Property Prices in Sofia and Varna Remain Stable in 1Q 2010

imoti.investor.bg, 08.04.2010

“Relatively successful” - this is how real estate agency BULGARIAN PROPERTIES describe the first quarter of 2010. According to company data the average activity on the market was about 40% higher compared to the same period in 2009 – the most difficult period on the property market in Bulgaria.

Property sales in January and February 2010 remained the same as those in the second half of 2009. However, March brought higher activity on the market and the number of deals reached a record high since the beginning of the crisis and a growth of 50% compared to the average monthly levels in the last 10 months, the agency informed.

The more dynamic market in March was mainly connected to properties in regions around the country some of which had registered almost no deals in the last few months. The activity on the market of city properties in Sofia and Varna remains unchanged compared to the last six months and property prices based on actual concluded deals remain stable. The concluded deals are still mainly with luxurious properties or with very cheap properties, as the main requirement of the buyers is the bargain price.

In the city property segment and mostly in Sofia we witness a calmer market and an overcoming of the initial shock from the crisis, the company comments. In the first quarter of 2010 property prices in Sofia and Varna based on actual concluded deals remain unchanged compared to the last quarter of 2009.

The average price of sold apartments in Sofia in the first quarter of 2010 is 1,040 EUR/sq.m., the agency’s data shows.

In January the apartments in Sofia were sold at an average price of 980 EUR/sq.m. which is similar to that of the last quarter of 2009. In February the average price was 1,220 EUR/sq.m. (mainly luxury properties were bought) and in March - 940 EUR/sq.m.

In the last year or so the residential property market in Sofia keeps relatively stable prices as property prices didn’t fall significantly and many of the buyers are still waiting for better prices. As this volume of deals, which balances the market in the last year, is very small for the capital there might be a second wave of decrease in property prices in Sofia, especially for properties with bad location, bad environment, Soviet-type properties and properties in need of overall repair works, the company forecasts.

There is an increase in the number of concluded rental deals in Sofia since the beginning of the year by about 30% compared to the last quarter of 2009. However, now deals are concluded at prices that are 30% lower. If at the end of last year the concluded rental deals were mostly with luxury apartments at about 600-700 Euro/month, in 2010 rentals of apartments under 450 Euro/month prevail – an average of 390 Euro/month for January, 430 Euro/month for February and 400 Euro/month for March 2010, the data shows.

Prices of city properties in Varna remain stable and the interest towards them – relatively low. The average offer price per square meter in Varna is about 900 Euro making the properties there more expensive than the buyers expect and the market there continues to be not very active.

Regarding rental levels in Varna there is a decrease of 30% in the number of concluded deals compared to the first quarter in 2009 and a decrease of 27% compared to the last quarter in 2009. According to BULGARIAN PROPERTIES’ data the average price at which a new one-bed apartment was rented out in the first quarter of 2010 is 380 Euro as deals are concluded after additional bargaining, while according to the data of BULGARIAN PROPERTIES in 2009 the average rental price was 540 Euro.

Due to the slow market lessors are often willing to rent their properties out for a shorter period (1-3 months). Foreign and Bulgarian clients are already looking for holiday homes to rent for the summer season in the Golden Sands resort and in the top central area of Varna.

Decrease in the offer prices of properties

The decrease in the asking prices of properties became more obvious in the beginning of this year as there were most offers with decreased prices in the period 20.01.2010 – 10.02.2010. Their number was higher than that of the new offers which BULGARIAN PROPERTIES publishes every week. At present the number of discounted offers makes up about 60% of that of the new offers published every week.

The average decrease in the asking prices of properties around the country is 25% since the beginning of the crisis, as in the last two months offer prices have decreased by 5%. Since the beginning of the crisis the decrease of the asking prices of Sofia apartments is 21.4%.

The greatest drop in the asking prices of properties is to be found in the residential quarters where prices were some of the highest in the capital and where the supply is biggest. In most quarters the decrease is similar to the average level for Sofia while in quarters like Ivan Vazov, Iztok and Yavorov the drop in the offer prices is lower.

The buyers

The dominating buyers on the property market since the beginning of the year are Bulgarians and Russians. While in January it was the Greeks that were most active, in February and March they were not present on the Bulgarian property market.

Bulgarians are the buyers in 20% of the deals realized by BULGARIAN PROPERTIES. They bought mainly apartments in Sofia, Bourgas, Varna and also in Bansko, as well as rural houses at bargain prices around the country.

The Russian buyers make up the biggest share of foreign buyers in the first 3 months of 2010 – 20%. Generally, they buy apartments in our ski and seaside resorts.

This year the British make up 15% of the foreign buyers as their interest is mainly focused on rural properties at low prices.

The other foreign buyers are of various nationalities. This year there are representatives from many countries present on the Bulgarian property market – from the neighboring countries but also from faraway destinations like Canada, Australia, the USA, etc.

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