Eastern delights fail to please
A ‘stark reversal of fortunes’ in the Bulgarian property market has been logged by property investment specialist Assetz. But France has ‘a strong and stable housing market’, it said.
’The eastern European country's market has not fulfilled its early promise as total returns have plummeted from 104 per cent to 44 per cent due to increased rental competition. Meanwhile, France rose to the top of Assetz's table, which looked at the percentage return on cash invested as a sum of net rental income and capital growth’.
In Bulgaria house prices went up by 1.6 per cent in the second quarter, putting the annual rate of house price inflation at 17.8 per cent, down from 36 per cent. In the popular Bansko ski resort prices have actually fell by 2.1 per cent, Assetz claimed.
The ‘mushrooming supply of properties’ is blamed for the slowdown. There is also fierce competition for rentals as the demand for letting has not matched the furious growth in home construction, said the firm.
’Bulgaria is facing a period of readjustment after a huge initial foreign investment’, reported Assetz managing director Stuart Law. ‘While longer term investors are still set to benefit over the next five to 10 years, as low cost property continues to attract holiday home buyers, there are no longer instant returns to be made in the short term.
‘France, meanwhile, is continuing to perform consistently well. The majority of investors want to make personal use of their property, either as a holiday home or somewhere to retire to, and they are opting for the quality of France as a sophisticated destination over emerging markets such as Croatia and Turkey’.
Bulgaria is attracting multiple property purchasers. One in every 12 purchases in the three months to July 2006 was for more than one apartment, Bulgarian Properties has reported. This is double the number in the first quarter.
‘The new trend for buyers is to look for a combination of a one bedroom apartment and a studio, rather than the pricier two bedroom apartments’, said the firm.Meanwhile local reports have suggested an Italian businessman is planning to buy a village where only two people currently live to create a resort development. Paolo Bartali says he plans to restore abandoned traditional houses.