Property in Bulgaria Up by 327 Percent since 2001

In the last few years there has been no variety of projections, expectations or forecasts on the Bulgarian real estate market. There has been only one trend – that of prices going up, and only one result – each year the money invested in real estate around the country increase and so does the number of concluded deals. The market continues pacing forward registering an unprecedented growth for the country.

The increase of property prices by the end of September 2007 is 30 percent on an annual basis, experts say. Compared to last year the number of concluded deals has gone up by 39 percent the main reason for that being the increased volume of foreign investments in real estate – 1,160 billion euro or about 35 percent of all financial resources that have been invested in Bulgaria in 2006. Just to compare the figure – the invested resources in 2006 were three times less. However, Bulgarian investors do not sit idle either - after all, Bulgaria is a country where over 94 percent of residential properties are privately owned and already 60 percent of Bulgarians own a second home. And if two decades ago the second home was a legal problem now it is a good investment. The buying of a second home means spare money and solves important problems for the family. In principle, such an investment is made either in a resort (summer or winter) or in an apartment in one of the biggest cities.

Of course, on the real estate market there are some things that change against the general background of swelling prices and increasing demand. For example, this year it is the property in Sofia that attracts foreigners more than that in Varna and Bourgas. The reasons underlying this change of heart are different but the main ones are the overbuilding and the problems with the infrastructure along the Bulgarian Black Sea coast. The result – the prices of Sofia apartments swelled threefold in the last four years as the greatest soar was registered at the end of last year and at the beginning of this.
According to experts in 2007 there will be less concluded deals but for more expensive properties. In 2007 300,000 euro already sounds like a reasonable price for a luxurious apartment, real estate agencies claim. While only a year ago the acceptable price was twice as less – 150,000 euro. How much that amount will be the same time next year is very difficult to forecast. But one thing is sure – it will not be less. Properties, whose prices exceed 1 million euros, increase progressively as this is not a trend witnessed only in Sofia and Varna.

Apart from the internal reasons forming the growth in investments and property prices, in the last few months the Bulgarian real estate market started experiencing the effect of external factors as well. The mortgage crisis in the USA and the problems of the real estate market in the Baltic countries were felt in Bulgaria as well. The withdrawal of the big European real estate investors from the US made them turn their gazes to the Balkans – to Bulgaria, Turkey and Greece. There is no direct data about big players entering the Bulgarian real estate market but their influence is already felt. Russian investors which up to now invested in Lithuania, Latvia and Estonia are also redirecting their businesses to Romania, Bulgaria and Turkey.

The bottom line is that there is quite a lot of investment interest which means that the prices will remain the same (at least) or will increase even faster in 2008.


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