The average asking sales prices in Bulgaria’s capital Sofia stood at BGN 1 444.83 per square meter, and  Varna keeps the second place with  BGN 1 381.33 per square meter followed by Burgas – BGN 1 113.33 per square meter.

Even though prime neighborhoods had a negligible, average decrease of 1.8% in an year-on-year comparison, 2013 was the fourth year in a row when residential property prices in Bulgaria edged down.

Residential property prices marked the sharpest fall in towns, plagued by high unemployment rates, such as Vidin, Vratsa and Dobrich.

The fall in prices this time was not due to soft demand, but rather to the need of sellers to dispose of their property and get cash, as well as due to the limited budgets of the buyers, experts say.

Developers remain flexible; willing to offer attractive schemes for installment payment, finishing works or parking spaces as well as rent-to-buy opportunity.

Buyers are careful and have high expectations from the developers. Few, if any, transactions are closed on the asking sales prices.

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Orchid says this follows frustrating construction delays due to issues with the contractor.

Orchid Gardens Varna is one of the largest multi-use complexes ever built in Varna; the project has 42,000 sq.m of built area with 16 floors above ground and 3 floors below ground.

It combines two levels of retail space (7,700 sqm), four levels of office space with 88 units (9,500 sqm), 10 levels of luxury apartments with 107 apartments (12,100 sqm) (of which 10 have already been sold) and 13,270 sqm of underground parking.

Orchid Developments Group Ltd. engages in the real estate development and hotel operations in Bulgaria. The company involves in the development and leasing of office space, shops, and entertainment and leisure complexes; and the development and sale of apartment units. It also engages in commercial, financial, lending, borrowing, trading, sale, and purchase of real estate; and provides tourist services. Orchid Developments Group Ltd. was incorporated in 2004 and is based in Sofia, Bulgaria.

Because of the economic crisis and ensuing unemployment a greater percentage of Bulgaria’s population is seeking relocation opportunities in Sofia, with Varna and Bourgas on the Black Sea coast also attracting some people as well as investments, the IME report entitled “Regional Profiles: Development Indicators” has concluded.

According to the report, the Western Bulgarian city of Kyustendil is generating the lowest interest among investments.

The conclusions of IME’s report have also indicated that Bulgaria’s demographic crisis is becoming worse because of the dire economic situation in a number of provinces around the country.

“We are observing an overall worsening of the demographics in all regions of Bulgaria, no exceptions there,” Desislava Nikolova, chief economist of IME, told Darik Radio.

“The only districts that with positive mechanical population growth are Sofia, the capital, Varna, and Bourgas. As far as Varna and Bourgas are concerned, this trend has become more tangible only after 2007,” shed explained.

In her words, a number of districts in Northwestern, Northeastern, and Southern Bulgaria – Vidin, Vratsa, Razgrad, Smolyan, Yambol, and Sliven – are undergoing the fastest depopulation.

The Institute for Market Economy recommends that in order to improve the living and investment conditions across the country the Bulgarian government should go for greater financial, economic and social policy powers for the local authorities.

The sale of the Landmark business center in Varna with a guide tag of 6.7 million euro will test the attitudes of Bulgarian real estate investors toward a market which surged in volume to just less than 200 million euro in 2011 on the back of foreign money inflows.

Belgrade’s office of real estate advisor Jones Lang LaSalle said on February 28 it will hold the first public auction for property asset sale in the country on March 21. But the building, located in the very center of Bulgaria’s third largest city of 340 thousand, has little chances of attracting the likes of Bluehouse or Europa Capital, who were behind the bulk of deals in 2011, for reasons like Varna’s thin occupational market and general reluctance of international investors to go outside the capital city in the moment.

While the building’s rentable area, which includes some 6,300 of class A offices and ground-floor retail, yields 532 thousand euro from leases that amount for just less than half of the space, locals that could make use the vacant premises are expected to show up at the auction.

Andrew Peirson who runs the Serbian and Bulgarian operations of JLL from Belgrade said, “As it is very early days we don’t yet know how many people will turn up but interest is very high. The majority of this interest is from the domestic Bulgarian market.”

The Landmark building, opened in late 2009 in the place of the ruins of former listed hospital building, has leased to books and entertainment store Public most of the retail space but has since struggled to find office tenants in the competition of a business park on the city fringes and the Varna Towers development.

