Sofia, 2 November 2006, Monitor Newspaper By Vassil Nanchev

18,5 per cent of all foreign investments in real properties in Bulgaria are made by Austrian citizens. That is what Ivan Mekoushin - the Executive Director of Winslow Developments said during the first day of the Construction and Investment Forum R1№FOR. The forum, which started yesterday and is being held at the Sheraton Hotel in Sofia, will run until tomorrow.

According to the statistics maintained by Winslow Developments, the British investors hold the leading position with 20,3 per cent of all investments, followed by the Austrians and the Danes – 15,3 per cent. The total amount of foreign investments in Bulgarian real estates made over the past year is € 538 million. What we expect of 2006 is a 12 % increase in the number of real estate transactions, said the Head of Winslow Developments. We also expect significant increase in the number of flats and houses in Sofia purchased by foreign citizens and Bulgarians coming from the country. In 2007 the prices of real estates located in the most prestigious neighbourhoods will rise by at least 10 per cent. Mekoushin predicts a downward trend in the price rise in the country as a whole.

The main reason for the slowing down of the rates of price growing is the significant investment activity generating increased supply, added Mekoushin. However, the demand for rental housing is not so big and this leads to decreasing interest in real estate investments, explained Mekoushin.

The increased supply makes the buyers of real estates more demanding and they are looking for better quality products. This refers mostly for well-to-do Bulgarians. Trusting their brokers, foreigners and other buyers are willing to quickly conclude purchases of real estates. Clients of smaller means usually choose flats in panel buildings located in the peripheral parts of towns. People from the emerging middle class prefer to invest in newly-built housing but are not fastidious about the location. Naturally, the expensive dwellings in prestigious areas are purchased by the most solvent clients, added Mekoushin.

According to the head of Winslow Developments, next year there will be greater interest in buying old buildings which will be renovated. Increasing number of investments will be directed to closed-type complexes where the flats are more expensive.

At present the greatest demand is for two-and three-room flats having area of 50-80 sq.m, said Mekoushin. The smaller flats are usually bought to be let out and the main requirement for their location is to provide direct access to public transportation means, so that they can easily attract tenants. The functional internal arrangement is the principal criterion when selecting dwelling units for personal use. In the years to come we are expecting an increase in the number of sales of larger flats, said Mekoushin.

The accounts of Winslow Developments show that there will be а decrease in the number of dwelling purchases for speculation purposes due to the downward trend in the price rise.

Nowadays, 50-60 % of residential properties are bought by means of mortgage loans, informed Mekoushin. The newly-built properties are usually bought at shell stage because it is easiest to get a loan at this stage and the prices are advantageous to the buyer.

NEARLY ONE THIRD OF ALL REAL ESTATE TRANSACTIONS ARE CONCLUDED IN SOFIA, VARNA AND BOURGAS

About 30 % of all real estate transactions concluded in 2006 are concentrated in Sofia, Varna and Bourgas, said Strahil Ivanov - Manager of Yavlena Real Estate Agency, cited by Investor.bg. The number of transactions concluded in these three cities in 2006 was 58 500, almost equally distributed among them. The transactions concluded during the previous year were 57 213, equal to 29% of the overall transaction volume. The increase over the past two years is significant as compared with 2003 and 2004. In 2004 the percentage of transactions was 23%, being equal to 44 870 and in 2003 - 18 % of all transactions, being equal to 36 049.

What is interesting is the ratio between the number of country’s population and the number of dwellings. It has been proved that in 2001 the number of population was slightly exceeding 8 million people and the dwellings were 3 686 million. In 2005 when the number of population decreased to 7 739 million people, the number of dwellings increased to 3 715 million.

Belogradchik is the town that has registered the greatest growth in real estate transactions within the first six months of 2006 – 1800 transactions. During the same period in 2005 this number was 473.

There has been a double increase in Nikopol and the number of transactions and mortgages in Ardino and Devnya has increased several times. One of the Managers of Yavlena turned our attention to the fact that recently the number of long-term investors has increased at the expense of financial investors, including speculative and medium-term investors

According to the forecast of Yavlena, in 2006 the number of transactions will reach 261 thousand as compared with 2005 when there were 240 thousand transactions and 2004 when they were 196 thousand. There has been an increase of 122 % over the period between 2001 and 2005