Since the global credit crunch took hold, purchases by UK investors of Bulgarian properties priced between €45,000 and €90,000 (£33,500 -£67,000) have fallen sharply, according to Sofia-based estate agents.
Hugh Fraser, of Sofia-based LS Property, said: "Our research suggests that only about 30 apartments were sold in Bansko last month and the buyers were Russians and Greeks." This compares with sales two years ago of more than 500 properties a month to UK and Irish buyers.
Such a steep decline suggests Bulgaria's holiday home boom, which has focused on Bansko and Sunny Beach, the leading resort on the Black Sea coast, may be over.
Property developers have been offering discounts of 8-12 per cent in buildings nearing completion in Bansko. Meanwhile, prices for new apartments in Sunny Beach have fallen by 7-8 per cent.
Mihail Chobanov, chief executive of Bulgarian Properties, one of the country's biggest estate agencies, believes that about 50 per cent of UK investors who took a punt on the Bulgarian market four years ago are now trying to sell their properties. "Speculative buyers want to cash out and move on," he said.
While tightening credit conditions have given the market a decisive downward push, Bulgaria's appeal for UK investors was already starting to fade.
Rapid development at Bansko and Sunny Beach resulted in an over-supply of lower-priced apartments, putting a severe strain on local infrastructure. An estimated 85 per cent of UK investors bought properties off-plan without having visited Bulgaria.
On arrival in the country many were disappointed by mediocre construction quality and local developers' lack of concern for the environment.
Rental incomes on the Black Sea coast have been lower than expected, according to investors. "Estate agents talked about a six-month season and yearly returns of 6-8 per cent. The reality is more like three months and under 3 per cent," said David, a Dubai-based IT worker who bought at Sunny Beach two years ago. He declined to give his full name.
Two years ago 90 per cent of Rockarch's customers were UK investors, including a sizeable number of expatriates living in the Gulf states. Mr Dimov said the client mix changed last summer, with cash-rich Russians replacing buyers from the UK.
"In the past six months 60 per cent of sales were to Russians, 10 per cent to Greeks and Poles and only 30 per cent to the British," Mr Dimov said.
Julia Titova, of Best Real Estate, a Moscow-based estate agent, said Bulgaria had overtaken Montenegro and Spain as the most popular foreign country for Russians wanting to buy a holiday home.