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Prices rise sharply in Bulgaria

Issue Issue 104 November 2003

Prices rise sharply in Bulgaria

The Bulgarian real estate market has been rising constantly for twelve years, and it’s not over yet.

A sccording to the Bulgarian Real Estate Market Index (REMI), established by Fiabci principal member the National Real Property Association of Bulgaria (NRPA), real estate prices in Bulgaria rose by 12% in the period from January 2003 to September 2003 and should reach 15% by the end of this year. 
The NRPA forecast that this trend will keep steady for the next few years with an average rise of 10% per year until 2007, for two main reasons :
- Mortgage lending potential - currently, mortgage loans represent 5% of the total credit supply within the local banking sector. In developed markets, this rate is usually in the range of 15%. There is thus a considerable potential for real estate loans.
- It is predicted that there will be increased foreign direct and indirect investment in real estate influenced both by Bulgaria’s expected EU membership in 2007 and a booming tourist industry.
As regards Sofia, the capital of Bulgaria , the residential property market is on the rise with a complete offer of high quality apartments, both new and renovated. Average sales prices in the city centre range from 200-500 Euros/sq.m. with high quality apartments going for 600-1000 Euros/ sq.m. City-centre rents range from 5-10 Euros/sq.m/ month. High quality houses for rent are mainly located on the outskirts of Sofia at the foot of the Vitosha Mountains. 
They are highly prized by the foreign business community, diplomatic staff and expatriates and rental prices, depending on location and size, range from 1500-5500 Euros per month.
Market demand for office space is stable, although the supply is higher than in the last two years. The average sales price for offices is about 600 Euros/sq.m., going up to  1500 Euros/sq.m for prime class "A" class office space.
Rents for office space in new business centers in Sofia vary from 7-24 Euros/sq.m./ month.  Average vacancy rates reached 25%., and while demand for retail space is steady, it  is concentrated mostly in downtown Sofia. 
Sales prices of retail real estate with good to excellent location are in the range between 500-2500 Euros/sq.m, with average sales prices in downtown Sofia coming in at 1200 Euros/sq.m.
Rents vary from 25-120 Euros/sq.m./month depending on location, type of business activity, size of premises, etc.
The market for Black Sea coastal real estate in Bulgaria has grown significantly since the beginning of the year. Demand outstrips supply, due on one hand to the increased availability of mortgage loans  and on the other to a migration of the population - the workforce is moving from inside the country to seasideresorts where more jobs are available.
Sales prices of brand new residential properties have almost doubled compared to 2002 and seafront real estate is on average 30% more expensive than properties with merely a seaview.
Bulgaria  remains a popular holiday destination for lower income tourists, which is the main reason for a higher demand for smaller and cheaper real estate. 
Plots of land are also very attractive for investment purposes; as their prices have increased more than 30% on average compared to year 2002. Some beachfront parcels for leisure property development have reached 35 Euros / sq.m. compared to similar properties sold at 15 Euros/sq.m. last year. 
In certain areas close to leading resorts like Golden Sands and Sunny Beach, prices have more than doubled in the last twelve months.


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