Long Russian summer

Not whether, but with how many less ?!. That was the answer of the question if the Ukrainian crises will bring decline of the property  market in the Black Sea this year. The Russians are major buyers of holiday homes along the South coast and the rift between Moscow and the West along with the calls for investments in the Crimea brought alarming note in this segment in the spring. Many expected the crisis in the big policy to make ordinary people more insecure and transactions to stop or at least diminished. The beginning of the summer, however calmed down those worries. There is  a decline of the Russian deals  but that was a trend from last year  (see chart bellow). The main reasons for that trend beside the political instability were factors such as the growing competition in the property markets in southern Europe and the slowdown of the Russian economy. This year, the estimates are rather on the detention of a Russian purchase deals on the black sea coast  and a slight drop in housing prices because of the devaluation of the ruble.

No pessimism

After last year, when the number of newly registered Russian buyers along the  Bulgarian Black Sea coast fell under 10 000 (see chart above), this year expectations are quite the same.
On the one hand,  the market already passed peak levels as transactions. On the other hand, the crisis in Ukraine and the patriotic calls to invest in the Crimea led to temporary confusion among Russians, buying a second home abroad.
"The crisis in Ukraine will certainly lead to a decline in the interest of Russian buyers abroad. The devaluation of the ruble, political uncertainty and fears of a negative attitude towards the Russians – all this worries the potential Russian buyer of property abroad, "commented Philippe Berezin, Chief Editor of the web site for properties sale abroad  - prian.ru. According to him, as a result some people postpone those purchases, while others even cancel their intentions. Negative impact on the mood of the Russian buyers are also some news coverage and press release  in the Russian press.
"The news that in Bulgaria there was a bad attitude towards the monument of the Soviet ( Russian ) army, or the problems surrounding the" South stream " gas pipeline project create a negative mood among some groups of potential property buyers," summarizes it. However, his assessment is that if there is a decline in the interest in Bulgarian holiday coastal properties, that  is a minor factor , and for the mass buyer the  country remains a preferred destination.
Similar picture painted Nikola Stoyanov, managing partner at property agency "Bulgarian properties". According to him, the information in the Russian media often has a strong propaganda element and directly affect the property market. The effect, however, was short-lived and the moods are changing swiftly.
“When Putin won the presidential election in 2012, for example, there was a record demand of Bulgarian properties  by Russian citizens in Europe. Then the political situation turned back to normal, people calmed down and started to buy ", said Stoyanov.
This effect apparently was caught by the Bulgarian  statistics register - BULSTAT that in 2012 were registered a record number of new Russian buyers of properties along the Black Sea coast – nearly 12 000 people (see chart above). And vice versa, now the Russians  live in political instability, the ruble has depreciated, and their economy goes to zero growth or decline. It is normal that affects the volume of property purchasers in Bulgaria, stated Stoyanov. According to him the number of buyers were less in the spring, but within the last few weeks the market on the Southern Black Sea coast is stabilized and again there are deals with Russians.
Similar to last year's number of Russian deals were reported by notary offices in Nessebar, which serve the area between Ravda and Sunny Beach. Big property developers ,such as "Green life" also started the spring with worries about the effect of the Ukrainian crisis. The exhibitions of Bulgarian properties in Moscow, however  gave a positive forecast for the market on the Southern Black Sea coast.
"For the average Russian, Bulgarian is a good choice for the purchase of  holiday property . Normally they are pragmatic people, who are looking for sunshine, relaxation and low prices. Even if they are influenced by political conditions, this is temporary affect. "summarizes Nikola Stoyanov.
In this direction is the opinion of Goran Varbanov as well, Director of the New Estate Agency. It defines  Russian purchasers of property in Bulgarian as  having a pro-European mood, and in this sense we can not look  at them as example for the general  attitude among the Russian society.
"They see us as a West country, and the chance to continue to attract their interest to be part of the EU," says Varbanov. Its opinion  is also that Russian purchases on the holiday market this year will maintain the levels of last year.

