Buyer's remorse

2010-09-03

Bulgaria's property boom was always inextricably linked to tourism – the same factors that made it an attractive tourist destination were also responsible for the interest of foreign property buyers. That is, until the credit crunch wiped out access to easy credit and the oversupply of new developments, which combined to end the cycle of ever-growing property prices in 2008. The end result was thousands of investors who saw the value of their property plunge. Since peaking in the third quarter of 2008, property prices fell by 31.5 per cent as of end-June, according to data from the National Statistics Institute (NSI), but the figure only takes into account property deals in Sofia and the other 27 administrative centres. Property prices in resorts and villages have been estimated to have dropped by as much as one half. The property boom also led many prospective home owners to buy off-plan, sight unseen, but what they got in the end was not quite what was described to them. In other cases, investors fell prey to outright fraud. All that led to a drastic change in the perception of Bulgaria among potential property buyers abroad – from the next property hotspot, Bulgaria quickly became a "no-go" destination in media reports, particularly in Britain, which was one of the main sources of home buyers at the peak of the boom. But in other major markets, most notably Russia, Bulgaria's image remains markedly less negative. Bulgaria's tourism sector has not fared well in recession either, although NSI data for the first half of 2010 showed that about 775 000 foreign tourists spent 3.18 million nights in Bulgarian hotels, compared to about 732 000 tourists and 3.05 million nights in the same period of 2009. In 2008, however, the figures were 864 000 tourists and 3.84 million nights, NSI data showed. Data for the third quarter, the most important period for Bulgaria's tourism sector because it covers the bulk of the summer season, will only be available at end-October. In 2009, nine-month figures showed a decrease to 1.73 million foreign tourists who spent a total nine million nights, compared to two million tourists and 11.2 million nights for the same period of 2008. Bulgaria now hopes to reach about 608 million European households through its new advertising campaign, which will run on four international television channels - Euronews, National Geographic Channel, Discovery Channel and Eurosport. The promotional clips will feature Bulgaria's summer and winter tourist destinations, environmental and rural tourism and the country's cultural historic heritage. The clips, in Bulgarian, English, German, Russian and French will be aired during prime time hours, 3166 times in total. It would be done in two phases – from September 6 until December 26 and from January 31 until March 27 2011. The initiative is worth 7.5 million leva, financed by the European Union's operational programme Regional Development.