Renting Apartments in Sunny Beach and the Bulgarian Black Sea Coast as a Foreign Owner
Renting Apartments in Sunny Beach and the Bulgarian Black Sea Coast as a Foreign Owner
Letting property in Sunny Beach can still be a profitable and success venture, however it is important to acknowledge recent changes in the marketplace to ensure you are getting the most for your ownership and your efforts. The current economic climate has changed the Bulgarian summer holiday market considerably, your advertising or marketing strategies that might have worked in previous seasons are probably in need of revision. Currently the UK / Irish demand is considerably diminished by comparison to 2007 & 2008 summer seasons, the holiday and rental demand has broadly followed the decline in property interest. However, to the same extent, that decline has been replenished by a surge in demand from Russian holidaymakers who swarmed in 2010 (up by 11% according to Bulgarian Ministry of Tourism) and are expected to come to Bulgaria next summer in record numbers. Whilst there is little doubt that higher demand will return once the side effects of the recession subside, it will be prudent to adjust your income expectations and marketing techniques to maximise your property’s appeal in the meantime.
If you intend to maintain or increase your rental income, this article will help guide you through the current demand trends, booking patterns, expected incomes for various property types and associated matters worthy of your attention (as an owner) to maximise your bookings.
Breaking down the Russians demand – how is it different?
From a UK perspective Bulgaria represents a budget option; a close, hot, affordable destination that is culturally more exotic in people’s minds than the standard Costa resort holiday that you might find in Spain or alike. No visas necessary, buyers are trusting of internet transactions and online adverts. It is common and acceptable to book a privately owned apartment via email, pay by card and try to find a better deal than a hotel or package holiday offers. As a result of this common way to book holidays, British / Irish investors bought swathes of small and inexpensive apartments to cater for a now bygone demand, thus we have significant property stock; built, sold, available and too often empty.
From a Russian perspective Bulgaria is held in much higher regard; history has forged long term ingrained cultural desire, not to mention their ability to read the language as an added bonus. However, visas are required for Russian tourists to enter the EU and thus Bulgaria. This means that Russian individuals seeking private accommodation can only book via a registered tourist agency (who has listed your property listed) in order to achieve an official invitation complete with tourist registration number and stamp. All hotels and legitimate lettings or holiday agents do too. As such, it is simply not possible for them to book via private adverts as the owners cannot provide the necessary documentation to qualify them for a holiday visa.
Approximately 30% of enquiries wish to pay by credit card, the rest prefer to pay by bank transfer or cash on arrival. Less than 10% agree to pay in full before arrival, despite our best efforts. Naturally, this doesn’t lean towards successful international internet booking with private owners.
Our typical enquiries from Russian holidaymakers are for 3 weeks to 3 months, with the average being 4+ weeks. This is often for the same value per night but for much longer periods, thus meaning that you might only need 1-3 bookings to get 100% occupancy all summer. To achieve the same from the British demand would take 10-12+ bookings, meaning 10 times the risk, administration, question answering and time.
The demand for privately owned properties is typically for 2 bedroom apartments. This is for two key reason; firstly Russian families tend to holiday together and thus require the bedroom space and size. Secondly, because hotels rooms offer a viable often cheaper alternative to studio’s and 1 bedroom apartments, but almost no hotel can rival a 2 bed property for per bed per night value. As such, if you are a family seeking holiday accommodation together and are unwilling to cover the cost of multiple hotel rooms, there is no more efficient option that a privately owned two bedroom apartment, hence the higher demand for this category of accommodation. Of course, 1 beds and studios do rent successfully too, but they do not form the bulk of the demand and must always compete with hotel offers that can be tough to beat.
Bookings typically take place between late February and late June; if your property is not advertised in Russian during these months you stand a diminished chance to find long term bookings.
Approximately a third of all tourist activity in the Sunny Beach region was from Russia in the summer of 2010, which now represents the largest single sector of demand.
