Residential property prices in Sofia stabilised during the first half of 2006, Colliers International Semiannual Residential Market Overview said. The prices increased slightly in comparison to the prices previous years.

Ivan Vazov district became the second most expensive area in Sofia where the average price reached 1325 euro a sq m, the overview said. The most prefered area remained the Doctor’s Garden where prices reached 1700 euro a sq m.

The middle segment of the market in Sofia was the most active one. Clients prefered completed property. Two-bedroom apartments were demand the most, the overview said.

The supply of holiday homes in the mountain regions registred a 152 per cent increase since June 2005. The most prefered location was Bansko mountain resort, where the apartments costed more than 1600 euro a sq m.

The coastal resort property supply increased by 37 per cent or 6000 units for the past year. More than 22 500 units were currnetly in different stages of development, the overview said.

St. Vlas resort registred the highest prices, varying between 600 euro a sq m and 1850 euro a sq m.

In Sofia, as well as in the seaside, the property supply exceeded the demand.

Real estate prices in Bulgaria have increased by 20% over the last year, according to London-based Knight Frank Estate agents.

Bulgaria ranks second in respect of property prices growth after Latvia, whose capital is enjoying a 45.3% rise for the said period, the agency’s survey showed.

The ongoing trend of significant increase is due to the low inflation rate, the growing life standard and the easy access to mortgage credits, according to experts.

Within five years, the Russian capital Moscow will rival London as the world’s most expensive city, Knight Frank’s experts note.

The index, which covers 30 countries or capital cities, is based on official statistics or local survey data.

Disillusionment with the quality of life in Britain, the cost of living and “Nanny-state” are the reasons most people cite for leaving the country, a survey has found.

According to a recent survey for Quest Bulgaria, English language monthly magazine about Bulgaria and Bulgarian property, people are shifting from buying holiday homes in Bulgaria and opting for a permanent move there. And it’s happening four times faster than in France.

The move, led by the under 50s, shows a rapid trend away from the ski resorts and the sun-kissed beaches to rural areas, with more than half of all property buyers opting for the country life.

A huge 52% of all buyers are intending to purchase in rural areas, double the number of one year ago. With only 20% for ski and 23% for coast, the turn-round in where buyers are heading is significant. Purchasers feel they can get a lot more for their money in the country areas.

Few people at first looked to Bulgaria as a permanent base, but in the last couple of years the numbers are growing rapidly: 56% of respondents said their reason for buying in Bulgaria was for a permanent move. Some young couples are even taking their children and educating them in the country.

More than half (52%) are also opting for older properties with just 29% now preferring off-plan or new build options.

In this year’s survey of more than 2,000 people, the 30 to 40 age group have gained ground with an increase of over 20%. The previous year 55% of the buyers were in the group of over 50s.

West Europeans having enough resources to invest in vacation home were looking for opportunities abroad, mainly in countries like Bulgaria, Croatia and Morocco, a Newsweek article named Room With a View said.

Countries like France and Spain have traditionally been vacation property hotspots. The high demand, however, was creating good investment opportunities in new places like Bulgaria and Croatia, Newsweek reported.

Increasing number of Brits, Germans and Dutch searched for vacation property abroad. Foreigners bought as much as 80 000 to 100 000 second homes in Spain in the past year.

Nearly half of the purchases were speculative, aimed only at investment without personal use, the report said.

Low-cost air carriers have made travel across Europe easy and cheap. Such developments added to the appeal of property purchase abroad, Newsweek reported.

Less-developed regions welcomed the inflow of foreign investment, Newsweek reported. It quoted Sofia mayor Boiko Borissov as saying that Bulgarians welcomed foreign property buyers because of the financial resources they brought along.

The torrential rains of past week, unprecedented for the last 50 years, as explained by meteorologists, confronted municipalities and the state, insurers and the affected. The normal desire to help encountered the avalanche-like financial demands of the affected to cover all kinds of losses. The restricted budget of the Emergency Fund which has allocated 55 mln Bulgarian levs, half of which already spent by mid-May, further aggravates the situation.

