October 28, 2005
A Second Home in Bulgaria?
By DENNY LEE
IT wasn't because the Hamptons were too flashy or the
Catskills too sleepy that Aaron Hicklin ended up in Croatia.
Nor was it simply the cachet of owning a vacation home in
"I didn't want to go somewhere obvious," said Mr. Hicklin,
36, the editor in chief of Black Book magazine, who lives in
Brooklyn. So instead of a seaside cottage in the south of
France, he and his partner, Ilya Marritz, 28, a radio
producer, bought a 19th-century stone house last year on the
lavender-scented island of Hvar off Dalmatia.
"It's the new European Riviera," Mr. Hicklin said. "There's
even a celebrity element here, though that's not why we
went. Croatia is still relatively undeveloped. And it's
relatively dirt cheap."
Forget the Tuscan villa, the chateau in Provence and the
pied-à-terre in Paris. They're so cliché, not to mention
overpriced. Savvy second-home hunters are packing their
passports, pouring through foreign classified ads and
snapping up homes in far-flung countries from Argentina and
Bulgaria to Nicaragua and Turkey.
Even though these places may lack the glamour of Cannes and
are sometimes harder to get to than Timbuktu, they are
picturesque, not overrun by Americans and, in some cases,
even fashionable. Best of all, there are still bargains to
Mr. Hicklin, for example, paid $65,000 for his two-bedroom
cottage in Croatia. In Nicaragua, a new beachfront house
goes for as little as $170,000. And in downtown Buenos
Aires, $85,000 buys a one-bedroom duplex in Recoleta, one of
the city's smarter districts. Try finding a broom closet for
that price in Miami Beach or, for that matter, the Fourth
Arrondissement of Paris.
"There's nothing available at that price," said David
Michonski, the chief executive of Coldwell Banker Hunt
Kennedy, a real estate firm in New York, and a specialist in
international real estate. "Americans, for the first time in
history, are looking abroad for second homes. It's not just
Tuscany or England, where the rich have always gone."
The trend is just starting to emerge, as low interest rates
and rising property values at home, cheaper air travel and
the globalization of the housing market have prompted
Americans to canvass the planet for vacation homes beyond
the tourist beltway. In addition, baby boomers are
better-traveled than their parents and think nothing of
sinking money into foreign soil, especially as the domestic
market seems to be overheating.
"Real estate has enjoyed a boom for the past five years, and
it's spilled over internationally," said Jeff Hornberger,
the manager of international business development for the
National Association of Realtors in Washington. "Someone who
bought a house for $300,000, that's now worth $600,000, may
want to downsize and get a second home. But when they see
the prices in Florida, they start looking overseas."
That is basically how Marie Munday, 50, a deputy sheriff
from Aspen, Colo., ended up as an international snowbird. As
her house tripled in value over the last decade, she began
condo shopping in Florida, but the prices were still beyond
her reach. So she got off the beaten path and landed in
For $54,000, she and her husband, Chip Munday, 49, a
property manager, bought a half acre last month in Altos del
María, a new second-home community in the mountains of
Panama, about 90 minutes from Panama City. "We hope to do a
high-end home with a vanishing-edge pool," Ms. Munday said.
"Labor here is pretty cheap. High-end construction is about
$65 a foot. In Aspen, the norm is $400."
"The first wave was Costa Rica, Mexico and Thailand, but
those countries got expensive; now there's a second wave,"
said Matthew Atlee, the editor of Escape From America
Magazine. The magazine is published online by
EscapeArtist.com, a Web site based in Panama about living
abroad, which started in 1996 and gets about 8.5 million
visits a month. In Central America, the spillover has
prompted real estate agents to call Panama, Honduras and
Nicaragua, the "next Costa Ricas." In Europe, there is
already talk of Croatia's being overpriced, as Bulgaria and
Romania are promoted as the undiscovered hot spots. And in
Asia, Americans are no longer ghettoized in well-traveled
places like Bali and the beach resorts of Thailand but are
branching out into Malaysia, the Philippines and the
mountainous reaches of Thailand around Chiang Mai.
Even the Middle East is up for grabs. "Dubai is a nice blend
of the Middle East and America," said Adil Samad, 24, a
graduate student from Buffalo whose family recently bought a
$600,000 three-bedroom condominium in the planned Trident
Grand Residence, an apartment tower overlooking the Persian
Gulf. "We considered Miami, India and California. But Dubai
is extremely safe and 30 percent cheaper."
