LM Legal Services Blog

Analysts expect that 2012 will be again the year of the buyers. Most buyers will be first-timers. The hope is that those who have savings or free money will be bold enough to spend them on properties because of the attractive prices.

The property prices in Bulgaria will continue to fall in 2012, however the analysts do not dare to give forecasts about the amount to which the prices will drop. The expectations are that the buyers and the tenants will dictate the property prices. Most of the buyers of holiday apartments and houses will be Russian, while the buyers of all other types of property will be mostly Bulgarians.  The expectations are that in 2012 cheap properties not exceeding 55 000 Euros will be in demand.  Although the number of the property sales in 2011 has increased by 30% in comparison with 2010 unlike a year ago, now the buyers are spending mostly on cheap properties.

Concerning the survival of the construction companies, the European money will be of prime importance for many of them.  In just one year the income of the construction industry has shrunk from 11.7 billion levs to 9.9 billion levs in 2011. Big companies will focus on the construction of apartment buildings and private investors will commission them for the construction of individual buildings. The construction of big shopping centres will continue.

The money from the European programmes will be spent for the reconstruction of hospitals, schools and cultural monuments.  The greatest amount of the European money will go for the development of infrastructure.  Some of these projects have to be completed in 2012.

In 2011 the market of agricultural land in Bulgaria went back to the levels before the recession. 1 200 000 dka of land have been sold and only in July 124 000 sales took place. In 2008, which was the best year before the recession, in 122 000 deals were sold 1 240 000 dka of land.

The average price of the land is 345 levs (170 Euros) per dka, for comparison in 2010 it was 320 levs (160 Euros), while in 2008 – 350 levs (175 Euros).

According to analysts, agricultural land proved to be a stable asset in Bulgaria and this has attracted investors.

According to the property analysts 40% of the property buyers in Bulgaria are prepared to pay between 50 and 80 000 Euros for their purchase. They are the largest group of property buyers in the country. In the second place (23%) are the buyers ready to pay between 80 000 and 120 000 Euros and in the third place (again 23%) are those under the 50 000 Euros margin.
According to the official statistics 40% of the sales have been of properties that cost from 30 000 to 50 000 Euros, followed by a group of properties (24%) that cost between 50 000 and 80 000 Euros. Although apartments under 30 000 Euros are the least in demand, the actual sales of such properties are 14% of the total number of the sales. The sales of apartments with prices exceeding 120 000 Euros are 7% of the actual sales which is equal to the number of enquiries for properties within this price margin.
Concerning rent, almost 60% of all enquiries were for apartments that rent for less than 250 Euros per month, of them 40% fall in the 150-250 Euro margin. However, the highest number of rental contracts (66%) is signed for properties that rent between 250 and 500 Euros per month. In the second place (17%) are those that rent for more than 500 Euros per month and in the third place (17% again) are properties renting for less than 250 Euros per month.

The internet statistics of Yandex, the Russian equivalent of Google, show that the Russians used the phrase “property in Bulgaria” in their online searches and Bulgaria was topping the list of their searches of properties abroad.  This is not surprising as the Russians have bought more than 200 000 properties in Bulgaria in the last four years.

The prices of apartments in Sofia have decreased by 1/3 since 2008 due to the recession. If four years ago a one-bedroom apartment in the Bulgarian capital could sell for 78 302 Euros on average, at the moment it sells for 54 073 Euros. Only in the last year the prices have dropped by 9,78% .

However, according to the Land Registry, the total number of the sales in the first half of 2011 was only 102 276, in comparison to 73 867 sales in the same period of the last year. This is an increase of 27,78%. Most of the sales, about 25%, have taken place in the biggest Bulgarian cities: Sofia, Plovdiv, Varna, Burgas and Stara Zagora.