Niche market investors are being tapped with the aim of enticing them to invest in a Maltese project in Bulgaria. Stockbrokers are currently being presented with a private placement memorandum aimed at encouraging local investors to contribute towards a Maltese project in Bulgaria.
The Balkan Jewel is a 160-residential and tourist complex, overlooking a golf course designed by Ian Woosnam in Razlog, and which is situated adjacent to the slopes of the Pirin Mountain.
Company director Chris Grech, who is one of the promoters and the man behind Dhalia Real Estate and Bay Street, among others, explained that "four years ago we decided to invest in a central European country and visited a number of such countries, including Bulgaria, Rumania, Czech Republic, Slovenia, Albania and Croatia to see their property development potential. Our safest bet was Bulgaria, which not only is a beautiful country, but was also on the verge of joining the EU.
"The country's tourism grows considerably year on year. Not only but there are also direct flights to and from Sofia. The country enjoys the four seasons. We chose Razlog and the site we went for was still virgin territory and potentially a 12-month destination. There is golf, the Pirin Mountains, the ski resorts of Bansko and Razlog, trekking and hiking possibilities, as well as other adventure sports. There were a lot of anchors one could hold on to for the 12 months of the year."
Mr Grech added: "So we went for a residential and tourist complex, appropriately designed as an apart hotel. This is purely an investment with return purposes. We decided to rope in Colliers International, a leading global affiliation of independently owned and operated companies with more than 293 offices in over 61 countries. We paid hundreds of thousands of euro to get them on board and they have been there since day one. We launched the project in October 2006 and thought we'd sell some 20 units. Our expectations were exceeded. We were overwhelmed since in the first week we sold 70 apartments. The rest will now be marketed as upmarket, luxury holiday accommodation."
Over the past year the company has also been working on a scheme to offer local investors an opportunity to participate in this project. A new company has been formed to manage the project and the board of directors is made up of Mr Grech, Tony Camilleri and John Cassar White.
"We feel we are moving with the financial markets. The company has already put forward €2.5 million. Our aim is now to collect €7.5 million and pay off the remaining debt which amounts to €3 million."
The strategy of the company managing this project is to generate income through the leasing of properties. It is envisaged that the Balkan Jewel will be put up for sale on the market in seven or eight years' time. At the end of that period the investors would share the proceeds from the sale of the property.
The group's financial controller Nicky Camilleri explained that Bulgaria had very "strict financial authorities. The financial regulation in this country discourages those who are not fully committed to operate professionally".
With a preferential tax rate of 15 per cent, Bulgaria's economy is growing steadily at around five per cent per year. After five years of boom and equally booming prices, the commercial residential and second holiday home market is cooling down and prices are becoming more realists, since supply exceeds the current demand. The situation in the holiday accommodation sector is a different story. Growth is still evident albeit in quality accommodation in anticipation of a steady minimum average increase of 4.5 per cent in tourist arrivals till 2017, when arrivals are expected to reach 20 million tourists. A few days ago, I joined some other journalists and company directors to Bulgaria to get a view of the Balkan Jewel. Work is going on at a very fast pace and the infrastructure has been completed.
At present work is being carried out on the landscaping while others are busy finishing off the apartments, which are being finished to a high standard. No corners have been cut and the parquet flooring, carpets, furniture and all material used is of the highest quality.
The apartments are south facing, offering residents dramatic views and landscapes of the gardens, golf course and the surrounding mountains.
Complementing the development are various amenities: a services department, reception, lobby bar and restaurant, fitness centre and spa, children's play area, a conference room and outdoor swimming pool.
The development is situated only a short drive away from Bansko, Bulgaria's largest ski resort. A small historic town situated some 925 metres above sea-level, it is surrounded by the Pirin, Rila and Rhodopes mountain ranges, rivers, and beautiful landscape. It is a two-hour drive away from the capital Sofia and plans are in hand to build a small airport in Bansko.
Colliers should start marketing the complex in the coming months.