For sellers

Nearly half of all Irish and British owners plan to sell their Bulgarian property.

03 February 11

Although recent macroeconomic data suggests that the financial crisis is subsiding, the increasing number of enquiries from British and Irish owners seeking advice on selling properties in Bulgaria shows that the process of offloading assets is still very much in full swing.

A survey amongst the Bulgarian property owners conducted by indicates that approximately 45% of British and Irish Bulgarian properties owners are seriously considering selling their properties in Bulgaria within the next 12-18 months. The types of properties is commissioned to sell cover the entire property spectrum; from studios of just a few thousand Euros in Sunny beach up to multi million euro investment projects in Sofia.  Understandably, the majority of vendors are put-off by the true sale prices available from the few serious buyers active in the current market, thus many decide to continue their ownership and wait for better times. However, approximately 10-15% of these vendors represent classic signs of being ‘distressed’ and are prepared to exit their Bulgarian investments as soon as possible, which inevitably causes them to accept and absorb serious losses.

The expressed reasons for divesting their assets at low values typically relate to domestic financial constraints; unemployment, mortgage repayments on primary dwelling, divorce etc. Any Bulgarian overseas holiday home or investment naturally becomes surplus to requirements, if liquidated it makes for a sensible and logical source of financial breathing space.

This is of course great news for any active buyers, but not so good for Bulgarian developers and the construction industry as a whole. We expect that in the areas of concentrated British and Irish ownership such as Sunny Beach, Golden Sands, Balchik, Bansko etc, 40-50% of the actual property transactions will be from distressed vendors rather than sales made by developers of newly built property. In effect, this market will be impacted dramatically by the low value of resale property supplied by desperate vendors, a situation that will inevitably add further pressure to property prices; if it does not result in further decreases it will certainly curb, hinder and stall any price recovery.

The conclusion of our survey is that the long awaited recovery for holiday properties will definitely not happen in 2011. We expect to experience another year of property market depression, which will continue until we see the supply of low priced property from distressed vendors decrease substantially, thereafter recovery will have a chance to begin.