Bansko property prices begin to recover, finally good news for the troubled ski resort.

No other area in the Bulgarian property market suffered losses like Bansko, it was a perfect storm that saw the combined ingredients of excessive foreign investment, burgeoning market and the collapse of the world’s economy as we knew it. The reality for most Bansko buyers was that their off-plan investments were never built, never finished, repossessed, or, if lucky, operational years later and worth 80-90% less.

Ten years on Bansko has finally become a subject of positivity; property in Bansko can absolutely be sold, prices have risen and there is solid evidence that values continue to climb.

Would anyone suggest it has become stable enough for investment? Not us and not most investors just yet, but that doesn’t mean it is not perfect for holiday homes and weekend usage, which is the common conclusion of the domestic audience of Bulgarian buyers who are buying in droves.

Average income for Bulgarian families has increased by 21% over the past 24 months, meanwhile the average household expenditure has increased by 7% over the same period, the difference is effectively disposable income and its impact is obvious everywhere. Particularly in Sofia money can clearly be seen in the streets; new restaurants are opening weekly and its now hard to get a table in any of them, the public clearly can afford choices that they couldn’t during 2008-2016 and many are focussing their new found wealth on bricks and mortar. Domestic mortgage lending is now growing at a pace of 50 Million Euros / month, last month the National Bank announced its awareness of the possible overheating lending market and its intentions to apply cooling policies if required, but nothing official implemented as yet. 

Part of this 50 Million Euros / month is heading to Bansko as Bulgarian banks have opened lending to Bulgarians against Bansko assets, which for so many years were considered toxic and off limits. In September 2017 estate agencies across the market all witnessed a fresh new wave of demand just ahead of the ski season, particularly Sofians seeking Bansko properties under 20,000 Euros. Old stock sold, new stock was listed and it sold for higher prices, the winter passed and the frenzy calmed, but off-peak demand has since stayed constant and hope has been resorted.

What went wrong and why is it any different now?

The fundamental issue with Bansko was always that its rapid growth was poorly governed and allowed to deliver low quality services, loosely planned and almost unlimited accommodation construction, the supply of which collectively far outstripped its actual revenue potential from locals and inbound tourists. The maths never worked and only a continuation of a global property boom could have secured its survival from development stage through to success and sustainability. With macro scale influences being withdrawn halfway, left to survive on its own merits and still in its infancy, it failed to attract significant numbers of holidaymakers and its single gondola with limited slopes failed to accommodate anywhere near enough skiers to keep the bars, apartment complexes, hotels (30,000+ beds) and restaurants open and profitable.

Of course local greed was a major catalyst too, especially when developers turned their turrets towards foreign owners to target them for grossly inflated maintenance fees to make up their losses. Too often these ‘lucky’ owners who actually owned a finished entity would find themselves with heating bills higher than the gross rental income from the season, leaving few options but to keep it empty and stomach the running costs, or sell and wait for better times. The latter is now finally an option.

Today Bansko is physically much the same, but the past attitudes akin to that of a temporary exhibition have fortunately faded. Restaurants are again operated by locals rather than Sofian developers with no permeant or local staff, no culture of the area and no concern for market pricing or quality. Attractions have begun to operate all year round as those who live there operate them for the sustainable regular trade, not just 2-3 months of targeting a minority of higher paying international tourists. The gondola queues are still horrific, the infrastructure leaves much to be desired, but the area is less opportunistic and has made a step towards becoming more like the real Bulgaria. 

What are the prices now?

If there is a ‘but’ in the story of Bansko it is that you can sell, ‘but’ you cannot get back what you paid, not now in any case. That said, in some cases properties are selling for twice what they did in 2010-2015, which probably sounds more impressive than it is because in reality studios, for example, in Aspen Golf were selling for 6-7,000 Euros are now sell for 12-14,000 Euros. So, nominally the returns are still limited and not close to those of 2008, but at least buyers are in steady supply and at the market price sales do happen, which is a refreshing trend for anyone fed up with their Bansko losses. Closer to the gondola prices are naturally highest and a typical 1 bedroom apartment within close proximity will trade at 25-30,000 Euros within 1-3 months of coming to market, which probably could not have sold for more than 16-17,000 Euros a few years ago after a year or two of marketing.

The desire from Bulgarians has very much replaced the relatively brief interest from Russians, it also far outweighs interest from Greek and Israeli buyers that is much discussed by agents but actually rarely seen. Looking at what they want and what they actually buy we can summarise Bulgarian domestic interest as commonly being for:

• Finishing buildings with Act 16, which qualify for a mortgage
• Operational buildings with facilities
• Complexes that operate all year round
• Realistic maintenance fees
• Town, golf and gondola, all equally considered as they travel by own car

In conclusion, Bansko owners can breath easier this winter and either rest assured that their losses are decreasing as time goes by, or they can now step out of their ownership by taking a smaller hit than any time since 2009. We are still an unknown number of years away from full recovery, but it is a sustainable start.