Bulgaria with potential in real estate sector
16 April 2008
The global financial crisis sparked off by the U.S. sub-prime mortgage meltdown is yet to play out and the worse may still be ahead. That outlook was shared by many of the participants in the Balkan Real Estate Conference underway in Sofia. The biggest fallout for the regional economies has been in the real estate sector, a key bellwether for the Bulgarian economy, said experts at the conference.
Although it cannot be claimed with certainty that the Bulgarian property market is facing a bubble scenario, some segments - especially holiday apartments and developments at the project phase, are definitely flashing red, said some analysts.
Over the next two days, property and financial sector executives will be dissecting the development of the market in Bulgaria and the region, likely challenges and investment opportunities.
The robust regional economies are poised for strong growth even if, as anticipated it moderates to 6% in 2008, said Nicholas Spiro, director of the DTZ Central & East European Investment team.
He said that the emerging regional economies will not avoid a spill over from the mortgage crisis because they are very dependent on external financing. The Baltic states, Kazakhstan and Romania are most vulnerable, said Spiro.
Bulgaria is more stable than these countries but is also more vulnerable than Central European markets like Poland and the Czech Republic. Further proof for this assessment is the fact that Bulgaria has the region's best-capitalised banking system at the moment, said Ivo Prokopiev, chairman of Alfa Finance Holding and publishing group Economedia.
The biggest fallout from the global downturn for the Bulgarian property market so far has been the more cautious lending policy of local banks as the cost of funding increases, said participants in the conference.
The holiday complexes in the local ski and sea resorts and the projects still on the drawing board will feel the brunt of the market tightening. Another segment of the market - offices and shopping malls, is also believed to be headed for saturation in a couple of years.