LM Legal Services Blog

The number of purchases of property in Bulgaria has decreased sharply according to analysts. In the first six months of 2009 in comparison with the same period of last year the number of property purchases has decreased on average by 42% for the country as a whole and by 58% for the capital Sofia, based on the information provided by the National Statistics Institute. The volumes of the current market are similar to the ones in 2005.

The tendencies which started in the last quarter of 2008 continued and even deepened in the first half of 2009.  The buyers are currently waiting to see which way the market will go.  Only those who can see a long-term profit risk  buy now. Apart from the planned expansion of the big retail chains which started in the beginning of 2009, there has not been a single purchase of land for a big project.  The prices of apartments have dropped by 9,7 % only in the first quarter of this year according to the National Statistics Institute. The average price for the country in the second quarter of 2009 is 1074,98 levs/sq m. The highest property prices are in Varna – 1827 levs/sq m, followed by Sofia – 1745 levs/sq m and Burgas – 1471,67 levs/sq m. The lowest price is in Kiustendil – 540, 85 levs/sq m.

The purchase prices of properties drop faster than the rents and returns are becoming higher. The reason for this is  on the one hand the crisis in finding financing for a property purchase and on the other the fact that many prospective buyers stay as tenants and thus keep rents high.

The annual return of an apartment in Sofia in the first half of 2009 was 4,5% while in the last half of 2008 it was 4,1 %.