near Varna Electra Bulgaria, the Bulgarian arm of Israeli investment company Electra Group, will invest 300 million euro in a residential project near the Black Sea city of Varna, weekly Stroitelstvo Gradut said.

The company confirmed that it plans to build the biggest yet gated residential community in Bulgaria, called Electra Hills. The land plot it has selected for the purpose is near the Kalimantsi village, 15km northwest of Varna. The company has completed similar projects in Israel and Ukraine.

The compound will have a total built-up area of close to 400 000 sq m on a land plot of 50 ha. It will consist of single-family and two-family homes, as well as condominiums. The total number of homes will amount to five thousand. For the convenience of the Electra Hills residents, the company also plans to build a shopping centre, kindergartens, a school, restaurants, an amusement park and even a church.

07
Jun. 2008 Yachts sales in Bulgaria to increase by 30 per cent Yacht sales in Bulgaria would increase by 30 per cent in 2008 on an annual basis, Miroslav Ivanov, one of the organisers of the Bulgaria Boat Show, said. Revenues from yacht sales in the country in 2007 alone exceeded 30 million euro, Ivanov said, as quoted by investor.bg.

More than 50 new yacht models would be presented at the Bulgaria Boat Show on an area of 2000 sq m at the Varna Seaport. Elite vehicles, watches and properties would also be shown.

According to Ivanov, at least two more border checkpoints were needed at Bulgaria’s Black Sea coast because of the increasing number of tourist coming to Bulgaria by sea. The investments, allocated for the construction of 10 mixed ports along the Black Sea coast would bring an instant return and would create new jobs in the small coastal towns, Ivanov said.

Global statistics showed that a tourist with a yacht paid 30 times more money during their vacations, compared to all other types of tourists, he said.

At the end of May 2008, Varna municipal council chairperson Borislav Goutsanov said that the modernisation of Varna Seaport yacht club would cost more than one million leva. Some 200 000 leva were allocated for the reconstruction of the jetty, he said.

Varna port director Danail Papazov said that the new port would have a modern facility, providing electricity supply, water and internet to the yachts berthed at the port. A new restaurant, café and piano bar would also be built.

The Varna port had already been enlarged and could already host 120 yachts, investor.bg said. In 2009, the port would host the European yacht championship and in 2010, Tall Ships Race 2010.

06
Jun. 2008 Albena resort operator to build new gated community Albena, the operator of the eponymous resort, turned the first sod to Rila Estate, a gated residential community in the Byalata Lagouna (White Lagoon) resort, the company’s spokesperson Yovka Strashilova told Dnevnik daily.

Byalata Lagouna, a resort adjoining Balchik, on the northern Black Sea, is known for its mineral thermal springs and curative mud.

The complex, to be located on the front beach line, would occupy 21 000 sq m. The first phase alone is estimated to cost 15 million leva. Part of the dwellings have already been marketed to Russian and Romanian investors.

Albena is currently conducting fortification works at the site.

The start of the project represents a reversal of Albena’s 2007 plans. The resort operator intended to sell Byalata Lagouna last summer, however, it failed to reach an agreement on the price with prospective buyers.

Byalata Lagouna ended with a 0.594 million leva loss last year. The financial result was due to the higher buildings tax and write-offs related to the re-valuation of assets after the resort went public.

In 2007, Albena reported net profit of 17.7 million leva, a 13.7 per cent year-on-year increase. Revenues, however, were down 3.7 per cent over a 12 per cent decrease in overnight stays. The number of German and British tourists reported the largest declines.

03
Jun. 2008 US Best Travel Guide Ranks Bulgaria Top Travel Destination for 2008 Travel writer Pauline Frommer, daughter of the renowned US travel writer and publisher Arthur Frommer, ranks Bulgaria among the top 10 budget destinations for summer vacations in 2008.

The Guide's Introduction to Bulgaria says the following:

"Founded in 681, Bulgaria is the oldest state in Europe, but its roots reach far deeper into history. In the Valley of Kings, in tombs adorned with frescoes and bass reliefs, archaeologists continue to discover mankind's most ancient gold treasures -- the beautifully worked objects buried with Bulgaria's Thracian forebears, some dating as far back as 3000 B.C. Uncovering the countless burial mounds dotted throughout Bulgaria's central "belly" -- a process only started in earnest less than a decade ago -- has revealed that this was home to the world's most sophisticated goldsmiths, and prompted local claims that it was here, in the shadow of the Balkan Mountains, that Europe's first civilization was birthed."

In addition to Bulgaria, Frommer's 2008 top selections include destinations in the US, Peru, the Dominican Republic, Newfoundland and the Mayan Coast in Mexico.

Bulgaria is, however, the only European location to be listed as a top budget destination for this year.

The guide explains that "the strength of the euro has made much of Europe a budget-buster for American travelers, but it's also an opportunity to explore less heavily touristed areas of the continent -- such as Bulgaria."

While pointing out that Bulgaria doesn't yet have much of a tourism infrastructure, Pauline Frommer praises the country for being quite safe and for its "ancient monasteries and beautifully preserved medieval villages along with affordable spas and Black Sea beach resorts."

The guile lists accommodation prices in the range of $50 to $100 for budget Bed & Breakfast hotels and guesthouses and full Mediterranean meals for just $6 or $7.