The asset, initially part of the Landmark portfolio built by former Colliers International executive Tanya Kosseva-Boshova and British real estate professional Richard MacDonald, has been acquired by the latter in early 2011 from Landmark Property Management S.A., the Luxemburg-based company established by Iceland’s billionaire at the time Thor Bjorgolfsson, private equity firm Altima Partners and UK real estate investor Henry Gwyn-Jones to cash in on Bulgaria’s real estate market prior to the European Union accession of the country of 7.5 million. The cash generating buildings of the portfolio were sold to Bulgarian Alfa Finance Holding as the real estate investment market peaked in 2008. Owners had been looked for for the remains, including the Retail Park Plovdiv, sold to London-based fund manager Europa Capital for around 20 million euro a year ago.

As of the end of 2010, prior to the Varna business center transfer, Landmark Bulgaria Park, the asset holding company, owed around 6 million euro to Greek EFG Eurobank’s local arm. “I am working in conjunction with the bank”, Richard MacDonald said on the telephone when asked to comment by Gradat.bg. “I want to sell and the bank wants to sell.”

In 2008 a well-appointed apartment in the city center cost EUR 300-EUR 350 a month, while now the owners would be happy if they manage to find a tenant for EUR 250. A semi-furnished apartment in the downtown could be rented for EUR 200 a month.

This furnished apartment in Varna is offered for rent per 200E per month

The hotel will operate as a wholly-owned subsidiary of TimeShare Holdings, Inc., and operate under the management of the previous owner, under a five-year renewable management services contract.

The Grand Hotel Dimyat is classified as a 5-Star hotel property. It is also considered the most competitive, complete and sophisticated combination business hotel/business complex in the city of Varna and the associated region. The hotel’s location is famous to generations of locals and vacationers alike as the former site of the well-known establishment, Restaurant Dimyat. The name Dimyat refers to a grape variety, which thrives in this coastal strip.

Market Value of Principle Business and Assets:

* An independent assessment was performed by Velinov Consult Ltd establishing the current “Fair Market Value” for the “5-Star Grand Hotel Dimyat” is approximately $43.8M USD (32M EUR).
* Purchase price: $28M USD (20.4M EUR).

Property highlights include:

* 11 floors with 74 luxury rooms, and a potential for expansion to 86 rooms
* Underground and outdoor patron parking
* 7 floors with 28 Class A office spaces with ample tenant-business parking space
* Spectacular views of the Black Sea
* Conference and banquet facilities
* Business Center
* Panoramic VIP restaurant (120 seats) & Main Restaurant (120 seats)
* Spa & Recreation Center: pool, fitness, massage, sauna, steam, showers, hydro massage bath
* 24-hour security
* 24-hour room service
* Small Casino
* Lobby bar (80 seats)
* Free wireless throughout
* Breakfast provided
* Located near the Seaside Gardens attraction and a 5 minute walk to the beach

Business Awards:

* Best Five Star hotel in Balkans 2009
* Best Five Star city hotel in Bulgaria 2009 — award by the Bulgarian Hotel and Restaurant Association
* Nomination in the category city “City hotels” in the national contest “Building of the year”
* Golden Plumb award 2009 — award for Komfort, given by the Bulgarian Construction Chamber
* First award in the exhibition “Architectural Saloon 2009″ given to Grand Hotel Dimyat’s architect, Natalia Liuzkanova
* “Cook of the year” 2009 — Petar Yorgov, deputy chef
* Golden medal with the national cuisine team at the international festival in Constanca, October 2009 — Toni Ivanov, chef
* Second place in the category “Modern Dish” 2008 — award by the Bulgarian Association of Professional Cooks
* Two bronze medals at the International Culinary Olympics in Erfurt, Germany, 2008 — Toni Ivanov, chef
* First place in the Culinary Contest “Litorale Flegreo nel Mondo,” Neapol, Italy, July 2007 — Toni Ivanov, chef

After in December 2010, the District Governor’s administration in the city of Varna staged a demonstration of state responsibility, and destroyed several illegal resort properties on the very beach, two months later no one has cared to restore the respective beach to its original condition, the BGNES agency reported.

One of the demolished properties is the Ramona Hotel near beach of Varna . Neither the district administration, nor the State Directorate for Construction Supervision have completed the job leaving huge piles of concrete, bricks, and steel to be sucked in the sea by the waves and the tides.

Much of the rubble sinks in the sands on the beach creating all kinds of potential hazards for those who will try to use it for holiday fun.

The Bulgarian authorities will “traditionally” take measures after somebody becomes injured, and, of course, nobody will be held accountable for potential incidents.

