Bulgarian property boom

More than 800 000 building permits are issued this year in Spain – the number greater than for the UK, Germany and France together. This is record breaking statistic, even for Spain with the years of rapid overbuilding, which worries the experts. The economists warn that the building rate is too high, even risky for investment.
For the moment there is no reason to believe that something will stop the building boom, even though the property prices have grown uninterruptedly and now they are three times higher than in 1987. But despite this the real estate sector is experience a great demand from the Europeans from Northern countries, where there are less sunny days. The properties become more and more important for the country’s economy, as during 2004 they generated 18% from the GDP of Spain, and 20% of the occupied population are working in the real estate sector.

The worries origin from the probable growth of the interest rate in the next few years, followed by property prices crash.

In Bulgaria the issued permits for the whole 2005 are not more than 15 000. In the meantime the mortgages have increased with 116% according to the last data from the Bulgarian National Bank. The average monthly increase is valued to 54 mln leva.

In Romania the price of the building plot has tripled during the last 3 years. This fact causes bad forecast for the development of the property market there, because of the decreased return of investments.

The property market in the whole Spain is moving up, especially near the big cities and at the Mediterranean seaside, where the promotion is the strongest one. The interest in the detached southern regions is also growing, due to the better road infrastructure and the increasing number of cheap airfares. In these regions there are also 25 projects for building golf playgrounds.

For comparison, now in Bulgaria there are only few golf playgrounds – one in Elin Pelin (near Sofia), one in Ihtiman and one in Sliven. There are also two running projects for new golf facilities near Dolna Bania and in Bansko. Other playgrounds are planed to be built in the village of Katina (near Sofia) and in Razgrad, Kavarna and Primorsko. There are two more in th beginning of their development – between Bansko and Razlog and in Balchik.

In Bulgaria, as in Spain, there is high building activity, reaching overbuilding in some places. There is permanent investors’ interest in both countries. Many Brits are building homes in Spain, but some of them are building also in Bulgaria. Even so, the difference is still big, because Spain is much bigger (504 750 sq km) than Bulgaria (110 993 sq km). Moreover Spain is a member of the EU from 1986 and the expected earlier date for Bulgarian membership is in 2007. It is to be seen how long and in what pace will continue the property boom in both countries.