2009 Season Review

Uncle's comment: Here is an article that I wrote last year for an english language newspaper in Bulgaria.I am re-publishing it because I think the points made in it are still relevant today.

IT MIGHT BE BABEL BUT IT AINT ENGLISH

Apologies to faithful readers for the absence of my column in recent issues but I was saving up for a ‘magnum opus’ !.

This one concerns the enormous power of the big tour operators and the effect they can have on a local economy.

As most people will know, this year the big UK tour operators; Thomsons, First Choice and Thomas Cook, have virtually given up on the Varna region. The reason for this is allegedly the 36% increase in charges at the city’s airport.

As a consequence of this, the lions share of flights are now going to Burgas, which means that the majority of UK tourists are being accommodated in the ghastly mega resort of ‘Sunny Beach’. Those tourists who have booked into Albena, Golden Sands etc face an uncomfortable two and a half hour bus transfer after already enduring a four hour plane ride. Faced with this, who in their right mind is going to book Bulgaria for their hols next year ?.

Since UK tourism has plummeted there is a noticeable sea change in the North Black Sea resorts. I was at the beach in Albena the other day, and could hear a myriad of languages being spoken….with the exception of English. The resort is now dominated by Eastern European and Scandinavian visitors ( big point here, if airport taxes at Varna are too high for UK operators why are they ok for Sven from Sweden and Olga from the Volga ?).

There is naturally no point in complaining that people aren’t speaking English, that is downright silly. However the economic effects are quite serious. British people are probably the biggest spenders amongst the visiting nationalities; beer, food, trinkets, you name it and the Brits are opening their wallets and purses. Other nations don’t have our pub culture and would rather eat and drink in their hotel room. Consequently the bars and restaurants don’t make much money. Faced with soaring rents and declining customers what do the always inept and greedy resort businessmen do ?.....they put the prices up……leading to less customers…leading to….I don’t need to prolong the point. 
This year people in the resorts are paying 4 leva for a beer and 26 leva for an alleged ‘steak’. This is more expensive than the 5 star Hotel Radisson in central Sofia (I know I have been there).

After having left the beach, I girded my loins and approached an Albena taxi rank, ready for the usual argument over prices. After a while I managed to get an offer of 15 leva for the 6km back to my place (way to much, but never mind). The amiable young taxi driver told me that the four taxis on the rank had been there all day (it was now 4pm) and I was the first customer. I almost..almost.. felt sorry for them, but then I slapped myself and thought of the phrase ‘those who live by the sword shall die by it’.

But when you think about the several thousand Romanians in the resort don’t need taxis because they bring their own cars. The Russians aren’t interested in seeing Slavonic culture because they have a big fat one of their own and the Scandinavians just sit on the beach all day.

Then of course there is the effect on the real estate industry. The mainstay of which as been the Brit. Faced with the UK credit crunch and a world recession that could be reminiscent of the 1970’s, the Bulgarian real estate industry in the North region now has to contend with limited and very expensive air flights. Because the number of charter flights is slashed, the carriers left are charging ridiculous prices despite the fact that the planes are in many instances one third empty.

And all because of a few ‘men in suits’ in the Travel companies in London.

United States Economy news

4 big banks have just paid 4 billion US dollars back in loans from the government, a 15% return.This is remarkably good news in a relatively short period.This seems to prove the worth of the bold spending decisions I remarked upon earlier.Remember when the U.S. sneezes the world catches a cold, so when it gets better......

Property News latest

Britons Face Big Losses on Holiday Homes in Bulgaria

Views on BG

By Claer Barrett 
Financial Times

British owners of second homes overseas are facing ruinous losses on their investments after plunging price drops in foreign markets wiped as much as £24bn from the value of UK-owned homes abroad, new research shows.

Dubai and Bulgaria are the worst hit markets, with reported peak-to-trough price falls of 75 per cent on property built for the in-vestment market, according to a report in the Investors Chronicle, the Financial Times' sister publication. The high levels of debt used to engineer transactions have ratcheted up the risk of financial problems for purchasers following the collapse of property markets.

Owning a second home abroad was once the preserve of the super-wealthy, but in the past decade a heady combination of TV property shows and cheap mortgages has convinced an estimated half a million Britons to buy their own place in the sun. The value of UK-owned foreign property investments peaked at £58bn last year, up from £10bn in 2000.