Since May 2007, the writer's father - Arthur Frommer has been actively blogging about travel on the Frommers.com website. In his blog travelers can read his impressions of Bulgaria such as "Europe's budget champion, with its Black Sea beaches and well-preserved medieval villages" and "in Bulgaria you can wander the cobblestone streets of Plovdiv, sip plum brandy at a Black Sea resort, or pay just $15 to stay at the famous Rila Monastery, a grandiose medieval construction packed with painted icons amidst green mountains".

Frommer's is one of the best selling travel guides in America. Frommer's travel guidebook series began in 1957 with the publication of Arthur Frommer's book, Europe on $5 a Day. The book ranked popular landmarks and sights in order of importance and included suggestions on how to travel around Europe on a budget. It was the first travel guide to show Americans that they could afford to travel in Europe. It was a new concept for the time and has been credited with opening the door to modern tourism and travel guidebook publishing, particularly for budget travel.

Frommer's has expanded to include over 350 guidebooks across 14 series, as well as other media including the award winning Frommers.com website which covers over 3,500 destinations.

02
Jun. 2008 Agricultural land in Bulgaria 50% up What started off as a challenge in land consolidation is fast becoming an attractive financial investment. Agricultural land funds are turning Bulgaria’s inefficiently small rural land plots into bigger and more manageable farms for later leasing to agricultural operators. As domestic and international investors become increasingly interested, agricultural land prices are going up and the farming business is set to get a boost.

Land dispersion has been an issue in the country since the fall of communism. The agricultural land market has been paralysed, mostly due to the fact that plots were excessively divided and dispersed. With plots often less than one hectare in size and ownership randomly distributed, farmers who wanted to expand production have had to negotiate with an array of owners in various locations. This has had an impact on the amount of foreign investment directed at the Bulgarian agricultural sector.

Now, however, land consolidation is bringing new players to Bulgarian agribusiness.

“We are seeing a change,” Veselin Petrov, executive director of Elana Property Management, told OBG. “We have been approached by the Danish association of farmers; we have been approached by Greek, Turkish and English farmers wanting to rent land here.”

Elana’s agricultural land fund, the first of its kind, was established in 2005. The company’s Agricultural Land Opportunity Fund currently holds a farmland portfolio of 25 330 ha, at an average acquisition cost of 1038 euro a hectare. The company has a capital of 47.4 million euro and plans to extend its ownership to 37 000 ha by the end of this year.

Five funds – financial services provider Karoll’s Advance TerraFund, Agrofinance, FNI Bulgaria and Bulland Investments plus Elana – together own and manage about 60 000 ha of Bulgaria’s estimated three million ha of arable land, according to local media.

Although the buying and consolidating of Bulgaria’s agricultural plots has been pushing prices up, arable land is still relatively cheap compared to other European countries. The price of agricultural land in Bulgaria is almost a 10th of Greece’s 10 500 euro a hectare and almost 30 times lower than in the Netherlands, where the average price of agricultural land is 29 000 euro a hectare, according to figures provided by Karoll.

Prices are set to rise in the near future, as foreign investors try to cash in on the affordable land. However, Bulgaria’s cost advantage will remain considerable for years to come. “I do not believe that land prices in Bulgaria will reach those of Germany, the Netherlands or France, but there will be an increase,” Petrov said. “Now the average cost is about 1500 euro a hectare, and I believe that in five years it will reach 3000 euro a hectare.”

The rise in foreign interest is set to bring much needed know-how to the Bulgarian agricultural sector, used to operating small plots with rudimentary techniques. This inflow of foreign players is already raising the standard of production. “Some of our fund clients have rented the land and have begun the certification process for organic foods,” Petrov said. This could be an appealing new market for Bulgaria, where a large number of farming plots have not been used for decades.

The movement of consolidation, currently being spearheaded by the agricultural funds, is bound to take some time. It will take about five to seven years for significant progress to be made, according to industry insiders. Karoll currently employs 200 agents whose jobs are to scour the country and buy up land plots, concentrating on certain geographical regions.

The land funds are attracting domestic and international attention and Karoll plans to launch an IPO in June. However, some experts have cautioned that agricultural land funds are overvalued.

“When you acquire dispersed land plots to make bigger plots the price goes up. So these large plots are currently traded at a premium of more than 50 per cent,” a broker told OBG.

01
Jun. 2008 Bulgaria Work for SAPARD Receives Good Mark from EC The representatives of the Main Directorate "Agriculture" at the EC have given a good mark for Bulgaria's work in the SAPARD program.

This statement was made by Depute Prime Minister Meglena Plugchieva in front of Cyril Vulchev, host of Darik radio's Saturday show "The Week".

Plugchieva admitted that the auditors have found some oversights but qualified them as minor. The Depute PM expressed optimism regarding measures undertaken by the Cabinet for optimising the SAPARD program as well as the two other EU ones - ISPA and PHARE.

"The measures are successful and what we need now is intense work", Plugchieva said.

She declined to state the exact amount of the funds that have been put on hold by the EU for different programs.

The ISPA funds were put on hold, but with the new measures regarding the Road Agency, we expect that they become available soon", Plugchieva commented, adding that we must also secure the PHARE funds since they amount to about EUR 280 M to be absorbed till the end of the year.

"The task related to SAPARD is enormous since there is a large amount of money to be absorbed and this requires intense labor on the part of State Fund "Agriculture" in June and July", Plugchiveva explained. She pointed out that there was a request already submitted with the EC for extension of the absorption deadline till the end of 2009.