Ukrainians have Stirred Up the Rental Market in Bulgaria

Business » PROPERTIES | June 1, 2022, Wednesday // 15:47
Bulgaria: Ukrainians have Stirred Up the Rental Market in Bulgaria @Capital

Most brokers, who have been active in renting housing to Ukrainian refugees since the beginning of the war, no longer have free accommodations to offer. At the same time, the demand for rental property remains stable on the part of Ukrainians. However, there is often a mismatch between the budget they have prepared and what they want to rent for it.

An additional difficulty is the search for a home in which to allow pets. With the advent of the summer tourist season, prices in holiday properties have risen significantly and do not fit into the limited budgets of Ukrainian citizens in combination with the short deadlines for which they seek shelter. This is shown by the observations of experts in this segment of the real estate market, influenced by the completion of the government program to accommodate Ukrainian refugees in hotels.

What is the demand?

Demand for rental housing by Ukrainian citizens has remained relatively stable compared to the first months of the war. Most often the occupants of the dwelling are between 4 and 6 people, as they are usually women, children and elderly people from one family. They are looking for a temporary residence option - between 2 and 8 months, depending on their expectations for the end of the war. They are interested in two-bedroom or larger homes, with the option of pets. They have no preferences for the neighborhood, they set aside about BGN 800 as a standard budget. Such a picture is outlined by the brokers of "Address".

One of the most active agencies on the market in the first two months after the start of the war, Bulgarian Properties, commented that there is currently more moderate demand compared to the first weeks of the war, with some reorientation towards slightly longer leases , but in the general case for no more than 6 months. The main demand continues to be by seaside - Varna, Burgas and the surrounding area, but there is also an expansion of the perimeter to Plovdiv, Sofia and other places in the country, said Polina Stoykova, executive director of the company.

According to Boris Pavlov, chairman of the Association for Tourist Properties and Innovations and manager of Flat manager, there has been a significant increase in demand, especially after the state announced that the hotel accommodation program ends on 31.05. "Almost half of all inquiries for long-term rent received so far are from May and most of them were made immediately after the press release of the Council of Ministers. In March inquiries were 28%, and in April we received at least 26% of the total number", he gives an example. He adds that demand for short-term and medium-term rents has been gradually declining since March. The main reason for this is the higher prices at which guest apartments are rented in the context of the revival of tourism and reduced supply, a consequence of the pandemic.

Currently, the rents of this type of property are about 2 times, and on the Black Sea coast sometimes 3-4 times higher on a monthly basis compared to similar apartments that are rented for a long time”, said Boris Pavlov

His assessment is that they are mainly looking for apartments with 1 or 2 bedrooms and most of the requirements are standard - Ukrainian citizens need an equipped kitchen, laundry and other facilities common to long-term rentals. However, a large part of the inquiries are for apartments where pets are allowed - traditionally, as everywhere in the world, this makes finding an apartment much more difficult. Demand is mainly on the Black Sea coast - 38% of inquiries are for Varna, 20% for Burgas and 8% of Ukrainian citizens search everywhere by the seaside, regardless of location. Interest in the capital is lower than expected - only 18% of inquiries are for Sofia. Followed by Plovdiv, Ruse, Dobrich, Veliko Tarnovo, Bansko and other smaller settlements. It is important to note that 5% of Ukrainians seeking rent do not have location requirements and search throughout Bulgaria.

The budget of long-term rental Ukrainian citizens varies between 250 and 450 euros per month. The average value for the most sought-after market - Varna, is 340 euros, and for Burgas and Sofia the preferred monthly rent is 320 euros.

According to the Refugee Agency, as of May 25, about 59,000 Ukrainians are staying in hotels - mainly in Burgas, Varna and Dobrich. There are a total of 97,000 in the country, and a survey is being conducted among them about their intentions - how long to stay. According to data released by Krassimira Velichkova, adviser to Deputy Prime Minister Kalina Konstantinova, as of May 27, about 22,000 people are expected to stay in a total of 400 hotels, which continue to operate in the government program, but with reduced funding

What is the supply?

Polina Stoykova points out that currently the supply is extremely limited, as the apartments rented out at the beginning of the war have not been vacated yet and there is almost no new ones available. With the start of the season, many homes by the sea will also not be available unless agreed for the entire season, she added. "We have a number of refusals from landlords to rent to Ukrainians - this has been happening since the very beginning of the demand for such housing and it is mainly related to their desire to rent for a short period - 1-3 months, not a whole year. I.e. owners prefer to rent out long-term," she says.

"We are almost no longer able to find new housing for refugees, but on the other hand, the pressure is no longer so strong, as the state intervened and provided accommodation," Stoykova said.

The brokers of "Address" point out that half of the landlords are people for whom the rent is not essential. They are renting out their homes free of charge or for a token rent, and in return expect to cover the overhead costs of the refugees.

The other group are investment-minded owners, for whom renting is the only business venture and are reluctant to compromise. For them, the nationality of the tenants does not matter, they are rather not ready to compromise with the price and do not reach a deal, the brokers explain. Many of these homes have been "dark windows" since before the war, as their owners prefer not to rent them out under conditions other than the original. We have seen a significant decline in supply in the districts of Varna and Burgas since the end of February, and this is mainly due to concluded lease agreements with Ukrainian citizens, said Boris Pavlov. He adds that many holiday property owners have also started the season earlier than usual and the nights spent in March even exceeded those in June 2021, which would not be possible under normal circumstances.

The number of offers in Sofia and Plovdiv is also declining significantly, and in the capital they are already at pre-pandemic levels, Pavlov said. However, limited supply is mainly due to people already returning to work in major cities - a trend that began last spring. For landlords in Sofia and Plovdiv, the lease term is of paramount importance and transactions with Ukrainian citizens are lower, he said.

We do not want Ukrainians

After the initial enthusiasm of both hoteliers and private owners to shelter refugees from Ukraine, the picture has now changed. Most brokers do not want to talk about it at all. Others say low budgets combined with high demands are a major problem, but also report owners who want inadequately high rents for housing in dire straits. An additional consideration is the short deadlines with unclear prospects, the presence of pets and fears that bills and even rents may remain outstanding.

Boris Pavlov commented that he sees a clear tendency for property owners to refuse to rent to Ukrainian citizens. "Floating rents are among the main reasons, but there are others - for example, landlords are worried that Ukrainians will not be able to pay their rent and utility bills. The concern is understandable, as for many landlords rental income is a major component in the family budget, they are used to repay loans and cover ever-increasing consumption costs,” he says.

On the other hand, he notes that many Ukrainians have funds, some still receive salaries, and others have already found work in Bulgaria. According to him, the result is a lack of market efficiency and fewer deals.

We help solve this case by offering to connect the parties without commission, completely free of charge, both for Ukrainians and Bulgarian citizens seeking to rent or lease property. We are currently developing a special mechanism to build trust between the countries - it will be ready before the end of the summer when the government's new program for accommodation in state bases and hotels expires”, he added.

He estimates that Ukrainians seeking temporary protection in Bulgaria have a tangible effect on the rental market, especially on the Black Sea coast. In the conditions of low supply and increased demand, rental prices are rising, which is in line with the inflation we are seeing, he added. He predicts that the prices of standard long-term rents, as well as short-term ones, will continue to rise and "we will witness even higher levels in the autumn".

/Tatiana Dimitrova, Dnevnik

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