26 February 2008 Newsletter

A NATIONAL STRATEGY FOR A STEADY DEVELOPMENT OF BULGARIA'S TOURIST INDUSTRY ENVISAGES:

TOURIST INDUSTRY REVENUES WILL TRIPLE IN A 5-YEAR PERIOD

Infrastructural Development, Diversification of the National Tourist Product and Improvement of the Quality of Services are Top Priorities

A national strategy for a steady development of Bulgaria's tourist industry envisages tripling of the revenues in the next 5 years. Last year's revenues amounted to EUR 2.4 billion, this year they are expected to reach EUR 3 billion, while the expected figure in 2013 is EUR 6 billion.

The growth of revenues will be guaranteed on condition that Bulgaria enters a higher level of the global tourist market, diversifies the supply of its tourist products and deals with seasonality. Among the other important factors are: increasing the number of weekend holidays for local and foreign clients, balancing the regional disproportions and intensifying the infrastructural development.

It is suggested in the document that the National Agency for Tourism should participate in the evaluation and regulation of the architectural planning and development of the tourist towns / villages and holiday resorts.

The strategy envisages decentralization of the tourist business alongside with financial decentralization of municipalities, as well as passing of legal regulations by 2010 for granting the National Agency for Tourism and the municipalities the privilege of owning, controlling and concessioning the Black Sea beaches and the relevant activities.

The conditions for achieving the set of goals of the national strategy are; enlarged share of the specialized types of tourism; efficient promotion; increased number of the tourists as a whole and that of well-off tourists; limited export of the GDP to competitive destinations; stimulation of the local tourist travels inside the country.

Data, presented in the document, show that the share of revenues from sea tourism is 75%, while that from all other types of tourism is 25%.

The ambitious goal is in 5 years' time this ratio to become 58 to 42%. The existing accommodation basis on the Black Sea Coast is 56.8%, in the mountain resorts - 9.8%, in the balneotherapy complexes and resorts - 4.6%; 28.8% is left for the town hotels in the country's interior.

Pamporovo the family favourite ski resort will be having a cash injection of €600,000,000 making this area the number one for capital returns.

THE GERMAN TOURISTS PREFER BULGARIA

According to officials from the Union of Investors in Tourism, the German tourists prefer Bulgaria to Croatia for their summer holidays.

Research data by 16 000 tourist reservation offices in Germany show that Bulgaria ranks 5th among the Germans' favourite holiday locations and is ahead of such prestigious destinations like Morocco, Tunisia, Portugal and Cyprus.

Among the Germans' favourite distractions are the sea cruises and holidays with SPA and wellness programs.

24 Hours Daily
22.01.2008

Fraport Twin Star Airport Management Ltd. has launched a competition for the architectural modernization of the airports at Varna and Bourgas.

It is said in the announcement that applicants are required to present projects for architectural and engineering services, as well as conceptions for the construction of new terminals at Varna and Bourgas airports. The intended cost of the projecting work, which is expected to be completed within 6 months, is EUR 1.5 million excluding VAT.

The procedure is open, the competition is international, and the basic criterion is the lowest price. Projects containing financial offers should be submitted no later than 11 March.

In mid-October 2007 the Bulgarian Minister of Transport granted the concessionaire of the Black Sea airports a first-class investment certificate for the extension and modernization of Bourgas airport, which ensures government support to the project.

The planned investment in this enterprise is EUR 49.6 million which should be gradually invested by the end of 2009. The biggest share of the money will be used for the construction of a new and modern airport terminal.

According to the terms of the concession, EUR 403 million will be invested in the modernization of the two airports, of which EUR 188 million will be invested in Varna airport and EUR 215 million in Bourgas airport.