Between Crimea and Spain

After several years of intense investment in Bulgarian is expected that among some Russian buyers there will be a fatigue. That is stated by both  the Russian analysts like Philip Berezin, and also from the Bulgarian sea coast estate agencies as "Yavlena."
The competition of Greece and Spain on the local property market is felt as well, where property prices have fallen. For short term, also the calls for investments in  Crimea, which veered off more patriotic-minded Russians from foreign markets.
"We had a customer who decided to sell his properties in Bulgarian, to invest in the Crimea. He went there, realized that there is nothing to buy, and the prices are 2 times higher, and returned back here with a changed mind, "summed up Goryan Varbanov. According to him, the peninsula could not compete with Bulgarian black sea cost ,as  level of the holiday properties offered, and the quality of the construction is "as in Burgas in the 1980s".
Nikola Stoyanov from “ Bulgarian properties " also acknowledges that many Russians who have planned purchases in Bulgarian, Greece or Turkey, temporarily stopped the process with the idea to buy in  Crimea. "To them is a close market without visas, language barrier and with easier access to loans," summarizes it. His observations, however  suggest also that the properties there are twice as expensive than the Bulgarian, and as  climate and beaches here is way better.
For the serious decline in the interest in Bulgarian can not be spoken also because of the  reduction of housing prices in Spain over the past two years, its considered by the estate agencies. According to Nikola Stoyanov, Spanish banks have truly flooded the market with cheap offeres, acquired as collateral for non-performing loans. "In some cases, the prices fell to € 50-60,000  euros for a property, but for such money in Spain can not find good quality and location, " he summed up. In addition, the cost of living, taxes and maintenance of the properties there are higher, which also influenced the selection. In short: in the low price class Bulgarian market remains without competition.

Cheap and sunny

Beyond the political unrest the picture of the property market on the Black Sea now is not very different from previous years. According to the general description of Russian buyers are mostly families with children, or people of middle age, looking for a holiday apartment, and in perspective to retire here as well. Their budgets are within € 20- €40 000 euros, in more rare cases, up to € 50-€ 60 000 euros. Some Russians looking for properties over € 100,000  euro in Bulgarian. According to Philip Berezin they are more interested towards southern Europe-Spain and Italy.
In nine out of ten cases the demand of the purchasers is focus on the Black Sea cost , mostly in southern part.
The local estate agents point as most preferred the area around Ravda, Nessebar and Sunny Beach. Although the seasonal usage of the holiday apartments prevail , many of the properties already are occupied whole  year-round.
With regards to the property the price levels, however things are not optimistic. The devaluation of the ruble hit the savings to the Russians and is expected to lead to a correction in property prices. Mr. Varbanov believes that the price correction  will be around 5 percent, while the forecast of "Bulgarian properties" is rather to hold prices.
Price pressure is experienced also from the strong secondary market in "Sunny Beach", with prices moving around € 500 euro/sq.m. according to the New Estate and € 600-€ 700 euros/sq.m according to the "Bulgarian properties". New construction is available for € 800-€ 1000 euros/sq.m, as investments continue mainly in the western part of the complex.
To attract buyers, developers in the area are betting on a higher quality of build compared to before. Invest in holiday complexes with facilities  like swimming pools with salty water, spa centers, restaurants. Some even managed on the  landscape of adjacent municipal sites.
Other Developers as a "Green life" see potential in urban housing market, including in the smaller towns like Pomorie and Sozopol.
In Burgas ,Russian purchases also have presence, but lately the agencies reported more tangible Russian presence on the rental market. They settled down in the city with their families, and are looking for quality and furnished three-bedroom homes with rental up to € 500-€ 600 euros per month.
The agencies note that the Russians have already experience as sellers on the local property market. At the moment  few of them are selling their property due to different reasons - change in marital status, change of residence etc.

How many are the Russian property owners

300,000  Russian citizens with long term permit to stay on the Bulgarian Black Sea coast, who own over  500,000 properties!!!! This data  published by the Russian consulate in Varna, attracted lots of attention, although that information is not supported with specific facts. On the contrary according to the statistics register BULSTAT, which covers foreigners acquired property in Bulgarian as individuals held total 55 000  Russian citizens. This is the number of people who bought property in Varna and Burgas regions (including the cities themselves) since 2006. In the far North east district, there are also purchases, but their share is insignificant. Even assuming that some of these people have invested in more than one place, the total of the real estate own by Russian individuals hardly exceed 100,000.
Real estate agencies estimates the number of flats owned by Russians  on the Black Sea does not exceed 70-75 000. In the area of "Sunny Beach" for example roughly spoken there are  about 40 000 apartments, and  nearly half of them are still owned by non Russian owners. The figure is far below the  500,000  Russian owners of property in Bulgaria. Because of the lack of accurate and detailed statistics, however hardly anyone can say the exact number.