The affected are farms, houses, yards, streets, vehicles. The verbal war between the Sofia City municipality and the concessionaire of the water and sewerage network is but an illustration of the poor interaction between the different state, muncipal and private structures in similar crisis situations, very often politically tinted. In the heat of the floods when two residential areas in Sofia were flooded and rivers went out of their beds, the Sofia Mayor (currently running for Parliament) demanded 10 mln levs for covering the losses, and the municipality accused Sofiyska Voda AD, the operator of the water and waste water services of Sofia, that the floods had been a result of the clogged sewerage system. Sofiyska Voda, in turn, said that the pipes were clogged due to the dirt in Sofia and because the rain water had dragged all kinds of debris. One way or another, the situation again set forth two basic issues on the agenda: why the authorities, the state, municipalities, people are never prepared for similar meteorological surprises and why is the share of agricultural produce insurance still modest.

The Most Affected Areas

Although the losses from the disastrous floods are still to be estimated, the Ministry of Agriculture and Forestry announced data according to which the floods had destroyed nearly 16,500 ha of agricultural crops, mainly wheat, sunflower, maize and barley, for the period May 17 to June 3. The disaster also inflicted heavy losses on the infrastructure, state, municipal and household property in the affected towns and villages. The most problematic are the areas of Rousse, Lovech, Vratsa, Montana, Stara Zagora, Sofia, Pleven, Targovishte and Shoumen. By June 7 the Rousse agriculture office had registered losses on 3,800 ha of land under crops.

Entrepreneurs from Rousse district reported huge losses inflicted also on the vineyards, with some 40 pct of the fruit fully destroyed and some 10 pct of the vine varieties.

Many farm producers from Rousse district believe that the crop of tens of hectares planted with wheat and barley, flooded by the rains, has practically been destroyed. “Before the calamity the cereals were developing very well and we expected good yields,” the chairman of an agricuture cooperative said. According to figures provided by the mayor of a municipality in the district, the calamity has inflicted over 2.0 mln levs worth of losses.

As for Shoumen district, the hail destroyed 860 ha of land under wheat, 195 ha of barley, 250 ha of maize and 920 ha of sunflower, the chief of the district agriculture and forestry directorate, engineer Miroslavov, told the Capital Weekly. Among the worst hit in the district are the villages Zlatar and Suha reka from the Veliki Preslav municipality where the floods destroyed 30 pct of the areas under wheat, 26 pct of the barley, 18 pct of the maize and 15 pct of the sunflower. Areas of some 100 ha of maize and 330 ha of sunflower, that is, some 30 pct of the crops, have been destroyed in the village of Tzani Ginchevo and in the whole municipality of Nikola Kozlevo. The non-insurance of the agricultural produce is a serious problem in Shouymen district too. According to Miroslavov, only the farmers who file applications to the Agriculture Fund for credits insure their crops, and only because this is a prerequisite for a loan.

By June 7 owners of over 1,300 ha of land in Pleven district and of more than 1,500 ha in Lovech district had submitted applications to the district Agriculture and Forestry directorates for assessment of the losses from the flood. There have been no precise estimates as yet, since information on the losses keeps coming, the deputy director of the Agriculture and Forestry directorate in Pleven Yordan Neikov told Capital Weekly. Some 9.6 ha of areas under melons and water melons have been completely destroyed by the floods. Complete assessment will be made after the water withdraws from the areas. The insurance companies - Allianz, Vitosha, Orel and Bulstrad have the biggest number of clients in Pleven and Lovech district. Allianz has reported that the company is to cover the losses for over 150 ha of insured agricultural land.

The Fund Will Have To Undertake Something

Although the final losses have not been estimated as yet, the affected municipalities have submitted 260 claims to the Commission for crisis management and emergency situations to the total amount of 19 mln levs. For the time being the commission has decided to allocate 6.6 mln levs - about one third of the needed amount. The commission will also demand material and technical assistance from Directorate 19 (environment and calamities) of the EU and from NATO. This took place after a week earlier - on June 1, the Commission for crisis management and emergency situations decided to allot other 8.7 mln levs despite the financial problems of the fund itself. Some 25.5 mln levs of the 55 mln lev budget were spent by May 4 to cover losses from other calamities from November 2004 to May 2005. The necessity of keeping 16 mln levs as a reserve forced the government to provide additional 8.0 mln levs for the fund. All that will hardly be a consolation for the affected, on a purely personal plane, taking into consideration the fact that the money from the fund is destined to urgent repairs, to cover damages inflicted on infrastructure, state and municipal property, schools, libraries, culture houses, churches, etc. Only after meeting the emergency demands can building materials be provided for affected private property, officials from the Fund administration said. So, the major problem comes to the fore, and it is about