WITH the notable exception of Africa, hot zones like Iraq
and Afghanistan and restricted spots like Cuba, few corners
of the world seem to be off limits to intrepid home buyers
"What's a verboten place?" asked Mr. Michonski of Coldwell
Banker. "I can't think of one. We're seeing this happening
around the world. London plumbers are buying places in
Portugal. Europeans are buying in Florida. Greece is on the
verge of a huge boom. It's identical to global trade. In
fact, they're tied together."
For one thing, real estate listings are no longer a local
commodity. Not long ago, a tourist might have stumbled upon
a "for sale" flier at a local cafe. Today, all one needs to
do is plug a country name and the words "real estate" into a
computer search engine to see what's available. That even
works for places as hard to travel to as Fiji, which is
about a 10-hour flight from Los Angeles.
"I had over 100,000 hits and 200 people e-mail me in the
first month," said John Knox, 45, a land surveyor from Costa
Mesa, Calif., who listed his Fiji bungalow on
EscapeArtist.com in June. Last month, a British couple
bought the property, a two-bedroom house on the volcanic
island of Taveuni, for $55,000. "Now I'm trying to find a
place in Croatia, maybe Montenegro."
The process for buying overseas has also become less risky,
as the financial and legal institutions that make it
possible for people to own second homes are increasingly
transparent, global and linked. That is not to say there are
no pitfalls. In many countries, there is little legal
protection for home buyers should the deal sour. Mortgages
for foreigners are nearly impossible to obtain, and the
mechanism for transferring titles can be downright
"The nightmare scenario is the guy you meet at the bar who
sells you a house, but doesn't actually own it," said Lief
Simon, the chief financial officer of International Living,
a Web site started by Americans in Ireland about buying
property overseas. Mr. Simon also runs seminars that promote
overseas real estate to investors.
Some countries restrict foreigners from owning land. Mexico,
for example, prohibits Americans from buying property within
31 miles of the coast. Similar restrictions are found in
Thailand, Croatia and much of Central America.
But as countries recognize the value of the second-home
market, ownership rules are being relaxed. Or at least bent.
In Mexico, Americans can now buy beachfront property through
what is known as a "fidecomiso," a title-holding trust. In
Croatia, homeowners form a local corporation. And in
Thailand, where foreigners are barred from owning more than
49 percent of a property, buyers have developed a kind of
corporate shell game to give themselves control of their
Maintaining a home overseas is also becoming easier. The
peace of mind afforded by title insurance, once a rarity in
less-developed regions, is becoming standard. Financing for
foreigners is available in a growing number of countries,
including Panama, Mexico, New Zealand and, soon, Croatia.
And a cottage industry of rental and caretaker agencies has
sprouted to meet a budding demand.
SOME countries are going so far as to court American buyers.
In Dubai, the local emirates designated broad strips of land
as freehold, or private property, in 2002 to lure
developers. Malaysia recently started a program that allows
foreigners who buy property to apply for renewable five-year
"The borders for second homes are falling," said AJ Janoyan,
35, a lawyer from Emeryville, Calif., who has second homes
in Lebanon, Argentina and, as of last year, Armenia. He is
now in the market for something in Croatia and Bulgaria.
"There are lots of opportunities before these places convert
to the euro. I think it's all open season."
Like many foreign homeowners, Mr. Janoyan treats his
vacation properties as an investment. He visits only a few
times a year. To help pay for the scattered homes, he has a
business partner and rents out the properties to vacationers
through local agents. "It's all about discovering new places
and having a great time while we make money," he said. "The
X-factor is no longer the distance, but how reputable the
local people are."
Some economists, however, worry that the global buying
frenzy is exporting the American real estate boom to other
countries. Robert J. Shiller, a professor of economics at
Yale, cautions that vacation home destinations tend to be
driven by fashion and, therefore, are more vulnerable to
bubbles. He calls them "glamour properties."
But Suzanne Halmer is not the least bit concerned. A
teacher's assistant in Los Angeles, Ms. Halmer postponed her
dreams of a Paris apartment and, instead, paid 22,000 euros
(about $27,000) this year for a 400-square-foot studio in
Bulgaria. It is part of a new resort called Sunny Beach,
near the old town of Nesebur, that looks like a mini-Florida
development on the Black Sea.
"Five years from now, it's going to be worth 85,000 euros,"
said Ms. Halmer, 47, who also owns a ski condo in Park City,
Utah. "I'm not crazy about Bulgaria, but I'm crazy about the
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sale and rent