Large Investor has Admitted There are Bureaucratic and Market Problems with Home Sales in Sofia
Estonian real estate group Arco Vara had a bad year. In 2018, the company reported a net loss of € 544,000, with a profit of € 785,000 in the previous year. In the 12 months of last year, revenue from real estate sales declined by 81 percent to € 2.8 million. At the same time, the company recorded an increase in revenue from the property maintenance business by 65 percent to € 857,000. The company's assets have grown 37 percent to € 33.5 million. The reason for the bad result and the accumulation of assets is due to the company's failure to turn its projects into marketable, reports money.bg
"We are not happy with the loss that was caused mainly by the failure to sell Iztok Parkside in Sofia." The project remained unresolved within the expected period (the fourth quarter of 2018) because we remain caught in the Bulgarian bureaucracy network, "Chief Executive Officer Taramo Silver said in a statement together with financial results.
"We have to get permission to use and sell the apartments by the end of the second quarter of 2019," he said. In 2019, the company expects to sell the second phase of the Kodulahe project in Estonia. "By adding 100% of the apartments in the building of Madrid Boulevard (in Sofia), we expect to achieve sales revenues of over € 20 million and a net profit of over € 2 million in 2019," the executive director also said. He also said that "despite the obvious financial anorexia," the group still managed to achieve operating profit (€ 101,000 in 2018 against € 1.56 million in 2017) and the main losses come from interest expense, " mainly from the bank loan linked to the building on Madrid Blvd.
"Our land and cash holdings of over € 2 million remain strong and are sufficient to complete the current projects and start new ones in 2019 if market conditions and bureaucracy allow it," the Chief Executive also said. As an alternative scenario, Arco Vara can cache its assets and stand on the land with the right to build.
As Money.bg has already written, the Estonian company has sold the brokerage agency in Sofia to the management team, but still has access to the transaction database. "Based on this data, the real estate market in both Tallinn and Sofia moves from one dominated by vendors to dominated by buyers." The agency itself in Bulgaria brings a net loss of € 18,000 in the last three months of the year and a net profit of € 1,000 for the whole of 2018. In the previous year, the net profit was € 50,000.
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