Conti, a UK-based foreign mortgage broker, claims all mortgage products for overseas buyers in Bulgaria have been withdrawn, and are no longer available on apartments in Dubai, effectively trapping thousands in the market. Oversupply and weak demand mean investors' mortgage repayments cannot be covered by rental income, leaving speculators with a huge debt and an unsaleable asset.

For those who need to get out, the only hope is a cash offer from a growing band of "acquirement firms" which focus on distressed assets. In Bulgaria, flats on the Black Sea coast which were sold for €60,000 (£53,000) to British investors are now changing hands for €15,000 or less.

Figures from property consultancy Savills show that at the market's height, 80 per cent of foreign property purchases were being financed by mortgage debt, compared with just 20 per cent seven years previously. The extent of price falls across foreign markets means that most of the 35,000 Britons who completed deals in the 2007-08 financial year will already be in negative equity.

Before the slump, buyers believed that capital appreciation would enable them to sell out at a profit to another investor - a classic "greater fool" market. Yet investor-driven developments have little appeal to domestic home hunters, so liquidity has evaporated.

In Spain, 1m newly built apartments remain unsold, and a further 2m are estimated to be back on the re-sale market as foreign buyers retreat. The newly built properties alone account for five years of supply, based on current sales rates, and local experts believe prices have already fallen by 30 per cent.

In Florida, where an estimated 70,000 Britons have bought second homes in the past decade, prices are said to have fallen 40 per cent, with some properties on investor-driven developments selling for below their building costs as buyers rush to exit.

Foreign banks are also seeking to chase their losses in the UK in the event of mortgage default. Since last Christmas, EU creditors can pursue a European order for payment which makes the process of debt recovery easier and cheaper.

"There hasn't been a sudden rise since the legislation was introduced, but we are getting a steady trickle of cases where people are in situations abroad that haven't worked out," said Paul Connearn, a spokesperson for the National Debt Helpline. "Creditors could try and enforce the debt through a charging order on UK assets, typically the family home. This secures the debt on that property, but doesn't necessarily force the sale."

"In my experience, US banks will no longer lend to the British as so many have handed the keys back and done a runner," said And-rew Bartlett, a Florida-based relocation consultant. "Certain banks now believe it is worth pursuing unpaid loans in the UK under UK law."

Uncle's view: One man's problem is another man's opportunity.The bargains are there to be had.Again I have to ask where these people get their figures from.The market is undeniably bad at the moment but 75% price falls are only obtainable if a seller is absolutely desperate.I am convinced that, due to the prompt injection of large amounts of cash into world economies, we will see a stabilisation in 2010.

Michael Shields update

JAILED LIVERPOOL FAN DECISION DUE "WITHIN WEEKS"

UK Justice Secretary Jack Straw will make a decision "within weeks" on whether to pardon jailed Liverpool fan Michael Shields, BBC reported, citing his parents.

The 22-year-old is serving a 10-year sentence for the attempted murder of a Bulgarian barman after his team's win in the 2005 Champions League final.

His parents, Michael Snr and Maria, put their case to Straw during a meeting at Blackburn Town Hall earlier.

Shields called on Straw "to do the right thing and free my son".

In July, Straw made a provisional ruling not to release Shields and issue him with a pardon.

Shields' legal team then had 28 days to challenge the decision and make new representations to the minister.

It included looking at a report by Merseyside Police, which said had Shields' been tried in the UK, on the evidence used, he would have deserved a re-trial.

Speaking to BBC News, Shields Snr called the meeting "very productive".

He added: "Mr Straw listened to us in detail and to the information from Merseyside Police.

"He told us we would have a decision on the pardon within weeks not months. We just hope and pray it is to free Michael.

"I spoke to Michael before and told him how it went, but he doesn't want to get his hopes up yet."

Louise Ellman, Labour MP for Liverpool Riverside, a long-time supporter of Shields' campaign, and Councillor Joe Anderson, from Liverpool City Council, joined the family.

Shields, from Edge Hill, said he was in bed when the barman was attacked and has always maintained his innocence.

The victim, Martin Georgiev, had a rock dropped on his head in Varna, Bulgaria, where Shields, like a number of Liverpool fans, had broken the journey home from Istanbul.

Shields, then 18, was found guilty of attempted murder and sentenced to 15 years in prison, which was reduced to 10 years on appeal.

