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Commenting article: Irish Investment Fund Buys Bulgarian Sea Property from Desperate Owners

Appreciating Assets Ltd., an Irish based investment fund, is buying up properties on Bulgaria's Black Sea coast, primarily targeting UK and Irish owners who bought during the boom years and are now desperate to sell, the International Herald Tribune reported late Friday.

"You've got a number of people who agreed to buy property off-plan [pre-construction] and the people can't come up with the remaining balance of funding," said the company director Dylan Cullen.

Cullen's group has raised €7 million for its Bulgaria-focused fund (about million), he says. And so far there has been no shortage of interested sellers. Since mid-December the group has completed on 22 purchases and another 15 are pending, Cullen says.

Typically they are paying in the EUR 60,000 to EUR 70,000 range for "good size apartments in a good development with close proximity to the beach."

Not everyone is thrilled when the company announces a price, he acknowledges. But real buyers willing and able to close a deal are a rare commodity in Bulgaria these days.

The fund's strategy is to collect rental revenue on the properties for five to seven years, banking on the continued growth of the Black Sea's tourism business, a plan many owners may not have the patience or resources to pursue.

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#1
van4eto - 1 Mar 2009 // 10:46:30

Very true. One doesn't need to reinvent the wheel. If you can afford to maintain liquidity, go for it. And do not forget the key:Location, Location, Location. I am not an expert but love to follow simple old rules.

#2
pk - 1 Mar 2009 // 07:59:27

Resip,

The fund would have a much better chance buying apartments in a capital city...like Sofia.

Resorts are the worst investments historically!

#3
pk - 1 Mar 2009 // 07:54:12

Resip,

It's a losing move because here in Bg ( compared to other normal r.e markets) their is no rental market and we are years away from one. As long as they keep building in bg and stays way overbuilt their will not be a rental market.

Therfore, the funds investment premise is 50% incorrect: by depending on an income stream from rentals to make a return.

It's like their buying cheap stocks with no currrent dividends HOPING for a rally in price-thats years away from coming true.

It's called gambling Resip-not prudent "investing"!

#4
cstrut - 1 Mar 2009 // 04:37:00

There are oppurtunities in any kind of economic onditions and this is definately taking advantage of one of them. If I had the money during these times of lower prices I would be doing the same thing. No matter what some say or believe the economy will get better and those with the foresight and the money can really cash in if they can wait.

#5
NellieotAmerica - 1 Mar 2009 // 00:56:08

Owning property in Bulgaria may be a losing move in the short term, because the world recession and unemployment will make it difficult to fill hotel rooms. In the long term, it will be a good investment, because the tourists will return eventually. Right now the properties are cheap, it is a distress sale. In future, the properties will get more expensive. What is more cost effective - to buy cheap now and lose money on ownership costs (maintenance, taxes and mortgage) for the next few years or buy later when the properties have gone in price but you have avoided the costs associated with ownership? I don't know off the top of my head. Six of one, half a dozen of the other.

#6
resipsaloquitur - 1 Mar 2009 // 00:45:14

PK,

why do you think it is a "losing move"?

I have afriend(German man),who is a fund manager for a REIT(Real Estate Investment Trust)

and they are also buying properties on the Black Sea coast.

Just the Germans are SECRETIVE people and especially those working for EQUITY FUNDS!

A Fund(Trust in Germany) is better manager for such properties...single owners live in differen parts of Irland or other country and they can not agree fast on issues and can't make fast decisions.

#7
pk - 28 Feb 2009 // 12:53:21

Dont these people from the UK/Ireland EVER learn?

Another stupid losing move...So any of you looking to sell your apartment -call them up right away!

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