Good evening Mr Gater.

So, to begin. What are the price trends you are currently seeing?

What can you say about the market?

Of course it depends upon which part of the market you are focussing on

every area has a different dynamic,

but generally it is good news.

If we take Sofia for example and follow the national statistics,

these suggest that we have had a 6% rise in the past year,

this year so far does not suggest anything different.

In reality, actually, in some specific areas we have actually seen increases up to 20% and even slightly more.

We as a company have experienced specific cases where

we are actually selling property, not just advertising it

not just talking about it,

real sales in some parts of Sofia up by as much as that.

But in other areas, unfortunately in rural areas it is not true.

That’s a very different market, a very specific market,

it is a completely different case.

And what about the holiday market?

The holiday market is really very different.

A different segment?

Yes, it is, it is not driven by domestic demand.

If we look at the Sofia market, Plovidiv, Varna,

these are largely of domestic demand.

In areas such as Sunny beach,

it is still largely foreign money.

and therefore is effected by different influences.

There we have a more complicated structure

where, again in Sunny Beach, there are a lot of Russian owners

Those owners mostly bought between 4-5 years ago,

they bought in Roubles, which are now half the value of what they were

and therefore their Euros investment has effective doubled.

That doubling of their invested value

means that they can now afford to sell

at an enormous profit,

undercutting, perhaps Bulgarian owners,

developers or British, Irish owners

who are also looking to sell.

So, the holiday market is a very different one,

it is also more difficult,

prices there are not increasing,

we have many examples across the board.

of the opposite of that.

Is the property market really getting better, like everyone thinks?

I genuinely believe that it is getting better,

but of course it depends which perspective you are coming from:

if you are consumer looking to buy a property

I think you are going to find a lot more choice

on the Bulgarian market, now, by comparison to previously.

I think that now, at the moment,

80-90% of stock available

is top floor, ground floor, damaged

or of poor layout, unsaleable,

unlivable, poor quality, which are largely overpriced.

Now that prices are up,

certainly in the domestic market,

let us take again Sofia for example,

this is where developers can profit again

Not quite to the extent of 7-8-9 years ago

but they can now profit.

That means that new plans

are coming to the market.

They are fortunately, I see from my experience,

much more functional, livable properties.

at more reasonable prices

and this is a huge improvement for the market,

certainly for property buyers

not just those seeking buy-to-let investment property,

but for real homes, residences,

and that is fundamental for any property market.

So, why should someone invest in Bulgaria?

It’s a question we’re often asked

and there isn’t any brilliant answer

except to say that Bulgaria still has amongst the very lowest barriers to entry

and this is a huge appeal factor.

There isn’t really anywhere else that you can realistically say

with strong governance, within the European Union,

that is politically stable, relatively speaking, globally speaking.

What about the corruption!?

Of course the corruption plays a role in people’s decision making,

but when you are looking on a global scale

and you have 25,000 Euros to invest,

I think you’ll find it very difficult to find a place

to invest that kind of money

where you are going to get at 10% gross rental yield,

and a 5% net return, from that level of investment.

You will have other options of course, gold, shares, whatever it might be

but property is tangible, something owners can use,

so if you are in the market at this level

Bulgaria is still one of your only and best options.

So, from a barriers to entry perspective I still think that is one of its key strong points

Are foreign investor distorting the market?

I don’t think there is enough of them to distort the market.

Foreign Direct Investment in property is massively reduced

by comparison to what it once was.

However, as with the example that I gave earlier,

of with Russian investment and currency fluctuation,

that is certainly causing distortion.

What I would say, where there is substantial change

and growth in the market is in the rental sector,

where for example we have foreign money coming into the country pushing new products,

particularly in the shared economy,

where you now have websites such as airbnb,

representing 190 countries providing a new way of renting your property,

which is opening opportunity to a lot of people

other websites such as Arendoo.com

offering similar service in Bulgaria specifically

and this is something that is allowing Bulgarian owners

to actually utilise property, which is perhaps not being used,

to gain an income from it.

And also, it is allowing people to go on holiday,

or make a city break or a weekend stay

much more affordable for them.

So the foreign money that we see being involved

in the market isn’t necessarily in bricks and mortar,

there is actually a lot more going into cyberspace investment than meets the eye.

How about the interest rates in the market, how are they effecting the market?

Unmistakably, a huge difference.

We saw a 7 month period after the collapse of KTB bank,

and particularly when the government's guaranteed amounts were paid out to depositors,

we felt this was a bubble

because we could see the same repetition of buyers using cash,

which was always previously the main purchasing power for the Bulgarian market,

but now, I would say, 12 months on

that's not the case

80-75% of our buyers are young professionals,

buying with mortgage backed purchasing power.

With interest rates now below 5% the average employed person,

we are seeing that across our thousands of tenants that we deal with,

those tenants are less interested in renewing their rental contracts

and more interested in actually looking at mortgage options

to buy a property from us.

So, those interest rates are a huge factor.

So, we are not in a bubble?

I don’t think we are in a bubble.

I think the current demand is sustainable, highly sustainable,

I don’t believe that foreign money is the major driving factor.

The developers are making now normal profits,

we are not seeing anyone making 300-400% gains,

that was always an artificial business,

from which developers benefited a lot, of course no one is against making profit,

but on those gross levels it was always unsustainable,

especially when being sold on false rental returns, largely to foreigners.

Now we are looking at young, educated, professional Bulgarians

taking loans from Bulgarian banks, to buy their first homes,

sometimes with family help, sometimes without.

But importantly this is a new demand that will be here for the foreseeable future.

These people have already decided they are not going abroad, its Bulgarian money,

invested into Bulgarian properties, so it is sustainable.

One final question, what about the future?

Well, its truly the million dollar question!

We are still here, we still believe in it,

of course we are not just invested in the Bulgarian market,

but I still think that the Bulgarian market has plenty to give.

Prices are certainly not all they once were,

and you could say that they gives hope,

there is still a chance to get there again

and even if that isn’t possible we are still looking at a profitable ride.

I would prefer to see based on much more sustainable basis.

I think the Bulgarian market has plenty to offer,

but I also think this may not necessarily be for the classic international investor,

maybe not for international funds,

but on a domestic level there is money to be made

and its for the long-term, it is not a flash in a pan.

Christophe Gater, partner at NewEstate, thank you very much.