The Build-It-Up-and-Sell-It-Quick proviso has come back to haunt Bulgaria's speedy developers
Grey, Socialist buildings became dwarfed by skeletons of colourful resort complexes-to-be as construction in Bulgaria boomed in the mid-2000s. Empty beaches and ski retreats gave birth to literally hundreds of buildings promising to be off-plan bargains, high-rental yields and unmissable business investments.
Developers were excited. Bulgaria was dubbed the "New Spain", the "Next Big Thing". Buyers, in turn, were keen to jump on the bandwagon and be part of this up-and-coming holiday destination. Complexes, hotels, apartments and mini-villages were knocked out in a matter of months in a fervour to feed this presumed demand.
The demand came, and slowly plateaued. Investors starting worrying that the country wasn't all it was cracked up to be. They had already been reassured that EU accession would put an end to the main Bulgarian bugbears – corruption and infrastructure – but there was something they hadn't banked on. With such high quantity, quality suffered. Constructions were assembled as lopsided, sloppily finished death traps. Where is the evidence for this?
For those who had already bought, the reality of the CGI images that lured them to part with 40,000 euros for a "cut-price" off-plan property was something quite different. Statistics show that under 50 percent of off-plan buyers actually come and view the site or progress before they part with their cash. This resulted in many unhappy buyers in Bulgaria, who turned up to their new "dream home" to find it in dusty, unfinished disarray, boxed in the midst of numerous other ongoing developments, in an area that's a veritable building site. Danielle Best, an off-plan Pomorie apartment owner, commented: "I moved to Bulgaria after the proposed completion date of the apartment. I knew I'd have to rent for a few weeks until the interior was fitted with a kitchen and bathroom, but I ended up spending my building budget on alternative long-term accommodation while various problems were sorted out. The common parts of the block were unfinished, the lift to take me to the fifth floor didn't work, there was no electricity, and everywhere was dusty and filled with rubbish."
Incidents such as this have a knock-on effect for future buyers. Due to word of mouth, online blogs and property programmes, Bulgaria is getting a bad rap for being a property marketplace that doesn't keep its word. Particularly in the past year or two, when these big-dream skeleton buildings of the mid-2000s finally hit completion, once-keen buyers realised they had bought a badly finished property in an undesirable position, with a considerable amount of money needed to bring it to liveable, and indeed re-sellable condition. But with this much competition, with the increasingly rising prices, who would buy it?
Another construction asset largely overlooked by overly keen developers was infrastructure. Not only have the buildings themselves got little going for them, but the surrounding areas often remain bleak and unfinished. Although many developers promised the municipalities that in return for a planning permission, these infrastructure issues would top the priority list, these vows turned out to be as empty as the apartments themselves. Despite the fact that funds allocated for infrastructure development in 2008 totalled 25 million leva, or 12.5 million euros, it has yet to make a mark on the roads and wastelands surrounding buildings along the Black Sea coast and other resort areas like Bansko.
Once upon a time, though, the dirt-tracks, mountains of rubble spewing dust clouds, plus the rumbling lorries and chugging cement machines didn't deter potential buyers. Budget tourists, and indeed budget buyers, simply used to put up with the inconvenience, clinging to the justification that "you get what you pay for". However, Bulgarian developers are keen to shrug off the small fry and move on to a richer elite of buyers. Those who still want a chance to thrive in real-estate revenue from foreigners must realise that returns from a lesser amount of rich buyers would still outweigh returns from many budget investors. However, the more moneyed buyers simply wouldn't dream of paying what is now over the odds for overseas holiday or retirement properties in Bulgaria, for obvious reasons.
The economy is shifting worldwide. As a result, it's now possible for British buyers to get more for their ever-decreasing money in countries where building quality is higher. For example, a one-bedroom apartment, off-plan, promising luxury spas and swimming pools and so on in Tampa, Florida, currently costs $27,330, or 17,315 euros. A one-bedroom apartment, off-plan, in a complex in Golden Sands, with all the trimmings, costs from 40,000 euros, up to a shocking 140,000 euros.
Annual UK house price inflation recently slumped to minus 6.3 percent – the lowest level since December 1992. With house prices falling by literally hundreds of pounds per day, it's possible to buy homes for as little as £90, or 1,236 euros per sq m in cheaper areas, such as outer Manchester. Although many buyers go abroad for the sole purpose of escaping places like Manchester, drizzly weather and congestion doesn't seem quite as harsh when compared to the dubious electrics, wobbly fixtures and fittings, and inaccessible amenities found in the overdeveloped parts of Bulgaria.
It's not just the aesthetics, accessibility and lack of functionality that are dogging the botched buildings in Bulgaria. There have been some serious incidents in which lack of proper regulation and construction care has proved to be life-threatening or even fatal. Last year, a policeman passing a notoriously unsafe building in Vratsa was seriously injured after a chunk of plaster fell on his head. In January of this year, three workers were buried alive in Blagoevgrad, when the pit they were working in collapsed inward due to being improperly secured. Earlier this summer, a 50-year-old worker died after falling from unsecured scaffolding at a construction site in a Bansko resort. Just last month, a 22-year-old man was seriously injured after a brick wall collapsed over him at one of central Sofia's many construction sites.
According to the figures published by the National Statistical Institute in Bulgaria, the decrease in interest has been felt by developers. The volume of building permits issued during the first three months of 2008 fell by nearly 25 percent compared with 2007. So, are fewer people building because they sense the end of the gold rush, or is it because the EU has finally laid some ground rules down on quality levels – levels that the bog standard Bulgarian builder can't meet?There is light at the end of the tunnel, however, where it seems some savvy developers are learning other developers' lessons. So-called luxury complexes are underway, promising the best in Western quality and safety. Yet, with these constructions a year or so off completion and with the property market in Bulgaria becoming increasingly stagnant, only time will tell whether these buildings sell, or fail.