Polina Stoykova for Darik Business Review: There will always be bargain deals on the property market in Sofia
1,470 Euros per square meter is the average price of properties in the Bulgarian capital for the third quarter of 2022.
The annual growth is 22.5%, according to the data of one of the largest agencies operating on the market in Bulgaria - BULGARIAN PROPERTIES.
Expressed in monetary value, this represents a nearly €300 per square meter increase within a year.
However, the market is reporting a slowdown in price growth - on a quarterly basis it has slowed down from 5 to 3%.
Are properties in Sofia expensive compared to other markets in the country?
Surprisingly or not, it is not the properties in the capital that are the most expensive in Bulgaria. Data from the National Statistical Institute for the second quarter of 2022 indicate that the largest increase was registered in Ruse.
New built properties in the city by the Danube increased by 28.6% in the last 12 months to June 30, and existing homes by 22.3%.
In Sofia, the price increase for existing homes is 19.4 percent, while for new construction it is 14.4%.
Many of the big cities in the country reach the price levels of the capital - especially if we talk about their central city parts and attractive areas, says the managing director and co-owner of BULGARIAN PROPERTIES Polina Stoykova.
Prices at levels around 2,000 Euros per sq.m. are already available in every city in Bulgaria.
Inflation - a driver or a restraining factor for the real estate market?
17.7% annual inflation in August is reported by the National Statistical Institute in Bulgaria. Compared to July, the consumer price index rose by 1.2 percent. The average annual inflation is 12.6%.
At the moment, inflation is more of a driver of the real estate market, because mortgage rates are much lower than it, says Stoykova. There are almost no positive interest rates on deposits, so people continue to invest in property.
Soon, however, inflation will become a brake - the rise in mortgage interest rates will calm down lending, and this will also affect the real estate market, the expert predicts.
On October 1, the BNB raised the main interest rate to 0.49%, which has happened for the first time since January 2016. This is also the highest value of the interest rate in Bulgaria since December 2009, when it was 0.55%.
What are the most promising metropolitan neighborhoods for rental property?
Eurostat reports a steady increase in rental levels over the last 13 years in the European market. From 2010 to the second quarter of 2022, they jumped by a total of 18%.
In Bulgaria, the growth for the same period is 22%, and our country ranks slightly above the average values for the European Union.
Rent levels in the capital - after the Ukrainian boom, have returned to their pre-pandemic values, according to Polina Stoykova.
Currently, the most attractive for rent are the areas around the Medical University and other universities, where there is a concentration of foreign students, according to data of BULGARIAN PROPERTIES. Southern neighborhoods are also preferred, as are areas with a high concentration of office buildings.
Today, however, renting is not a big factor for buying a property, as the yield is much lower than inflation – around 4%, Stoykova points out.
One bedroom apartments - back in the game
Faster deals with 1-bedroom apartments in recent months BULGARIAN PROPERTIES data show.
In the new built complexes that the agency sells, this type of housing is sold out first, as it is suitable for investment and rental.
During the pandemic 2020-2021 investors disappeared from the market in anticipation of a drop in prices, and the market was mainly driven by those looking for larger apartments for their own use, this year the market has been dominated by those looking for investment which put back the 1-bedroom flats back as best sellers, says the managing director and co-owner of BULGARIAN PROPERTIES.
What would the ideal new construction property in Sofia look like?
The ideal newly built apartment in the capital is located in a building with an adjacent territory, garden or park, the construction of which has already started or is advanced.
It's prices would be between 1,300 and 1,500 Euros per square meter, Polina Stoykova points out, adding that the proximity to the metro and other amenities is preferred, as well as a payment scheme that implies the payment of a larger amount at a more advanced stage of completion.
The ideal new construction projects for those looking for a new home, according to her, are the new large-scale projects in Banishora - Central Park, Vitosha View and other complexes in the popular Krastova Vada quarter and the newly constructed buildings in Malinova Dolina, which offer a very good price-quality ratio location.
Change in demand
If until recently ground floor apartments were avoided by buyers, today they are preferred properties, especially if they have an adjacent garden.
The change in demand is due to the change in the architecture of the capital - today more and more gardet complexes are being built in Sofia, and they provide peace of mind to those living on low floors.
The situation is similar with the top floors - together with the "growth" of the buildings in the capital, the appetite of property seekers for apartments with a view and large terraces located on the high floors is also growing.
There are already new buildings on the market with 10-15 floors, which attract buyers because of the sun, light, spaciousness and views, Stoykova points out.
In general, new construction in recent years has been increasingly large - both in terms of height, number of dwellings, and size of plots. The reason – investors are bolder, relying on the active real estate market.
There will always be bargains in the market
There will always be bargains on the market. Polina Stoykova supports this thesis with a recent example from the work of the agency.
A fully furnished and equipped with modern furniture and systems house in Pancharevo with a large garden for the attractive sum of 280,000 Euros literally sells in a day.
Buyers have even raised its price with their offers as it is not to be missed. Newly built houses in the same area are sold for more than 300,000 per putty and screed, the expert points out.
And she summarizes the situation on the market – today the key is the sellers, not the buyers. Because in order to have deals, we need supply.
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Polina Stoykova MRICS is a managing director and co-owner of BULGARIAN PROPERTIES. With nearly 20 years of experience, she is one of the most respected real estate experts in Bulgaria.
She holds master's degrees in "Strategic Management" and in "Economics and Law" from the Faculty of Economics of Sofia University St. Kliment Ohridski. Since 2012 she has been a professional member of the Royal Institution of Chartered Surveyors (RICS) specializing in property research.
She is the author of the first research articles about the real estate market in Bulgaria and is the creator of the PSPI market indices. She has held the position of managing director of BULGARIAN PROPERTIES since the end of 2008.
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