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Bulgaria: Boosting Demand


Moody's: Bulgaria Economy Stable, 2009 Recession Expected


Bulgaria Business Endangered by Mounting Corporate Debt


Irish Investment Fund Buys Bulgarian Sea Property from Desperate Owners


Mall for EUR 52 M Opens in Bulgaria City of Plovdiv




Sincerely yours,



Nick Lavtchiev, MSc.

Properties in Bulgaria Managing Director


T: +359(0)2 9862863

F: +359(0)2 9861743








Bulgaria: Boosting Demand


While Bulgaria's tourism sector is already suffering from the financial crisis, the government has been quick to enact necessary measures to soften long-term impact.


According to Anelia Krushkova, the head of Bulgaria's state Tourism Agency (SAT), the number of foreign tourists in Bulgaria has declined this winter season and is anticipated to shrink to an even greater extent during the summer of 2009. Yet, the government tourist agencies, as well as tourism operators, are responding in full force.


A SAT report published in January shows that throughout 2008 there was a 10.4% year-on-year increase in the number of visitors over 2007. Krushkova said that 5.7m of the visitors came for tourism, 73.4% of which were from EU countries. The country generated a total of Lv2.4bn (EUR1.23bn) in tourism revenues between January and November 2008, an increase of 11.5% over 2007, according to Krushkova.


However, figures from the end of 2008 demonstrate tourism rates have been on the downturn. Bulgaria's National Statistics Institute reported that in December 2008, just over 385,000 tourists came to Bulgaria, 190,000 of which were holiday and recreation travellers. Of the EU countries, Greece and Romania top the list of the number of visitors, with 104,000 (27%) and 84,000 (22%) respectively, while the UK came in third with 12,500 (3%) tourists. Of non-EU countries, Turkey and the Republic of Macedonia saw the most travellers to Bulgaria, with 55,600 (14%) and 26,300 (7%) visitors respectively. The Russian Federation clocked in at 8100 (2%) visitors. The 2008- 2009 winter season has already seen a decline by between 15% and 20% compared to last year's figures, according to Krushkova.


At a January press conference Krushkova predicted that summer 2009 would be a tough one for Bulgaria tourism. The Sofia News Agency reported in February that early bookings of summer holidays demonstrate a similar impact, with figures showing a drop between 25% and 50% compared the numbers registered in February 2007. The financial crisis seems to be leading an increasing number of foreign tourists to wait until late spring or even early summer to book their trips, in the hopes of finding last-minute discounts on their holiday.


Region-wide tourism is expected to decline at similar rates, and governments have sought to address the growing concern. Greece has already increased its advertising budget by 50% and introduced tax cuts for companies operating in the tourism industry. Turkey has announced its plan to actively promote itself in 80 countries. The Romanian Tourism Ministry is considering giving employees vouchers for local resorts in the hope of encouraging domestic travel.


Bulgaria too has taken various steps to increase tourism in the country. Under the Operational Programme Regional Development 2007-2013, six projects have been approved that will fund SAT's various campaigns. One campaign focuses on international tourists from Germany, Britain, and Russia, where there is much room for growth, primarily through advertisements on CNN and Eurosport channels. Another campaign, worth Lv 5.7m (EUR3m), focuses on winning back tourists who, recently, have preferred foreign destinations. And the Agency is to spend Lv6m (EUR1.23bn) to create a multi-media catalogue of the country's most attractive tourist sites to attract visitors from both home and abroad.


In an effort to further attract tourists, Elena Poptodorova, the recently appointed ambassador to the Black Sea region, has focused on uniting bordering countries to increase regional tourism.


Much focus has, in particular, been placed on Russian tourists, who have been the main source of summer visitors in the past. Last year 250,000 Russian tourists visited Bulgaria, spending roughly EUR1000 per person. Bulgaria opened a business forum in Moscow on February 5 titled "Bulgaria Today - Realty, Tourism and Wine". The business fair continued alongside official activities intended to mark the "Year of Bulgaria" in Russia. There is talk of the Bulgarian state covering visa prices for Russians, so as to reduce the costs of travel packages and therefore attract more tourists. According to Nelly Sandalska, CEO of Balkantourist, this measure will cost the state EUR8m, but without such intervention, the number of Russian tourists to Bulgaria's Black Sea resorts is expected to shrink by 50%.


In addition to government efforts, tourist resorts have been expanding the number of hotels and holiday apartments in anticipation of greater demand. Easyjet has recently added several flights from Manchester, according to an Easyjet spokesperson who commented on the city's potential. These avenues of growth explain the World Travel and Tourism Council's expectation that Bulgaria will attract around 16m visitors per year by 2017. This increase should contribute to an increase of 12% in gross domestic product (GDP), as well as create a 10.2% increase in employment. The political commitment and infrastructure growth will allow Bulgaria's tourist industry to prosper in the long-term.

Moody's: Bulgaria Economy Stable, 2009 Recession Expected

Bulgaria is likely to experience a difficult recession in 2009 as the economy suffers from shrinking exports and slowing inflows of foreign capital. 

Moody's Investors Service has affirmed Friday the Baa3 local and foreign currency ratings of the Bulgarian government, saying that the outlook remains stable.