What is renting and to whom?
Frontline Apartments (1st-2nd Line):
In our experience, wealthy Russian families holidaying in Bulgaria can often comprise of the immediate family members, the nanny and the pets. The vast majority of enquiries are for top end 2 bedroom apartments on the first line (beachfront) with immediate access to the sand / water and with clear sea views. Critically, this cohort of holidaymakers can afford to pay for such properties and typically want to satisfy their desires first and consider the costs second. This is a stark comparison to the typical British rental enquirer who are often cost driven as an immediate priority thus lowering the potential yield for any owner. Disregarding pre-recession prices, current demand proves it possible to achieve 325-365 Euros / week based on bookings of 3+ weeks at a time. This would be for a good quality 4*, frontline, sea view, 2 bedroom apartment with facilities
Studios & One Bedroom Apartments:
If you have a frontline studio or one bed then it will rent equally in the current climate to a wide range of tourists and not specifically to Russians. However, these are slightly less likely to achieve long bookings and 50% occupancy through the summer should be expected at the maximum, the average achievable rate is typically 180-260 Euros / week for one beds and 20 Euros / night for studios.
3rd– 5th Line Apartments:
With some distance between your apartment and the sand the achievable income and level of occupancy will really depend on the quality of apartment and the facilities that you have to offer. Typically 3* one bedroom apartments are available on the day for 30-35 Euros / night, as such you are unlikely to achieve more than this from any pre-booked holidaymakers. If you achieve pre-bookings you should accept 200 Euros / week. These properties were largely in demand by British holidaymakers on budgets, however this group were few and far between last summer (2010) and not expected to be any more prevalent next summer. Throughout 2010 we saw many cases where these properties were only rented a couple of times per month, as such the yield was very low as the current Russian demand is not aligned with this sort of accommodation. For owners in this position, see below.
Outer Area Apartments:
Many complexes have been built with marketing saying 500m from the beach, which would be true with assistance of flight but on foot the true distance is often 1km+. These apartments are very hard to rent successfully, when bookings are taken the client often wants to be moved elsewhere despite clarity in adverts etc. At this current time we suggest that the best route for these owners is to rent their apartments to domestic workers in Sunny Beach on short term tenancy contracts. It is normal to pay between up to 4-6 Euros / day based on 1-4 month contracts, this tactic results in a fixed income of 120-160 Euros / month which is considerably better than otherwise.
Why are the rates so low, there are much higher prices on the internet?
This is a question we hear all of the time, the answer is that prices you find on the internet are asking prices only, these figures represent the desired income for the owner and not what is actually coming into their pockets. Researching other owners desires by looking at online adverts is not connected to the real marketplace, even when you see they are mostly booked the price at which the booking was taken is likely to be heavily discounted from the price on the ad. In essence, the actual typical transaction price is accurately reflected in the paragraphs above and not always by adverts for the same properties.
Of course, many apartments do rent for more and some owners do achieve high rates of income, but this is true in the minority of cases and is representative of only a small proportion of the market. Bookings for the ‘top end’ rates are inconsistent, irregular and sporadic, an owner of a flash 3 bedroom penthouse can see money falling when the occasional bug spender specifically wants it, or nothing at all for a whole season or two.
The vast majority of active private owners (of regular /typical properties) achieve a lot of advertising and almost no bookings, their prices are not in line with actual demand as such they don’t achieve any significant income. The alternative is to continue spending on adverts, maybe get the occasional booking, but still have far higher outgoing costs in maintenance fees and taxes than any income achieved.
Lettings agents – who to use?
There are a variety of options when it comes to lettings agents; we have offices in London, Sofia, Varna and Sunny Beach and as such we can offer native English staff and on the ground capabilities. Other options include you advertising your own property through various UK based websites, taking enquiries / bookings and then agreeing for a local agent to take care of the transfers, key exchange, linen, cleaning etc.