For Bulgarian property bounty, the only way is upmarket

There has been something of the goldrush in the way British buyers have surged into Bulgaria. Since they discovered this Eastern European country had sun, sea, sand and snow, and that you could own a place for the cost of a handful of holidays in a ritzy resort elsewhere in Europe, the stampede has been on.

Intense marketing has found an easy, and sometimes unquestioning, audience in the UK, which has lead some analysts to warn of oversupply and falling values. Those who bought a few years ago have comfortably banked a profit, but more recent purchasers might be wise to lower their ambitions.

Assetz, the property- investment specialists, reported that, in the third quarter of this year, Bulgaria suffered a dramatic change of fortunes. Total returns on cash invested fell from 104 per cent in June, to 44 per cent. Annual house-price growth, according to Assetz's figures, slowed from 36 per cent to 17.8 per cent, with the Bansko skiing region showing falls of minus 2.1 per cent. Since then, capital gains have dropped to 13 per cent.

"This may still sound high, but the rate of the fall is quite alarming [annual growth in February, 36.6 per cent], and some areas have actually shown negative growth," it reports.

But is it as alarming as it seems? Not if the latest plans of some British companies are anything to go by. These developers have watched the building frenzy from a distance, while itching to get stuck in. Now, they reckon, as the dust settles and the country prepares to join the EU, it is time to step into the quality breach. They want to offer buyers properties of a standard they would expect to find elsewhere.

Among the first off the starting-blocks this week was Yoo and Unique Development's new scheme in the Black Sea resort of Obzor. A town little known outside Bulgaria, it was a fortified trading settlement during the Roman era. For the British buyer, though, the white sandy beach will be the main attraction, and the development of 650 flats is but a few steps away. No other building will be as close to the sea in future.

Every apartment will have a sea view, thanks to the large balconies. The Canadian architects Diamond & Schmitt wanted to create an outside room. The most expensive penthouse, at £244,000 (current euro exchange rate) is 112 square metresinside, with a terrace of 102 square metres. At the lower end, a studio is £38,000, a one-bedroom flat £59,000, a two-bedroom one £90,000. On site, there will be a pool, gym, spa, tennis courts, restaurants and shops. The first phase is due to be completed in 2008.

Dominic Hassel, of Knight Frank, the selling agent, says that it is aimed at the end-user. There is no rental pool, although there are local agents. "As you drive up the coast, you come to this fantastic stretch of coastline, which has a headland either side. There can be no building next to the development."

Away from the coast, in the popular skiing resort of Bansko, Savills, together with Parc Investments Group, is this week launching a five-star - British five- star, that is - skiing and summer leisure complex, with 149 flats. Jeremy Rollason, director at Savills International, says that until now, people bought in Bansko on price, without giving much thought to underlying quality.

The plot for St George's Lodge is beside a nature reserve, and will have uninterrupted views of the mountains. There's a full letting and management service, and tour operators are being selected for the 2008 season. Prices from £48,500 for a studio to £322,000 for a penthouse.

YooBulgaria Obzor through Knight Frank: 020-7861 1737; www.yooBulgaria.com

St George's Lodge through Savills: 020-7016 3740