"Bulgaria is likely to experience a difficult recession in 2009 as the economy suffers from shrinking exports and slowing inflows of foreign capital... Nevertheless, many years of prudent fiscal policy and low debt mean that the government is well positioned to cope with the situation", Kenneth Orchard, Vice President-Senior Analyst in Moody's Sovereign Risk Group, commented.


Moody's recognises that the Bulgarian government used the recent period of economic growth to strengthen its financial position, and budget surpluses averaged 2,7% of GDP between 2004 and 2008, debt on GDP base declined to 14%, and a significant fiscal reserve was accumulated.


Domestic credit, external debt and the current account deficit all increased at rapid rates from 2005 to 2008, Moody's announced. The banking sector presently appears to be in reasonably good shape, with relatively high capital adequacy and liquidity ratios by international standards, but these buffers could be quickly eroded if the downturn intensifies, the report shows.


"The decline in foreign financing will probably cause a sharp downward adjustment in the current account deficit, implying declining output and weak government revenue growth. However, Moody's believes that low wages and a flexible labour market will ease the adjustment and ultimately allow Bulgaria to rebound when the regional economy improves", Orchard cautions .


Moody's believes that a greater risk comes from the large amount of private sector external debt that must be re-financed in 2009.


The last rating action on Bulgaria was implemented on 25 September 2008, when Moody's changed the outlook to stable from position on the local and foreign currency debt obligations of the government.

Bulgaria Business Endangered by Mounting Corporate Debt


Bulgarian companies are endangered by the fast increase of corporate obligations, including debts between separate private companies.


That may cause a chain bankruptcy, the Bulgarian Industrial Association's deputy chairman, Kamen Kolev, said Tuesday, cited by Bulgarian National Radio.


The average debt rate in the real economy has doubled in the last year, growing from 20% to 43%. Corporate debt is expected to reach EUR 150 B by the end of 2009, which is twice as much as Bulgaria's Gross Domestic Product (GDP).


Irish Investment Fund Buys Bulgarian Sea Property from Desperate Owners

Appreciating Assets Ltd., an Irish based investment fund, is buying up properties on Bulgaria's Black Sea coast, primarily targeting UK and Irish owners who bought during the boom years and are now desperate to sell, the International Herald Tribune reported late Friday.


"You've got a number of people who agreed to buy property off-plan [pre-construction] and the people can't come up with the remaining balance of funding," said the company director Dylan Cullen.


Cullen's group has raised �7 million for its Bulgaria-focused fund (about million), he says. And so far there has been no shortage of interested sellers. Since mid-December the group has completed on 22 purchases and another 15 are pending, Cullen says.


Typically they are paying in the EUR 60,000 to EUR 70,000 range for "good size apartments in a good development with close proximity to the beach."


Not everyone is thrilled when the company announces a price, he acknowledges. But real buyers willing and able to close a deal are a rare commodity in Bulgaria these days.


The fund's strategy is to collect rental revenue on the properties for five to seven years, banking on the continued growth of the Black Sea's tourism business, a plan many owners may not have the patience or resources to pursue.


Mall for EUR 52 M Opens in Bulgaria City of Plovdiv

Slavcho Atanasov, Plovdiv Mayor (second on the left); Peter Dudolenski, CEO, RESB (middle); Todor Petkov, Plovdiv District Governor (second on the right). Photo by M3 Communications Group Inc.

The newest shopping mall in Bulgaria, Mall Plovdiv, was opened in the southern Bulgarian city of Plovdiv on Thursday.


More than EUR 52 M have been invested in the construction of the first shopping mall of its kind in the city of Plovdiv.


Mall Plovdiv is located on an area of 45 000 square meters, and hosts over 110 famous brands some of which are entering Plovdiv's market for the first time.


These include Mango, Esprit, New Yorker, Benetton, Terranova, Calliope, XYZ, Oviesse, Tom Tailor, Lee Cooper, Kenvelo, Celio, Etam, Seven Seconds, Mexx, Naf Naf, Tally Weijl, Fox, Mothercare, Okaidi, adidas, Pierre Cardin, Etere, Leonardo, Geox, Foot Comfort, Hush Puppies, Beauty Zone, Oxette, Swarovski, Levi's, Playlife, Studio Scandal, Replay.


The Plovdiv Mayor, Slavcho Atanasov, pointed out he was happy the city kept attracting large-scale investments. The Bishop of Plovdiv, Nikolay, inaugurated Plovdiv's first shopping mall with the traditional religious ritual.


"I am not just happy, I am especially proud and thankful to all institutions and partners who worked on the realization of the project of Mall Plovdiv - a modern and unique complex, combining hi-tech, aesthetics, and entertainment", the CEO of the Mall Plovdiv investor, Real Estate Services Bulgaria, Petar Dudolenski said at the opening.


Thus, Real Estate Services Bulgaria (RESB) became the only company in Bulgaria which has taken part in the construction of two shopping malls - Mall Plovdiv and Mall of Sofia, which was the first shopping mall in Bulgaria, and was opened in 2006.


RESB is currently working on the construction of three more shopping malls - Mall Rousse, Mall Stara Zagora, and Park Tower in Sofia.


100% of RESB is owned by Cinema City International, a leading international movie theaters operator with over 600 multiplex complexes in Europe and Israel.



*The above information courtesy of and




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