Experts Warn about Property Bubble Risk in Eastern Bulgaria

Major players in the construction industry have cautioned about a bubble risk on the real estate market and in the construction sector in eastern Bulgaria in the next few years.

Bubble fears are explained with the fact that the demand for vacation properties, mostly by Russian-speaking citizens, is concentrated there, according to reports of investor.bg.

The forecast was presented as part of the presentation of the annual report of National Registry for New Constructions and Reconstructions bcc.bg on the construction market.

During the presentation, Angel Zahariev from A & A Architects and Nikolay Bachvarov from Baumit warned about the unsustainable model in the construction industry created by the lack of a national strategy on the housing policy and on the concentration of new construction in the Black Sea coast region (the districts of Varna, Burgas, and Dobrich), caused by increased demand for vacation properties.

Zahariev claimed that the vacation properties market was strongly dependent on foreign policy events and global economic trends, stressing that it was an unsustainable practice for the sector to rely on increases in this segment of the market.

The two cautioned that a collapse on the vacation properties market would be detrimental to the entire construction sector, citing Spain as a case in point.

In 2013, the newly launched vacation property projects exceeded 438 000 square meters of gross floor area, up by over 19% from 2012, when the newly launched construction projects in this segment amounted to slightly over 367 000 square meters, according to data of bcc.bg.

The gross floor area of the completed holiday complexes, however, dropped by 25.6% year-on-year from...