What is more, after the years prior to 2008 saw a boom of construction of resort properties along Bulgaria’s Black Sea coast, many of them built illegally or semi-legally, using loopholes in the legislation, many have hoped that the actual illegal hotels will be demolished at least some of the Black Sea beaches will be restored to their previous condtion. Such hopes have failed to materialize as only a few such properties have been destroyed, and apparently – not all the way through as there is no-one to clear the mess.

The rublle of the demolished hotel “Ramona” has been left just lying right there on a beach near Varna. Photo by BGNES

Raiffeisenbank will thus go ahead with the purchase 100% of Miller Mall Varna One EAD, headquartered in Sofia. RZB is the owner of Raiffeisenbank Bulgaria, which owns Raiffeisen Real Estate.

Raiffeisenbank Austria AG is a holding company of the Raiffeisenbank Group, which owns Raiffeisenbank Bulgaria EAD.

Miller Mall Varna One EAD manages the commercial and entertainment center known as Mall Varna. Raiffeisenbank approached the Competition Protection Commission over the deal at the beginning of October 2010.

The competition watchdog has now ruled that there is “neither horizontal, nor vertical connection between the activities of the two parties,” which will therefore generate no changes in the market situation of the participants after the deal is carried out. The Commission believes that the purchase will not affect the efficient market competition in the respective sector.

The sum that Raiffeisenbank will pay to acquire Mall Varna’s owner has not been revealed.

Mall Varna was constructed by the Bulgarian Interservice Uzunovi Jsc and opened in the summer of 2008. Shortly after it was acquired by the Scottish Miller Developments, a subsidiary of Miller Group.

The price of EUR 120 M was record-high for the purchase of a commercial center in Bulgaria at the time. This was also the second largest real estate deal in the country.

Bulgaria ranks first in the European Union in the number of new shopping malls in the first half of the 2010, according to a report by Cushman and Wakefield consultancy.

While in most EU member-states the number of malls is on the slide due to the global economic crisis, their construction has accelerated in Bulgaria, marking a nearly 90% increase over one year.

A similar trend is also witnessed in other Balkan states – Bosnia&Herzegovina, Romania, Slovenia, Serbia and Croatia – but the growth rate there is 5-10%.

The stock of contemporary shopping mall space in Bulgaria doubled in the first six months of 2010 with the opening of five new shopping malls, reaching 452 000 sqm in total, according to a recent realtor report.

Another five shopping mall projects are expected to open until the end of 2010, which will add 126 000 sqm of contemporary stock to the market, according to Colliers International’s retail market overview for the first half of 2010 in Bulgaria.

Mall Varna was the first major shopping mall to open doors in Bulgaria’s Varna. At the time of its opening it became the largest shopping mall in Bulgaria, with a total all-out build-up area of 70 000 square meters.

Two similarly giant malls opened doors in Varna subsequently – Grand Mall Varna, and Varna Towers.

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One of the greatest attractions of the complex is the only rotating restaurant in Southeast Europe named Magnito, located on the top of the Eastern Tower.

At the same time, the top of the Western Tower features a helicopter landing ground, which is the first in Bulgaria to be located on the roof of a building.

Varna Towers appears to be one of the largest malls in Varna with a total space of 83 000 square meters, including 60 000 square meters of commercial space and 23 000 square meters of office space.

EUR 50 M have been invested in the project for the construction of the “Administrative and Commercial Center Varna Towers”, with the participation of 2 000 people from over 100 firms.

Each of the two towers of Varna Towers is 70 meters in height, and the complex offers 800 underground and surface parking spaces.

Varna Towers, which was formally opened with fireworks Thursday night, presents a mix of commercial, business, and entertainment venues. Its entertainment park “The Two Towers” features a laser force, kids’ castle, party zones, dance halls, bowling, table tennis, among others. The complex is the first mall in Bulgaria to feature “an alley of crafts”.

The Varna Towers management points out that 45% of its total space have been designed as outside urban space featuring streets, squares, atria, fountains, benches, and walking space.

The Class A offices in Varna Towers have already been rented by companies such as E.ON, a power utility, and Bulgarian Posts EAD.

Ivestment in Varna Towers has been over EUR 50 M, by Varna Towers, owned by Densi-M, chaired by Martin Zgurev, and City Center, chaired by Antonio Buhtiyarov. 75% of the funds are a loan from Piraeus Bank Bulgaria.

Varna Towers at night – photo by Ivaylo Stoyanov