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 Bulgaria
House and land prices
Housing will remain an essential and fast developing area of
the market, especially in Sofia and the larger main cities like
Veliko Tarnovo, Blagoevgrad and the cities along the Black Sea coast
such as Varna and Bourgas. In 2007, prices in this sector rose by
some 25-30 percent, reaching 1,500-3,000 euros per square metre
in Sofia and up to 800-1000 euros in smaller cities. It is expected
they will jump by 30 per cent again.
Experts cite the rapid increase in the cost of land available for
housing as an important reason for this price hike. In 2007, a square
metre of land for building purposes varied from 50 to 3000 euros
per square metre, depending on the city and the location. Varna
for example would generally cost you around 1000 euro per square
metre for a typical residential building plot whereas 240 km inland
from Varna at the popular Veliko Tarnovo would only cost you around
120 euro per square metre which is why you see lots of flats in
built up areas on the coast, the cities and the ski resorts.
Generally, 2008 is going to be a generous year to those
investors who know the real estate situation in Bulgaria well and
know what and where to buy. The problem with Bulgaria is not so
much oversupply but often poor quality; especially older refurbished
houses and therefore owners and developers of high quality buildings
have nothing to fear. The Bulgarian authorities operate a planning
and building regulation system very similar to the UK and this will
hold new buyers in good stead but they must be aware of bad quality
old refurbs and too good to be true prices often advertised.
In 2006, prognoses for real estate market development in Bulgaria
suffered the “too good to be true” syndrome. Some experts
argued that prices for properties were unrealistically high and
would inevitably collapse in 2007, due to oversupply and lack of
investor interest. Instead, they rose by a further 25-30 per cent
in the period January- November 2007. That was a logical consequence
of Bulgaria’s accession to the European Union, the general
trends of the European real estate market and the relatively stable
local economy.
Now, however, the Euro-euphoria is over. Prices for property on
some real estate markets in the newer European Union member states
started to fall by 10 per cent and more. Shockingly, that happened
to promising markets like the Latvian and Estonian, until recently
among the EU countries with the strongest economies. Even the real
estate markets in the United States was shattered by a severe credit
crisis caused mainly by lax mortgage underwriting. Little wonder
that sceptics again started to “promise” a dramatic
fall of prices for properties in Bulgaria, followed by a withdrawal
of numbers of investors in 2008. Why do experts expect higher
prices for real estate properties in Bulgaria?
The expected growth of foreign investment in Bulgarian real
estate for 2008 is 40 per cent. Another reason is the easier access
to mortgage loans, which is expected to improve further now that
more and more foreign banks are entering and are currently active
in the Bulgarian credit market. Another important factor is that
35% of Bulgarian territory is now officially within the Natura 2000
programme and will be protected against certain types of development.
A third of Bulgaria is made up of mountainous regions. This will
automatically lead to a shortage of building land which will increase
its value and have an ongoing effect on property prices.
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