CONSTRUCTION AND PROPERTY IN BULGARIA ARE BOOMING

Both the construction industry and the property market in Bulgaria are continuing to boom as we move in to 2008, with 2007 having been bumper years for both economic sectors, according to a series of independent reports. This is excellent news for the nation and for all those who had committed to the market prior to the country's 2007 EU entry... but what does the market have in store for the short to medium term for those who have yet to buy?

Well, there is an opinion widely shared that the construction industry will continue to expand well in to 2010 simply because of a general dearth in supply of quality residential, retail and some industrial commercial stock across the nation... so this will bring with it undoubted opportunity.

PRICE OFFERS KEEP ON GOING HIGH

IN 24 DISTRICTS IN SOFIA PROPERTY PRICES ARE EXCEEDING EUR 1200/m²

Price Levels in Varna's Greek Neighbourhood and Pamporovo Remain the Highest

During the first month of the New Year the real property market in Sofia and Varna continues its dramatic development. The tendency towards permanent property price growth, which was so persistent in 2007 because of the strong demand, was kept after 1 January.

In 2007 Bulgaria held the world record in terms of property price growth, in spite of the prognoses for gradual growth within 10 - 15%.

Data by Global Property Guide show that for one-year period property prices in Bulgaria have grown by 30% on average. Data by Imot.bg show that in 24 districts in Sofia

property price levels are exceeding EUR 1200/m². Only a month ago such price levels were kept in 19 districts, and 6 months ago – in 7-8 districts. Until a year or two ago these price levels were possible only with luxury apartments in top locations.

In 3 of the capital districts prices already reach EUR 1500/m². These are the traditionally expensive quarters Yavorov, Ivan Vazov and the city centre. The range of the most expensive districts has already been joined by Boyana, Dragalevtsi, Borovo, Bunkera. Varna holds the record for the country's most expensive apartments.

In the town's Greek neighbourhood a m² costs EUR 1561 on average. It is followed by the Red Square andthe University precinct. Data by Imot.bg show that in 12 districts in Varna property prices exceed EUR 1000/m². A month ago such price levels were kept in 11 districts.

I the Rhodopi mountains Pamporovo quality development is anticipated that price will double within a three - four year period.

Credit growth at the end of 2007 reached a record height for the past five years at 63.7%, data from the Bulgarian National Bank (BNB) showed. Total volume of credits was close to BGN 37 billion, or 67% of Bulgaria's GDP.

Average credit growth in the European Union was around 30%.

For the first time the growth in corporate credit was higher than that in household credits, 71.5% and 52.2% respectively on-the-year.

The figures showed that the growth started immediately after the BNB removed limits on credits at the beginning of 2007. The limits had been put in place in 2004 at the insistence of the International Monetary Fund (IMF) when household credits exceeded an 80% growth in 2003. The measures calmed the market down to level of 32% growth by the end of 2005 and 24% at the end of 2006.

After the limitations had been lifted, growth spurted again, which prompted BNB to increase the required minimal reserves for banks in September 2007.

The Bulgarian economy keeps growing steady since the year 2000. The average GDP growth rate has remained stable during 2000-2007 (in real terms 4 to 6% p.a.) resulting in doubling of GDP per capita to almost EUR 3600.

The initially high unemployment rate dropped below 7% in 2007. Unemployment in Bulgaria stood at 6.91% in December, down by 2.21% from a year earlier. Bulgaria will seek to keep its jobless rate to under 7% this year as a result of the implementation of the 2008 National Action Plan for Employment that the government approved on Thursday.

High growth of the economy together with a tight budget policy of the government resulted in the budget surplus and impressive reduction of public debt.

Bulgaria is increasingly attracting high volumes of local investments and new FDI. Head of the State Investment Agency Stoyan Stalev said the agency expected foreign direct investment to grow by 10% to EUR 4.7 billion in 2008 after a surge by 20% to EUR 5.3 billion in 2007.

The country will focus its efforts on attracting investments in manufacturing and in power generation from renewable sources. Also about 60% of 2008 FDI is expected to be directed to residential and commercial real estate.

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