Building construction in Bulgaria

Building construction in Bulgaria is the cheapest in Europe, according to a comparative analysis of the EC Harris company, specializing in construction consulting.

The Bulgarian (“Labor”) daily writes Saturday, citing the analysis, that expenses for construction in Bulgaria are anywhere between 38% and 66% from those in Southeastern UK, which was used as basis.

Values of the Bulgaria‘s buildings

The study takes into account the price of construction material and labor expenses. Values in Bulgaria vary since buildings are divided in 44 categories, such as offices, stores, logistics facilities, hotels, residencies etc.

Globally, Bulgaria is also among the countries with the cheapest construction in the world. From all 56 countries, subject to the study, only some African ones such as Ghana, Morocco, and Tunisia, and some Asian – China, Indonesia, Malaysia, the Philippines and Vietnam, have expenses lower than the ones in Bulgaria.

The top three by the lowest construction cost are Taiwan, India and Shri Lanka where one building can end up being 4 times cheaper than one in Southeastern UK.

Labor in the sector is the cheapest in Pakistan and India.

Construction is the most expensive in Switzerland.

Cost depends a lot on the prices of steel, copper, and oil.

Experts say the fact Bulgaria is in the bottom in the Old Continent by construction cost does not have such importance for investors as qualified labor and good infrastructure.

Building investment in Bulgaria

Investments in shopping malls depend on the purchasing power of the population while for office buildings the most important factors are the overall state of the economy and the ratio between supply and demand in Bulgaria.

Real estate values

The current driver for real estate values in Bulgaria, the income levels and domestic demand of the population, are set to result in a stable annual growth rate of 5-6% of real estate prices, Curtis M. Coward, CEO of the Arceland asset management fund told Novinite.com (Sofia News Agency) in an interview.

According to Coward, who is also a member of he Bulgarian Land and Property Owners Association (BULLPOA), that is a reliable, understandable, and credible number for a decade, as opposed to 20% or 30% or 40% for 18 months or so.

Although Bulgarians are the poorest people in the EU, he says, the growth in people’s income levels is one of the fastest because it is from such a low base, so as a percentage it is growing much faster than in the EU generally.

Citing the proposal of the Bulgarian government to increase the minimum wage by 12.5% in September, he points out that this is “an astronomical figure”, compared to the 1, 2 or 3% increases that can be observed in other countries.

Bulgarian real estate investment

In Coward’s words, however, Bulgaria has lost some of its attraction as a destination for real estate investment due to the deflated hopes surrounding its EU accession.

“Three years ago there was a huge inflow of what I call “hot money” around the EU accession.

People got very excited and extrapolated that Bulgaria is going to become like the UK or something like this… Not so fast! Probably too much money came in too fast”, Arceland’s CEO remarks.

He believes that the impact of the catastrophic financial crisis on Bulgaria is gradually fading away, adding that, although the country had nothing to do with the meltdown, it was swept by it like a tsunami.

Investment in a different types of real estate

Regarding investment in the different types of real estate, he highlights farm land as the soundest investment.

“Bulgaria has an enormous potential that is unfulfilled at this point in terms of its agricultural development.”, he states, adding that “on the other hand, if you want to talk about residential, or commercial, or office real estate- those are very different stories. ”

In his opinion, there has been a huge explosion of retail space n the last year, particularly in Sofia.

“There are 3 or 4 malls that have been delivered in the last year so I think we are at a balance now. I think there is more retail capacity than maybe the city can absorb quickly, so that would be a more difficult area.

The same goes for offices because so many of these complexes are office and retail together. There has been an enormous delivery of inventory particularly in the Class A level, office, and again you see a sharp drop in lease rates, rental rates, because there is so much supply competing for good tenants.

It is like a sign curve, it will go up and down, up and down. Over time, Bulgaria needs more of everything – it needs more offices, more residential real estate. Particularly residential real estate, especially in the big cities, and in Sofia in particular, because the housing stock is generally in such poor condition. ”

According to Coward, one of the biggest public policy challenges for the Bulgarian government is going to be how to transition people out of panel block apartment buildings that over time are going to become unsafe.

“We think residential real estate over time is a very solid investment and we think that will continue for at least a decade as well”, he concludes.

Bulgaria expects 70 % growth of the number of Russian tourists

Bulgaria expects an year-on-year growth of some 70% in the number of Russian tourists for the 2011 summer season, according to consular officials.

A total of 10% more foreign tourists are expected in Bulgaria in 2011 as a whole, Deputy Economy Minister in charge of tourism Ivo Marinov forecast in Ruse Friday, as cited by BNR.

In his words, most of the foreign tourists in Bulgaria will be from Russia, Germany, Central Europe, and other Balkan countries.

Marinov stressed the fact that the Bulgarian authorities have opened additional points for processing tourist visa documents in Russia, and that two airlines have been authorized to transport Russian tourists to Bulgaria, with options to authorize others as well.

The number of the Russians owners of the Bulgarian properties increase more than  70%

According to the Bulgarian Consul in Moscow Angel Georgiev, Bulgaria will see at least 60% more Russian tourists, possibly as many as 70% more than it welcomed in 2010, while the number of Russians who own real estate property in Bulgaria has grown even further.

“By the end of 2011 we expect to issue no fewer than 300 000 visas. This is a staggering growth. We have never seen such a growth in the history of visa relations between Bulgaria and Russia. For 2011 so far, the y/y growth is 63%, and compared with the same period of 2009, it is about 110%. We expected that the overall 2011 y/y growth will be 70%,” Georgiev said at the Moscow International Fair for travel and tourism, as cited by the national radio in Sofia.

He further stressed that the number of Russians owning real estate properties in Bulgaria has grown by 100% compared with 2010, while the number of tourists is up by 50% is expected to grow further.

The Bulgarian visa’s center was opened in Samara and Nizhny Novgorov

The Bulgarian Consulate in Moscow expects to be issuing about 3 500 visas per day in the busiest summer period, which is why its staff was increased with 5 additional members. On Thursday, May 12, 2011, a Bulgarian visa center was opened for the first time in the Russian city of Samara, while by the end of May the first  center in Nizhny Novgorov will also open doors for Bulgarian visas.