BANKS MAY BECOME THE LARGEST OWNERS OF REAL ESTATE ASSETS

Banks may become the largest owners of real estate assets in Bulgaria because of the crisis. "Although their exposure to construction businesses may be small, a number of other transactions are secured by real estate properties," Yuri Katanov, CEO of Landmark Holding, said during the BalRec conference. However, prices will continue to go down and financial institutions must therefore act with maximum flexibility when dealing with problematic assets. 

"Transactions in such properties will be difficult in Bulgaria," commented Chris Bennett, Head of Acquisitions in Europa Capital Emerging Market Fund. According to the expert, the main reason for this is that it is difficult for banks to accept the fact that the prices of assets are falling and they do not show flexibility in trying to realise the pledged property of problem loans. His company has acquired Mall Sofia and Plovdiv Retail Park. The ambition of Europa Capital is to finalise one more deal worth about €30-40 mln in the next three months.

":The domestic mortgage loan market still has a great potential to grow," said Maria Ilieva, CEO of MKB Unionbank. The reason for this is that Bulgaria is still behind other countries on several indicators. According to the data, the ratio between mortgage loans and the country's gross domestic product is one of the lowest in Bulgaria, standing at 12.5%. By comparison, it is 16.0% in Hungary, 20.4% in Poland, 21.4% in the Czech Republic, 34.5% in Latvia, 40.7% in Estonia and reaching 41.2% in the Eurozone. Ilieva shared a moderately optimistic forecast for the development of the housing market, and hence - for a stir-up of mortgage crediting.