LM Legal Services Blog

In the last year the property prices in Sofia continued dropping. The sharpest decrease was of the prices of studios – which have dropped by 6.9% in comparison with April 2011. Now they sell for less than 700 Euros per square metre, while in 2011 their price was 733 Euros per square metres on average. Last year one-bedroom apartments used to sell for 770 Euros per square metre but now they sell for 723 Euros per square metre, a price drop of 6.1%. The prices of two-bedroom apartments have dropped less then the rest – by only 4.6% from 754 Euros in 2011 to 719 Euros now.
The one-bedroom apartments are the most popular ones and buyers prefer them to the two-bedroom apartments. The cheapest one-bedroom apartments last year could be found in the area of Tolstoy, 552 Euros per square metre, while this year the cheapest one-bedroom apartments are located in Malinova Dolina and fetch a price of 468 Euros per square metre. The most expensive one-bedroom apartments last year have been located in the affluent area of Ivan Vazov with an average price of 1286 Euros per square metre. This year, the most expensive one-bedroom apartments are located in the central area of Oborishte with average prices of 1167 Euros per squre metre which is a price drop of 9.3%.

According to leading Bulgarian banks, the value of the properties owned by Bulgarians has decreased by 3 billion levs (1.6 billion Euros) to 208 billion levs (106 billion Euros) in the last quarter of 2011. At the same time the savings held in bank accounts have increased by 1.4 billion levs and at the end of last year they have reached 30.9 billion levs (16 billion Euros). The debt of the Bulgarians has decreased and currently is under 52%. The loss from investments in shares has increased to 285 million levs (190 million Euros) at the end of 2011, an all time record.

At the end of 2011 the profit of the Bulgarian banks has reached 586 million levs (270 million Euros). In the last three years the Bulgarian banks have saved their profit to create a buffer zone of capital for emergency situations. Thus at the end of last year in the banking system there was a surplus of 2.9 billion levs (1.5 billion Euros) on top of the required capital.
The volume of the profit of the Bulgarian banks has been shrinking until the beginning of last year due to the expenses for servicing bad credits and due to the high interest on the deposits. However, during 2011, the banks managed to turn this tendency around. In January and February 2012 they recorded an increase of their profit. In January 2012 the increase on annual basis was by 19.2%, while in February 2012 it has reached 34.7% or 118 million levs (60 million Euros).

It is clear that the foreign buyers are the most influential on the property market in Bulgaria. Currently, the most active buyers are the Russians and the Russian speaking citizens of the former Soviet republics with share exceeding 40% of all buyers. They mainly buy holiday apartments in ready developments at the Black Sea (90% of them) at prices ranging between 20 000 Euros and 40 000 Euros. Most of these buyers come from the European part of Russia, the area of Moscow and the other large Russian cities. The interest of the Russians is based on the better property prices and the lower costs of living in Bulgaria. French, Italians, Germans and Dutch also buy properties in Bulgaria but there isn’t a specific nationality of buyers who have a significant impact on the market.

The Brits who have been the engine of the property boom in Bulgaria in previous years are not in the role of sellers. Many of them would like to sell their holiday homes due to the recession and the shortage of cash.

The property mark in the once popular Black Sea resort of Sunny Beach is almost dead and the prices have dropped by 50% since 2008. The most popular mountain resort of Bansko is full of empty developments and although the property prices have been slashed to 500-600 Euros per square metre, they still do not attract buyers. Fully furnished apartments are on the market for 18 000 Euros.

The sale of agricultural land in Bulgaria has peaked up in March 2012 after two months of stagnation due to the winter. The areas of Vidin, Stara Zagora, Razgrad and Haskovo are the most attractive for the buyers. In 2011 the number of sales of agricultural land has increased by 10-13% on the average and in same areas has reached 25%. In 126 000 purchases the buyers have acquired 1,185 million decars of land. The secondary market has a share of about 50% of the purchases and the expectations are in this year this share will grow to about 70%. The increase of the rent of agricultural land has been significant.