Investing in BulgariaThe Irish and Polish dominate developments in Bulgaria Kevin O'Connordiscovers on a visit to Sofia, where he meets Galway property men and the city's straight-talking mayor
IN J J MURPY'S, the talk runs as smooth as the Cork-brewed stout - dollops of cream on both drink and chat. Deals are being done, figures projected on backs of cigarette packs. Neither party wishes to be outflanked, yet each wishes to get, so to speak, the cream on the top - of the deal.
All very reminiscent of The Shamrock Bar on Novi Arbat in the chaotic Moscow of the mid-1990s, after communism collapsed and capitalism had yet to find its local way. In the heady atmosphere of Irlanski Dom, the Shamrock Bar shared a supermarket floor, from whence glowed bright shining goodies of the free market - tellies, CD players and video cameras.
Glittering prizes, then, that neon-lighted the lure of many a deal.
Stuck in my recall are two Irish adventurers, one offering 20 former military trucks, the other millions of Marlboro cigarettes. They shook hands and departed. One to find 20 trucks, the other to source a few million Marlboro fags.
What became of that deal I often wondered? Last month, in J J Murphy's in Sofia, the dealing was more structured. Colin Hanley, marketing manager of West Properties, was taking a break from a long day's showing of sites to investors from Galway, where the company is based.
It had been an impressive tour of developments, with large cranes over new apartment blocks seemingly reduced to miniatures against the giant, jagged mountain ranges of the Balkans. This is the new Bulgaria, as say, Blanchardstown in the 1990s signalled the New Ireland.
Founded by Brian Conneely, West Properties benefited from the Irish boom and has invested tens of millions in Bulgarian real estate, travel and leisure. It grew exponentially out Conneely's foray into the area, back in 1989. "I hated it then, the food and accommodation was terrible - but the people were warm and when I came in 1994, much had improved."
He kickstarted his Bulgarian enerprise by drawing finance from his Galway properties. Recently, local banks have been persuaded of the long-term value of providing mortgages to overseas investors, a giant leap for a banking culture reared on communism, one of whose guiding tenets was the destruction of private ownership of property.
To rectify communist seizures of land, the Bulgarian Parliament in 2002 enacted a Land Restitution Act, providing provenance, of title, where possible, so that owners can sell, often to foreign investors and developers. For all that effort to repeal history, Sofia, an unwilling satellite of Moscow since the last war, has much the same surface impact on the visitor as the Russian capital - cracked pavements, roads of such pot-holed depth as to make Kerry feel like an ice-rink - and outer Ballymuns of "proletariat" habitation, sagging into collapse.
Like most former satellites, loosening ties to the puppet-master also meant a cutting of the purse-strings. Opting for the EU - and Western values - incurred the ending of Soviet subsidies and rampant poverty. Brussels responded with a generosity unshackled to military threat, but keyed to EU demands of reforms - of jurisprudence, GDP, public administration. These "isms" of Euro prosperity are onerous conditions which, frankly, Bulgaria struggles to achieve.
A stress keenly felt by Boiko Borissov, Mayor of Sofia. "Just be grateful you never lived under Communism," he tells me, by way of softening the harsh impressions of a visiting press corps, faltering over rubbish-strewn streets, stucco-peeling public buildings and the shaky flats on the outskirts, where live most of the gentle, obedient staffs whom we encounter in the new hotels - sprung up in anticipation of Bulgaria's joining the EU, as it did in January of this year.
Borissov is popular with his citizens, because he is seen to be doing his best, taking on his broad shoulders the weighty burdens of budgetary chaos and flatulent bureaucracy dumped by the departing Soviets as a gift to an ungrateful nation. A former bodyguard to VIPs, his response seems right out of central casting when asked how he is tackling the fabled corruption of Sofia.
"Where you from?" he asks the questioner from a Dutch magazine. The reporter seems isolated under his menacing stare, until - sensing his discomfort - Boiko asserts there is planning corruption in most European capitals, throwing a raised eyebrow in my direction. In that context, an Irish voice clearly has no moral ground, so instead I ask about the pressures to alter the city's master plan of development, whose perimeters had earlier been outlined by the city's chief architect, Petar Dickov.
"Every day, Petar and myself could be millionaires - if we gave into, what you call? - pressure. The plan is set in stone and will not be altered - it is the developers who have to alter their plans . . ."
Later I hear from a consensus of Polish and Irish developers that this appears to be so. "Worse than corruption is the endless bureaucracy," says one developer. "It's a hangover from communism, where everybody had to have his say and nobody could make decisions - everything went back to Moscow. Borissov is streaming the process but it will take time, he has a lot of resistance, people who want him to fail."
Failure may not be imminent, if another figure from the Moscow time warp is indicative. The Mayor of Sofia is a look-alike for Yuri Lushkov, long-enduring mayor of Moscow, protegé of Gorbachev, survivor of Yeltsin and Putin. But this Balkan Bear, Boiko Borissov, may not be content to merely clean up his city. According to local observers, the minority party he leads is on a groundswell of populist support for increased parliamentary representation.
All this mixture of chaos and good intentions provides a rich picking-ground for outside developers. Most Bulgarian developers do not have the finance or expertise to engage in large-scale developments, of which the Irish and Poles seems current masters. Which is why, in J J Murpy's , as the expats gathered to watch the Irish-English rugby match, random conversations turned into deal-making.
Asking if a seat was vacant beside Colin Hanley, the person I took to be a local offered it with a Dublin accent. Tom had completed 16 apartments this month and within minutes asked Hanley if he would buy them. "I'll look at them," he said carefully, "but we have a brand to protect - if they meet our standards, we'll see . . ."
There are 35 one and two-bedroom apartments still available in West Properties' 112-unit FOT development in the southern district of Sofia. Due for completion in June, the 78-127sq m (840-1,367sq ft) units cost from €100,000 to €160,000. Fit-out packages cost €8,000, and letting agents Irish Trade Bulgarian will handle letting for a 10 per cent fee. Management services cost €10 per sq m per year. West Properties has three residential and two commercial developments for sale in Sofia, and 19 altogether in Bulgaria.
www.westincorporated.ie
