Banks Tighten Purse Strings For Holiday Property Investors

Having already cut down on loans for coastal holiday developments, Bulgaria's risk-averse banks are now doing the same investors trying to raise funding for ski resort projects, Dnevnik daily reported on March 7.

One of the reasons is the sharp decline in the uptake of resort holiday homes over the last 7-8 months, caused to some extend by the pullback of British home buyers. Financial institutions have been shying away from ski resort developments in the past several months, Bulgarian Properties manager Nikola Stoyanov said, as quoted by the paper. Krasimir Dimitrov from property developer Source concurred, saying that the banks were being too cautious.

According to Tihomir Toshev from Creditex, an Address Group company, it would be an overstating to say that loan-financing has completely dried up when lenders are simply being more cautious and risk aware.

In the Black Sea resorts, the exodus of British buyers was partly offset by demand from Russians, Ukrainians and buyers from Scandinavia but the deals in the ski resorts have plummeted tenfold, said Stoyanov.

Real estate consultancy Colliers International has also reported a decrease in the uptake of residential stock.

Although the banks officially reject any suggestions that they have changed their lending policy towards the real estate sector, off the record, industry sources admitted to Dnevnik that a certain pullback was happening, due mainly to the increased costs of lending in the wake of the global credit crisis and the negative trends emerging on the property market.