He is currently serving the remainder of his sentence in Thorn Cross Young Offenders Institute in Appleton Thorn, Warrington.

Shields is due for release in May 2010.

Uncle's Comment:This is indeed a strange case.I recall the furore at the time.There were many witnesses to the event as it took place in a bar, but the boy has always maintained his innocence.

Madonna Concert Sofia

Madonna is live in concert at Vasil Levski stadium tomorrow night.This will create traffic chaos in the capitol with major boulevards closed.The tickets are 170 leva each or about 67 pounds (though I hazard a guess that they are all sold out now).

Let us hope that Madonna does not manage to upset the audience as she did in Bucharest by making some haughty half-assed comments that 'it had been brought to her attention' that there was discrimination against Roma in Eastern Europe and that it was a jolly bad thing !.

Uncle thinks that sermonising should be left to priests not ageing rock stars.Best stick to singing Madge !. 

Obviously one to avoid !

Local British newspaper the Birmingham Post is reporting that a British family was struck down with severe food poisoning within days of arriving at the four-star all-inclusive Riu Helios Bay Hotel in the Bulgarian resort of Obzor Beach.

Anita Riley, 42, was reportedly diagnosed as suffering from - potentially deadly - salmonella food poisoning on her return. Anita and her husband John, 44, and their two children Megan, 16, and Jack, 13, apparently visited the resort in July for a one-week all-inclusive holiday with UK tour operator, Portland Holidays Direct.

The newspaper quotes Anita Riley: "The first 24 hours were fine and at first glance both the hotel and the food looked lovely, but then things rapidly went downhill. During our stay we noticed that the food, which was often left uncovered, appeared to have been reheated and was under-cooked. On one occasion we found the chicken that was served was still pink in the middle. One by one John, Jack and I fell ill. Only Megan managed to escape illness and she couldn’t go anywhere or enjoy her holiday because the rest of us were all confined to our room with stomach cramps and diarrhoea."

The Birmingham Post reports that it is not the first time that illness has affected the hotel's clients. "Problems were first reported at the hotel back in 2006 and law firm Irwin Mitchell is still pursuing a group legal action on behalf of its clients. But once again this summer dozens of British holidaymakers are being struck down by serious gastric illness – including four confirmed cases of salmonella – three years after problems were first reported. The law firm is now calling for hygiene improvements to be made at the Bulgarian hotel."

A spokeswoman for Portland Holidays Direct, which is part of the Thomson group, is quoted in the article: "At Thomson, the health and safety of our customers is our primary focus. We closely monitor all the hotels to which we operate to ensure that the strictest health, safety, hygiene and comfort levels our customers expect are maintained. The RIU Helios Bay is a very popular hotel with Thomson customers and continues to score highly in our customer satisfaction questionnaires."

Uncles comment: That is why I never go all inclusive, they serve you second rate food and drink !.

Aviation News

It's just been announced that Aerlingus will fly to Bucharest from the 25th October, prices are from 59 Pounds return. The news is good because Bucharest is accessible for most of Northern Bulgaria and is a feasible alternative to the once a week Wizzair service, that Varna will get as the only direct flight to London in the winter.Maybe Aerlingus will consider Gatwick-Varna for next year.

Blue Air are also flying from Bucharest to Stansted which makes Bucharest an attractive option for travelling to Bulgaria.

Good news day continues

EC Spokesman Upbeat about European Funding for Bulgaria
Bulgaria in EU | August 25, 2009, Tuesday


"Bulgaria is not by far the worst student in the European class," claims European Commission spokesperson Dennis Abbott. Photo by www.ec.europa.eu 

European Commission spokesperson Dennis Abbott has assuaged fears that Bulgaria risks to lose European funding, stressing his belief that the country will improve its performance.

Abbott's statement came shortly after the European Commission (EC) rejected once again the conformity assessments submitted by Bulgaria under the Technical Assistance, Transport, Competitiveness and Administrative Capacity operational programmes.

"Bulgaria is not by far the worst student in the European class and besides now it knows what it is supposed to do in order to be an even better student," Dennis Abbott said, as cited by the Bulgarian News Agency.

According to Dennis Abbott the most important task Bulgaria faces now is the launch of the unified management and information system, which monitors the payment requests and funding distribution under the programs.

He pointed out that the systems aim to make sure that the money allocated under operative programs are being spent transparently and efficiently so that they serve the interests of the citizens, create jobs and boost economic growth.