The Insurances

The press office of Filiz Hyusmenova, minister without portfolio, responsible for crisis management and emergency situations, reminded that the Emergency Fund had never covered losses inflicted on agricultural crops and animals and would not do it now either. According to data of Hyusmenova’s establishment, only 5.0 pct of the affected immovable property has been insured. According to data from the affected districts, the cases of insurance of agricultural produce are but exceptions. Daniela Konova, chairman of the Bulgarian Insurers Association, stresses the growth of agricultural insurances this year, made mainly by big agricultural producers and farmers who have received subsidies from the Agriculture Fund. Most of the small farmers and producers have not insured the crops and animals and their losses will not be compensated.

The growth of the house property claims is but insignificant, Konstantin Velev, executive director of the Orel insurance company, says. The losses are huge but the property hasn’t been insured, he said. The major problem in his view is that the citizens rarely resort to insuring their property and in this case, the state should not cover similar losses. He also stresses the acceptable insurance prices. For 20 levs one can insure his immovable property for an insurance amount of 10,000 levs. Prices are higher concerning vehicle insurances. There are some problems concerning the municipal and state property although its insurance is obligatory. Yet, it is normal practice for this property to be insured for minimum insurance amounts and respectively, the compensation paid in the event of damages and losses is extremely insufficient, which is an additional burden for the state budget, Konstantin Velev said in conclusion.

OLD PROPERTY DECREASES IN VALUE

Property prices in Bulgaria were beginning to stabilise, Capital newspaper reported.

The price of old property began to decrease due to the mass construction in bigger cities and in popular resorts.

Property prices went up by 4.7 per cent on the average during the first three months of the year, data of the National Statistical Institute said.

Until recently new and old property sold at nearly the same prices, Capital reported. Location, quality of additional works and the completeness of the project came as secondary factors.

In Sofia, Varna, Plovdiv, Bourgas and Bulgaria’s coastal resort supply already surpassed demand, which started affecting prices, Capital reported.

Despite the decrease the National Statistical Institute presented prices remain stable overall without great changes. Six cities registered price decrease in the second quarter of 2006, including Blagoevgrad, Kurdzhali and Plovdiv.

A new report has revealed that Bulgaria is making good progress towards meeting its required targets for entry into the European Union.

Bulgaria is confident of accession into the EU in 2007 and despite an earlier report insisting that some improvements would be needed, the latest research from the EU has found that the country is now making good progress. It had previously been stated that there were a number of areas that Bulgaria needed to work on to guarantee its accession and the latest report suggests that the country is now well on its way to meeting those targets.

Franco Frattini, European justice, freedom and security commissioner, has stated that Bulgaria is doing well in its attempts to improve the battle against organised crime and fraud – two areas in which the country had been ordered to improve. Mr Frattini is visiting the country ahead of its expected accession next year and according to the Sofia Echo, he has been impressed with the efforts he has seen to improve the country.

The continued progress of Bulgaria in areas such as crime is also helping to improve the country’s reputation and increase the number of people looking to visit the country. As its tourism continues to grow – and it is anticipated that the number of people entering the country over the coming few years will grow significantly once it becomes an EU member state – the opportunities for property investors are set to boom.

And as the country continues its progression towards entry in to the European Union, it is also aiming to develop its tourist economy. According to Bulgarian news agency BTA, the Bulgarian government has recognised that there is now a need to bolster interest in the country with travellers and to boost the country’s image abroad.

Therefore, a recent summit of interested parties concluded that, although investor interest is currently high, without a strong tourist base that demand from investors will quickly drop off. It was agreed that international promotion of Bulgaria as a top tourist resort is needed and this consensus also brought offers of help from the private sector. Private companies involved in the talks stated that they are ready to help the country realise its potential by pushing it onto the world stage and helping devise strategies and advertising campaigns which would benefit the national economy by enticing more visitors to Bulgaria.

Ski and seaside tourism have already been two areas which have proved highly successful for Bulgaria and the country is now aiming to build on this reputation in these areas as well as expanding into new sectors, such as cultural and alternative tourism.