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During the last few year, Bulgaria has become the new preferred real estate investment location in the Balkans. On the one hand, this signals that prices of properties in Sofia and in Bulgaria in general are cheaper than the ones in the regional capitals of Athens, Bucharest, Belgrade and Skopje. And this is true; apartments, as well as the industrial properties and office spaces can be bought at a lower price than similar ones in other surrounding countries. On the other hand, there are new market demands and evolving requirements by clients who are looking for the best quality for a competitive price.

The main noticeable trend in the Bulgarian real estate market is the increase of real estate market sales of office spaces, as well the increase of sales of luxurious and spacious apartments for end buyers – physical persons. The other trend is young families with stable incomes wishing to buy two and three story houses with a yard, around the big cities.

Why is the Bulgarian market so attractive for buying an apartment?

According to the Chairman of the Management Board of the National Association of the real Estate properties, Mr Dobromir Ganev, the first reason are the good macroeconomic indicators: the increase of the incomes of the physical persons and the low percentage of unemployment. The official statistics of the National Registry Agency show that the increase of the sales on annual base is 8% for apartments and other residential properties.

Other factors which influence the development of the market include the lowest interest rates observed in the last 30 years in Bulgaria for mortgage loans (between 2.6% and 3.0% per year, according to Mr. Tihomir Toshev from Credit Center) as well as the political stability which is a prerequisite for a stable market environment. 

The increase of the supply and the stable prices are likely to be the new determining characteristics of the market during 2020. At the same time, investors should be very careful when they determine the prices of their properties for sale, because overpriced properties will take longer to sell and will consequently lose in value. In 2019, one square meter of floor space was sold at an average of EUR 1,080. 

The big variety of real estate properties for end users – from newly built luxurious penthouses to comfortable and spectacular mansions by the sea – is also an active factor in shaping the market. There are also a large number of new properties being built not only in Sofia, but also in the countryside. Out of 28,000 property sales during the last six months in Sofia, over 10,000 were for newly built apartments in attractive areas.

The new trends are slowly but surely evident outside the capital as well, in the bigger cities of Plovdiv, Varna, Burgas, Veliko Turnovo, Ruse. International companies diversify their work locations across different towns in Bulgaria and thus lead to significant market diversification in the towns and higher demand for more comfortable, contemporary residential properties. 

Particularly during last year, one can notice a trend of growing market interest in properties by the sea or in the mountains. We expect this will also be a leading trend in 2020 – a purchase of own property on the Bulgarian seacoast.

Bulgarian office spaces – new prices, new tendencies

It is expected that around 160 thousand square meters of office space will be completed during this year. Several new business buildings in Sofia – Sofia Tech One, Balkan Business Center, Caritage Park, to name just a few – will be completed during 2020.  

At the end of 2019, the supply for rented office space remained unchanged with the cost typically high – EUR 12-14 /sq.m. for first class spaces on main boulevards and up to EUR 15/sq.m. for single A class building in the very center of Sofia. The average share of free spaces for A and B class ranges between 9-9.5% with a tendency to surpass 10% this 2020.

These prices are accepted as normal by the big international companies which have entered in Bulgaria in the IT and call-centers sector during the last 5 years. As all the biggest players in software development, IT research and science, hosting companies and others similar leaders have opened offices in Bulgaria, this has lead to an increase of the prices per square meter.  It is expected that in 2020 the market for office spaces will be driven by the need for restructuring and optimizing of the working commercial centers.

In 2019, we witnessed an increase of acquisitions of big land plots and the development of new projects at the industrial level. This tendency will be kept in 2020 and in 2021. Bulgaria has managed to attract investors from China, Japan, South America and Middle East. Thus also changes the rules and the prices on the market. It is a direct result from the growth of different sectors in the economy, particularly logistics, commercial trade, transportation and distance sales.

Anna Philiotis
Director Advisory Services
Eurofast Cyprus
anna.philiotis@eurofast.eu

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