Bulgarian Property Market Overview
A report recently released by the PMR Group suggests that the Bulgarian market for residential real estate may finally be reaching equilibrium. In contrast with the unstable real estate boom that Bulgaria experienced during 2007and 2008, current housing prices have displayed increased stability since the close of 2012. The report also states that construction output is going to be primarily in the form of small-scale real estate projects, as opposed to huge residential complexes. Nevertheless, it anticipates that some large-scale projects may remain in the pipeline following 2014.
The report also details how the housing market has experienced a 17 percent growth in transactions amounts relating to the luxury apartment industry within the country. Numerous real estate agencies and architects have communicated that a significant rise in housing purchases during the close of 2013, may indicate increased yet stabilizing demand, as well as an increased tendency to mortgage property for financing. Overseas investment has also been stated as a contributor to the growth of this sector.
Changing construction trends and foreign investment
The increase in demand over the course of 2013 has been concentrated particularly for small homes and flats that typically retail at an average of BGN 95,000 or 48, 573 euros. The country also experienced its slowest decline in flat prices over the course of 2013, with prices falling by just 1.21 percent per square meter, as per statistics from the National Statistical Institute. After factoring in inflation, flat prices have actually shown to have risen slightly by 0.38 percent.
However, it is not solely the small homes and flats sector that has contributed towards Bulgaria’s real estate upturn. The country has received significant investment from foreign investors, particularly from Russia, looking to purchase ‘get away’ second home properties. Moreover, this increase in foreign investment has been particularly targeted towards seaside resorts and homes. Seaside property values have risen by 20 percent over the course of 2013.
As the country’s capital, Sofia, finally lost its title as the central construction hub, smaller coastal cities of Burgas and Varna seem to have taken up the mantle. The two cities experienced record rates of construction completion over the last few years.
Small homes sector, a major contributor
Upcoming real estate projects denote a conscious shift between large scale residential properties spanning in excess of 10,000 square meters, towards smaller dwellings with a size range of 2000 and 3000 square meters. The gradual shift from large residential complexes to individual housing options can perhaps be attributed to the improved saving habits of Bulgarian citizens since the burst of the property bubble in 2008. Moreover, experts have also commented that a fall in deposit interest rates will lead to a rise in the number of individuals looking to real estate as safe investments.
Sustainable growth in construction
Currently, there is much cause for optimism within the residential real estate market within Bulgaria precisely because there has been little change in the number of real estate projects completed between 2012 and 2013. Coupled with stable housing prices, this is a clear indication that the market has found a sound equilibrium, with forecast figures suggesting continued yet sustainable growth all the way into the final quarter of 2014 and extending into 2015 as well.