SOFIA (AFP) — Bulgaria's real estate boom is turning to bust as its key British and Irish property buyers are now discouraged by financial difficulties at home and the ugly concrete views outside their windows.
According to a study by the Bulgarian Properties real estate agency, which works exclusively with foreign clients, holiday property sales in Black Sea and mountain resorts dropped 40 percent in the first half of 2008 compared to 2007.
"The withdrawal of British and Irish buyers from the Bulgarian market was prompted by the financial crisis in their countries but also by the bad infrastructure and the excess of concrete here," said Dobromir Ganev of the Property Association in Varna on the Black Sea.
Many areas of great beauty have been scarred, as elsewhere, by sprawling developments built for a quick speculative gain while the money flowed in.
Between 20 and 30 percent of newly-built apartments on the coast have no chance of finding a buyer over the next two years, said Ganev.
Prices that soared to 1,000 euros (1,477 dollars) per square metre (yard) last year now look fanciful and empty hotels in the southern Sunny beach resort are being sold as vacation flats for as low as 500 euros per square metre, agents said.
Meanwhile, properties offered for sale doubled this year compared to 2007, according to Lachezar Iskrov, head of the National Real Estate Association.
Foreign investment in property dropped 17 percent to 727.1 million euros over the first half, central bank data showed, in line with an overall downturn in foreign funds coming into the former communist country.
According to Simeon Peshov, president of leading building company Glavbolgarstroy, British and Irish holidaymakers who had hoped to make a quick profit, were giving way to construction companies planning shopping malls and industrial sites instead.
This trend was not necessarily negative, said Ilian Vasilev of Deloitte Bulgaria, even if there is some pain to take in the short term.
"A decline in speculative investment will have a sanitising effect on the economy," he said.
Investment in the property sector, which accounted for between 30 and 40 percent of gross domestic product in the past few years, brought an immediate profit, according to political and economic analyst Tihomir Bezlov.
"Real estate for Bulgaria was like oil and gold (for other countries)," he said.
It also brought other problems, among them concerns that the industry was being used to launder money from criminal proceeds.
Bulgaria's authorities have had to admit they cannot prove where the money that fed the construction boom came from.
"More and more often we come to a point where we see how money, that we have reasons to believe came from criminal activities, is wired through foreign banks and returned here in the form of investment," Bulgaria's investigation service chief Boiko Naidenov said during a conference in May.
The breakneck construction boom that scarred the Black Sea countryside has also chased away Bulgarian holidaymakers who instead seek summer hotspots in neighbouring Greece and Turkey.
The number of Bulgarians who spent their holidays abroad went up by 42 percent in the first half of 2008 compared to last year, while those who travelled to Greece went up by 111 percent.
According to the government, more than a million Bulgarians visited Greece and Turkey during the first five months of 2008.
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