The Concept of Luxury Property is Flexible

Nikola Stoyanov - Managing Director of BULGARIAN PROPERTIES' subsidiary luxury real estate agency LUXIMOTI - gave an interview for Stroitelstvo Imoti weekly and discussed whether there are already truly luxurious properties in Bulgaria and what their features are.

- Mr. Stoyanov, are the luxury properties in Bulgaria luxurious?
- Let’s put it this way – in Bulgaria there are already many luxurious properties which are constructed with materials and installations of the highest quality and are furnished to the highest standard, at the same time having unique locations and features. Still, the properties in this category are not many. The reason for that is that they started being built a couple of years before the global crunch hit the market. As a whole the supply of these properties is small and does not exceed demand. That is also the reason prices of luxury properties to remain more stable compared to these in the other property segments.

- Does it sometimes happen a property to be announced as unique while in fact it is not?
- It happens often, especially during the property boom years. This led to the wearing out of the words luxury and luxurious. Then almost all properties were announced as luxurious, with high quality finishing works and furnishing while what was meant was new construction, with laminated flooring and standard furniture. Property buyers saw through this marketing trick and in the last couple of years they are more exacting when choosing an elite property. They know very well what they want and what they expect from a property. At present the misleading offers do not work as a marketing trick – in most cases there is no interest in them.

- What are the features of this type of properties?
- The concept of a luxury property in Bulgaria is quite flexible. For our company these properties match specific criteria like location, technical parameters, architecture, construction, class of the materials used during the construction and finishing works, functionality and floor plans, quality of the environment, etc.

In principle, there are a few main features which define a property as prestigious. These properties are either a separate building (family houses, villas) or floors of buildings (could be maisonettes). They are offered fully equipped and furnished most often by an interior designer. What is taken into account is the location and the infrastructure, as well as the services related to the security, management and maintenance of the property.

- Did the crisis hit these properties?
- In the beginning the luxury property segment followed the general market trend for drastic decrease in the number of deals. This year prices of luxury properties remained stable and similar to those from 2009 on a background of an average decrease of 10-15% of prices of properties in the mass segment (in 2010 compared to 2009). The only exception is the luxury holiday home segment where there is decrease in the asking prices of about 10%. With the so-called unique properties which are positioned at the very top of the segment there is no price decrease but there are also no deals there.

- How did this segment develop in 2010?
- The luxury property market in 2010 is relatively stable regarding both sales and rents. Deals are concluded which shows that elite properties are a relatively sound investment.
This is due to a few main factors, one of which is the lack of big supply. The buyers are wealthy and they appreciate the quality of the properties and that is why they are ready to pay a higher price. The sellers also have enough funds and can wait even a couple of years to conclude a deal.

The players on this market segment are convinced the investment in a luxury property is a long-term one in contrast to properties in the mid and lower segment whose prices fell considerably in the last two years.

It can be said that the average prices of elite properties on the market in 2010 are between 1,300 and 1,600 EUR/sq.m. and are similar to those in 2009.

- What does the future show?
- In 2009 and 2010 the market segmentation cycle finished and elite properties are yet to become a separate investment instrument which will not be susceptible to the general market trends and especially to short-term fluctuations. I expect that apart from Bulgarian investors there will be foreign buyers on this market as well.

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