RE/MAX Bulgaria Manager Shtelyan Kalchev: Good Prospects for Sofia's Rising Property Market
Novinite.com spoke to Shtelyan Kalchev and his colleague Georgi Yankov at RE/MAX Partners, a leading Bulgarian real estate agency, about the general situation of the current property market and ongoing trends in Bulgaria. The market in Sofia is specific and, according to Kalchev, very different from the rest of the country.
You have identified a specific property market in Sofia. How and why is it different in the capital, for both Bulgarians and foreigners, compared with the rest of Bulgaria?
No matter what we are talking about, Sofia is and will always be different from the rest of Bulgaria. If we compare unemployment, job status, infrastructure, crime rates or the property market, Sofia is always different. At the end of the day, Sofia is the capital of Bulgaria.
All daily activities and processes are quite different. It is a fact that in some countries there are cities which are more dynamic and developed than the capital itself, but in our country there is a saying: “Sofia is another Bulgaria”.
First of all, there is a huge traffic of people coming to Sofia for a permanent living from all over Bulgaria. They all need a place to stay. This fact means a huge demand focused on the rental and sales property market.
On the other hand, the same fact attracts a lot of investors, whether Bulgarians or not, to invest funds in the real estate industry in order to take advantage of the rise in demand. And it’s a fact – it is happening. Who is going to invest money in a product that nobody can buy?
Well, in Sofia there is always going to be a property market. Of course it can slow down as well, but just the active processes in the society can make the market different from the rest of Bulgaria.
A simple example – imagine how many divorces or weddings are happening in a 2,5 million people city compared to a city of 100 000 people? After that, calculate how many property transactions are involved in these social processes. And, apart from that, there are all manner of macro factors.
Who buys, who rents – are there typical profiles for the different sectors?
First we need to divide two sectors – residential and commercial.
The answer to the question “who buys, who rents?” can be very simple – the one who wants, who has the ability and the need. Actually, talking about nationality in the residential sector of the market, buyers and tenants are from inside of the country, from Sofia as well as foreigners.
There are really many types of buyers and tenants – young families, students, investors, people who’d like to change their life status, employees, foreign students and employees, tourists, and so on.
But no-one can say this apartment will be bought by a “first time home buyer” or by a “foreigner for investment” – I mean that, if the buyer fits those three requirements that I’ve mentioned above, and likes the property, there is a sale. There is no specific profile attached to a certain type of property.
The commercial market is also occupied by Bulgarian and foreign investors, but their profiles are much more complicated and their decisions and intentions depend on many more factors, even though my simple answer to the question “who buys and who rents?” is valid for them as well.
What about trends in the Sofia rental and purchased sectors? Compared with 2008, is this year up, the same, or down?
Even though I like statistics and use them a lot, in so many cases statistics can be just an opinion. Also, it is quite hard to compare 12 months with another 12 months, especially if comparing 2008 and 2009 – two very dynamic years with a lot of U-turns.
Generally, the market can be defined as going up, but one of the main reasons is that the sellers became more realistic, which brings a crossing-point between demand and supply. In other words, if someone decides that prices needs to go up, the market will freeze again.
What observations do you have on the prospects for 2010 and beyond?
It’s always risky to forecast a market trend, mainly because it really depends on macro-economical factors. I can give my opinion for a logical trend for 2010, based on the current situation and ongoing processes. It is very important that the market should remain calm and stabilized.
Real estate agents needs to be as professional as possible, to give their best service to the customers and to educate them about any opportunities and threats that this market can offer.
I expect a healthy 2010, with an improving property market and a lot of work to be done, the way it should be done. I am very far away from thinking that this boom market is coming again – this would be the worst mistake. When I’m saying healthy and improving, I means stable, with a lot more professionals involved and top quality service for all clients.
Is the overall situation in Bulgaria a direct reaction to the so-called global financial crisis, or are there specifically national factors involved?
It would be silly to ignore the global financial crisis, even though I don’t use the word with a capital “C”, as every additional mention of the word causes more troubles. Of course, the overall situation is reflected by what is happening in the global economy.
But there is no doubt that there are local factors involved as well. It is a fact that all Europe and Bulgaria as well are experiencing the great popularity and high rating of the current Prime Minister, which has a huge impact on the economy and the situation in Bulgaria.
People are more positive now, seeing that someone cares. We are living and working in times where Bulgaria cannot be a separate country living on its own. There are always going to be local and international factors involved.
Turning to mortgages – they are almost universal in Britain. What are the trends in Bulgaria? Is it difficult for a foreigner to obtain a mortgage here?
For a lot of people, this is a stressful topic. The banking system in Bulgaria is quite specific. The main reason is that most of the offices here are local branches of foreign banks, which became a problem at some point. I believe that this problem is already in the past and the branches in Bulgaria are part of the real estate market again.
Apart from that, there are still cash buyers, who drove the market for the last 12 months and will maintain their activity in 2010. Another financial instrument called “leasing” is becoming part of the market as well; simply explained – the buyer is financed by the seller.
However, even if I said that the banks are back in the real estate game, there are still a lot of different bank policies in the industry, based on requirements to do with nationality, the type of property, income, interest rates, and so on.
From all you’ve said, do I understand you are still optimistic about the Sofia market, despite the current difficulties you describe?
Yes, we are cautiously optimistic. The lessons are that we all need to be patient and very careful in riding out the problems. And this is true for everyone – the professionals and those people who want to buy or sell their property.
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