Gold in the snow

Zuzanna Wiak

What are the main differences between pistes in the Alps and the Tatra mountains? Usually only the height. With skiing becoming an increasingly popular Polish pastime, European companies are enthusiastically getting in on the act

Market experts believe that PLN 200 mln will be invested in Poland’s skiing infrastructure within the next two years. But these are by no means simple investments, largely because land in the mountains where hotels and ski-lifts can be built often belongs to several or even scores of owners. This is why many planned centres stay stuck at the drawing board stage for many years. But there are usually some exceptions to the rule. Two new ski lifts with additional infrastructure have been opened in Jurgów (Bukowina Tatrzańska) at a cost of PLN 14 mln. But consent had to be given by almost 400 people for this to materialize, while the company which currently owns the land has 270 shareholders.

Krzysztof Brzeski, president of the Dwie Doliny (Two Valleys) Muszyna-Wierchomla company, which has been investing in Polish skiing slopes for the past 10 years, describes how his own company managed to put their plans into action: “In 2006 I got to know the surroundings of the Beskidy hills of Muszyna and Wierchomla, which was virgin territory and where there was practically no skiing infrastructure. The land that I wanted to develop was owned by 10 people who had to be convinced to sell their properties, which obviously took much time and effort. Our company now owns 80-ha and leases another 40-ha.”

Lifted to the heavens

Dwie Doliny Muszyna-Wierchomla connected the two Muszyna and Werchomla skiing stations at a cost of PLN 40 mln. Both valleys now have a full range of hotel facilities, as well as the necessary skiing infrastructure – two chairs and 9 drag lifts.

Krzysztof Brzeski adds that: “In 2005 we opened a hotel with sleeping for 300 people, restaurants and fast-food outlets at each ski lift station. The complex also holds many other attractions, such as a swimming pool, a spa, a paintball area, a tennis court, a beach volleyball court, a children’s playground and a specially constructed lift and ski slope for the youngest skiers.”

But this is not the most well-known and expensive project in the Polish mountains. The winner in this category was the modernization of the old cable car to summit of Kasprowy Wierch. The reconstruction and repairs to these facilities cost more than PLN 60 mln. But this is not the end of the improvements to the infrastructure of Polish ski resorts. The mountain railway built in the 1960s to Mt. Czantoria near Ustroń was modernized a year earlier and much less expensively than the Zakopane lift, costing a mere PLN 15 mln.

Far from the Golden Sands

Thinking about the attractions of Bulgaria rarely evokes images of mountains and snow-covered slopes, but rather of wide beaches and swimming in the Black Sea. However, Bulgaria is not only a location for summer holidays. It boasts skiing resorts in the mountains above Rile, Pirina and Rodope, the most popular of which are Pamporovo, Bansko and Borovec – with the latter being the most popular over the last 20 years.

In the opinion of Dr Paweł Grząbka, the CEE Property Group’s managing director: “Bulgaria is in the happy position of enjoying a continental climate with clearly defined seasons. The summer is very warm and the winter very cold, which favours the development of skiing infrastructure. Bulgaria’s ski slopes have become popular due to their excellent sun exposure, easy access and low prices.”

The full range of infrastructure is a major feature of Borowec, now a well-established skiing resort. There is a very large number of hotel rooms and a well developed chain of restaurants. But it is extremely difficult to purchase a property in Borovec. Most sites were developed long ago, while the remaining land is legally protected. To obtain a building permit almost needs a miracle.

Resorts receive a lift

Dr Paweł Grząbka points out that: “The ski lifts in locations for years regarded as mountain resorts are no longer as new as they once were, and have not undergone repairs for the past 10 years. But completely new infrastructures exist in centres which are now being discovered as attractive locations for skiing.”

One such new resort is Bansko, where many residential and hotel investments have emerged next to modern ski-lifts and well prepared pistes. It is the most rapidly developing skiing location in Bulgaria and is also increasingly popular due to its proximity to the capital city Sofia, which is 170 km away. Several Bulgarian firms were granted a 30-year licence a few years ago to restructure and maintain the skiing slopes. Since then, millions of euros have been invested in Bansko, both in the ski slopes and the hotel facilities. EUR 27 mln was invested in 2006 alone. Bansko has 65 km of pistes, which are served by a gondola cable car, as well as chair and drag lifts. Apart from the fine skiing conditions, the thing which is attracting an increasing number of tourists are the prices – which compete favourably with those in Austrian, Italian and even Polish resorts. The market for residential investments, although certainly not inexpensive, is also growing at an impressive rate.

According to Paweł Grząbka: “A huge number of modern apartment-style investments are being built in mountain locations. In Bansko, one of the most popular resorts, the price for a high-quality apartment comes to around EUR 1,200-1,300 per sqm, which outstrips even the asking prices for residences in the popular seaside resort of Golden Sands.”

Millions to repay

Much of this investment is financed by bank loans of often staggering amounts, which are later repaid over many years.

Krzysztof Brzeski puts it this way: “Our investment has partly been financed by our own means, as well as through loans and an EU subsidy. The first loan was for PLN 8 mln, the second – which was used to finance the construction of the hotel, two ski lifts and enlargement of the restaurant – was PLN 25 mln. We have currently taken out a bridge loan of PLN 5 mln. These loans will be repaid over a period of 10 years. However, we shall continue to invest there and we are even thinking of building another hotel on the other side of the valley. I really would like it to look like an Alpine resort 10 years from now.”

Finance for such investments is more easily available to Polish than Bulgarian investors, since access to loans in Bulgaria is still not as universal as in Poland. As a result, foreign investors in Bulgarian real estate prefer to take out loans in their native countries where they are less expensive and more easily available. This is a common practice among British companies, which are eagerly investing in the Bulgarian mountains. The conditions for obtaining a loan in Bulgaria are very much worse than in Poland. For instance, there is still no real competition for Bulgarian banking services, which means that loans are much more easily available in the Czech Republic and Poland. One reason is the high interest rates in Bulgaria. The conditions for granting loans and the economic feasibility requirements of a venture are also more severe. Dr Paweł Grząbka, CEE Property Group’s managing director, goes into more detail: “The cost of developing one ski-lift is between EUR 5 and 10 mln, which has to be repaid only after 15 years or so have passed. A proportion of the expenses are fixed costs, such as land and equipment. Only the energy required to start the ski-lift is a variable cost.”