"I am sure that this will be done in Bulgaria. After you find the solution to the problems concerning one of the programs, there are big chances that all the rest will be approved," he said.

Abbott explained that the absorption of EU funding covers three years after the approval of conformity assessments, which is Bulgaria's case is the end of 2010.

Uncle's View: The news on EU funding in the past couple of days has been frankly dire.This latest comment appears to be a lot more positive.

 

More positive UK economic news

UK mortgage approvals have rocketted by 76.7%. It appears that financial confidence is returning both in the banks lending, and borrowers feeling secure enough to borrow.As most people are aware the health of the UK housing market is a major factor in the Bulgarian housing market and I am getting more and more confident that 2010 will be the end of this recession.

Trouble at Upton Park

Sad to read that there was a major outbreak of violence mainly outside West Ham's ground last night, before their 3-1 Carling Cup win against Millwall.

Having said that it was quite predictable as the two sets of fans hate each other.It appears that there were ten arrests and quite a few injuries including a stabbing.

It's a great shame that football hooliganism has raised it's ugly head yet again.Thankfully West Ham are in a different league to Millwall and these matches are very rare.

True story

This is absolutely unbelievable....An acquaintance of mine was in a real estate agency (and I use that description advisedly) he was talking about advertising his property and said to the agent why don't you put up a sign saying 'For Sale' outside the property, the agent replied 'What a good idea , we hadn't thought of that'...You just wouldn't credit it would you the sheer amateurishness.

The story goes that years ago the lawyers were making alot of money, so every Bulgarian was a lawyer, then the estate agents were doing well so that every Bulgarian was an estate agent, I firmly believe that if Astronauts were doing well every Bulgarian would be one of those too !.

Absolutely pathetic !

Cockney rhyming at cash machines 
  

A cash machine operator has introduced Cockney rhyming slang to a number of its ATMs in east London.

People using Bank Machine's ATMs can opt to have their prompts and options given to them in rhyming slang. 

As a result they will be asked to enter their Huckleberry Finn, rather than their Pin, and will have to select how much sausage and mash (cash) they want. 

The rhyming slang prompts will be available from five cash machines in east London for three months. 

Other rhyming slang prompts people can expect include a speckled hen (£10), while the machine may inform users that it is contacting their rattle and tank, rather than bank. 

Ron Delnevo, managing director of Bank Machine, said: "We wanted to introduce something fun and of local interest to our London machines. 

"Whilst we expect some residents will visit the machine to just have a butcher's (look), most will be genuinely pleased as this is the first time a financial services provider will have recognised the Cockney language in such a manner." 

The ATMs displaying prompts in Cockney are all free to use, although the majority of the group's cash machines charge a £1.50 fee.

Uncles View: These people must be a right bunch of 'merchant bankers'

Football Focus

Well funny old start to the footie season.Burnley have taken the role of last seasons promotion flyer Hull with surprise wins over Man U and Everton.Liverpool have had a disastrous start with two unexpected defeats, and of course West Ham went down to arch-rivals Spurs.West Ham have a dreadful record against Spurs but I did think they were a little unlucky although the last goal for Spurs was a complete defensive cock-up.

I have high hopes for the Hammers this season, Zola is having to cope with injuries and a deficit in the striker department.Let us hope that he can pull it together and give people in the East End something to smile about (lets face it there isn't much these days).

Let's at least target European football I would love to be able to watch them in Bucharest or Sofia.

Here are the latest hot vehicles in the Balkans !

The Soft Top
The Low Loader
The Truck

Very strange West Ham news !

A Premier League footballer has been stabbed in both legs and is described in a "serious" condition after an attack on him and his mother at their home.

The West Ham central defender Calum Davenport required emergency surgery today on his injuries after the knife attack in the home in Bedford. Doctors described the Bedford-born player's injuries as severe, but it is too early to speculate whether they have curtailed or could damage the 26-year-old's career. His mother was also described by police as being in a serious condition.

Two men have been taken in to custody in connection with the incident. A 25-year-old man was arrested in Derby on suspicion of attempted murder, while a 19-year-old man arrested earlier remains in custody, said Bedfordshire police. Detectives from Scotland Yard have also been notified of the incident. In addition, West Ham's medical team are liaising with hospital staff over the extent of the wounds.

