Банкеръ Weekly



The time of chaotic and uncontrolled construction in Bulgarian seaside resorts is obviously coming to an end. It is by investors' sobering that brokers from Bourgas explain the fact that the Southern Black Sea coast real estate market is full of selling offers for completed or almost built-up hotels. Entrepreneurs are expecting still lower and lower prices of the offered tourist services over the coming years. The cheapening due to increasing competition makes more difficult the return on investments in seaside resorts.
It is indicative that as of May 7 there were about fifty various offers for sale of hotels in the regions of Pomorie, Primorsko, Sozopol, Tsarevo and Sinemorets. About half of them were moved to the agencies between May 2 and 6. Such a stir-up could be partly explained by the beginning of the active holiday season, but according to branch insiders the real reason is another one - i.e. the offers are for establishments whose investors had not planned to operate.
The prices of the above-mentioned offers are curious as well. About 40% of the buildings up for sale have been evaluated at EUR0.5MN-plus, with the highest offers standing at some EUR7.5MN.The average price of the offers is around EUR650/sq m. The most expensive establishments are in Sinemorets which was until recently the resort most spared from the construction boom. Obviously, that notion is already outdated because it is there that the biggest hotels are offered (with 17,500 sq m, 8,000 sq m and 5,000 sq m built-up area respectively which is huge for Bulgaria). These are 6- to 8-storey buildings with some 500-600 beds. However, their future owners should add problems with the water and sewage network to the usual difficulties regarding their maintenance. Some of the offered facilities are completely furbished, including furniture, telephone, minibar, and air condition in the rooms and the necessary equipment in the restaurants and bars. Their average price, however is considerably higher, up to EUR1,100/sq m.
The summer holiday season which has already started could turn out to be decisive for the future of most investors along the Southern Black Sea coast, brokers believe. If no buyers appear for the hotels now offered, a drastic drop in selling prices might follow in the autumn. Then separate suits and rooms might be put up for sale.

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