A statement by West Ham read: "The club's thoughts are with Calum Davenport and his family. His mum is recovering while Calum underwent surgery this morning and his injuries were described as serious by doctors.

"The thoughts of everyone at West Ham are with Calum and his family and, due to the ongoing police investigation, no further information will be released at this time."

Davenport is a former England Under-21 international, who cost the Hammers £3m when he joined them from Tottenham during the summer of 2007. However, he did not figure in West Ham's first game of the season at Wolves last week and recent transfer speculation has linked the defender with a £1.5m move to Nottingham Forest.

Davenport spent a spell on loan at Premier League rivals Sunderland last season and has also been loaned out to Watford. The centre-back started his career at Coventry and has also played on loan at Southampton and Norwich. Gianfranco Zola's side are due to play Tottenham tomorrow.

Anybody want a cheap hotel ?

There are 772 Hotels for sale in Bulgaria, many are mortgaged and due to lack of tourists the owners are desperate to sell.It is the smaller family run hotels that are worse hit, but even the larger ones were offering ridiculously cheap deals to Bulgarians even in August.

Basically the shift is towards all inclusive big hotels, which has the effect of vacuuming up the trade from bars and restaurants.

What we are seeing is nothing less than a fundamental realignment of the hotel industry, to fewer bigger Hotels offering better higher quality facilities.This cannot be a bad thing as long as there is competition to keep prices down.

I have said before that Bulgaria is pricing itself out of the budget holiday market and there is not a new client group to replace this market because Bulgaria does not have the service level or infrastructure to attract the middle classes.

It is great news though for the enterprising who want to convert hotels to apartments as most hotels are in excellent locations. 

Swimming pool

I thought I would share with you pictures of my new pool which has become my private pet project for the last few months.It's quite large at 8 metres long and 5 metres wide and I am inordinately proud of it !.

Now this could be VERY interesting !

Bulgaria to yank cash out of property deals 


A new public institution will be set up in Bulgaria to manage and control amounts from all real estate transactions in an effort to bring them into the light and crack down on money laundering in the industry. 

The new Deposit and Consignation Fund will be inaugurated by special legislation hammered out by the Justice Ministry and the Notary Chamber. 

The institution will be a state-owned enterprise and not a bank and will be modeled on a system already operational in France, said Notary Chamber head Dimitar Tanev. Under the scheme, the sellers will receive their money with a short delay but it will ensure transparency and security to all loyal parties as well as central and local authorities. 

The system will see buyers transfer the money into the fund where it will spent two or three weeks before it is passed on the seller. The period will be used to check up the resources’ origin and charge all dues of the government and municipalities. It is expected to put an end to sham transactions and block cash payment as money will have to be put into the fund by a bank transfer, Tanev explained. 

Market values in the different regions will be determined by experts and updated every three or four months. The price will serve as a reference point for actual property transactions to make sure money laundering and tax evasion is prevented. A difference within 10-15% could be assumed thanks to property improvements but current differences topping out at between 300% and 1000% will be impossible, Tanev said. 

The Notary Chamber discussed the proposal with representatives of the European anti-fraud office Olaf, who said the project will indicate the country’s commitment to combat abuse and money laundering.

Uncle's comment : I will be absolutely amazed if this comes to fruition, but stranger things happen here !

Ivana to perform in Albena resort

Ivana, Bulgaria's leading pop folk diva, is performing at the Variete theatre here in the Albena resort.Its sure to be a sellout so get your tickets early !.

Facts and Figures

I was reading an article this morning about the Bulgarian property market.In the article it bemoaned the lack of reliable statistical information over a number of years about property prices.

Quite rightly it suggested that investors could not make informed decisions without correct information.The vast majority of figures in the Bulgarian Real Estate market are actually completely made up, mostly by agencies keen to boost the market by promoting high sales figures and prices. Only now when even the biggest idiot in Idiotsville can see that there is a serious decline, are realistic figures coming out.

These are the facts as I see it:

The Bulgarian property boom started in 2002 and peaked in 2007.In 2008/2009 prices have declined by as much as 25% (more in some places). Prices are now what they were in 2005/2006.

Wise investors, who got in early and sold at the peak, could realise up to 200% profit.Only those who invested late and/or unwisely, have lost money, if they can afford to sit tight most will still make a profit.

It is an unfortunate fact of a speculative property boom, that hard facts are the first casualty in a desire to get rich quick.