LM Legal Services Blog

Unlike earlier expectations the market of luxury property in Bulgaria has also experienced price decreases. Rich buyers bargain and refuse to pay the high prices for top properties in the Bulgaria. As result prices of luxury properties have dropped by 1 million levs on average according to market analysts. The most striking example is a luxury apartment close to the National Theatre in Sofia which appeared on the market last year with asking price of 2 million Euros. The total area of the apartment was 253 sq m and this was the top price for the country – of 7905 EUR per sq m. The apartment is located in a listed building constructed in 1912. A year later the seller has dropped the asking price to 1,5 million EUR or 5929 EUR per sq m.

At the same time the price of a house close to Perla Hotel in Dragalevsty has dropped by half a million Euros to 2,5 million EUR. The total area of the three-flour house is 900 sq m and it has 7 bedrooms and six bathrooms as well as inside pool, jacuzzi and sauna.

Another striking example of a price decrease of a luxury property is in the affluent suburb of Plovdiv – the village of Markovo. A year ago this property, with total are of 2417 sq m used to sell for 2,5 million EUR. In the last few months its price has dropped to 2 million Euros.

Prices of apartments in prefabricated apartment blocks are higher by 100 Euros in Sofia. In middle class areas like Mladost and Borovo in the outskirts of the capital prices of prefabricated apartments vary from 550 Euros to 900 Euros per square metre. Newly built properties in those areas vary from 450 Euros to 850 Euros per square metre.

In the central parts of Sofia the prefabricated apartments sell for 1240 Euros per sq m while newly built ones for 770 Euros.

This is due to several reasons. One of them is that some of the newly built apartments are not of good quality. Some of the owners of prefabricated apartments on the other hand keep the prices from last year in their attempt not to lose money. In order to attract buyers, the developers offer free furnishing of at least one room as a bonus. However, despite the falling prices there are only a few buyers who are ready to pay in cash. Many developers offer payment in instalments, only to attract new buyers.

Despite the fact that the number of purchases has slightly increased, there are no expectations that the property prices will increase in the next three months. To the contrary, all professionals expect further reduction of the prices.

The property prices in Bulgaria have dropped on average by 12.4% in the first three months of the year according to information of the National Statistics Institute. The sharpest price drop was in Veliko Turnovo – 25.1%, followed by Kyustendil – 21.5% and Blagoevgrad – 20.5%. The average price for the country is 1190.7 levs (608 Euros) per sq m. The most expensive apartments are in Varna – 1982 levs (1013 Euros) per sq m, closely followed by Sofia – 1980 levs per sq m.

Now is a good time to buy a property according to estate agents and there are no expectations in the next two years for the property price to start going up.

Irish estate agencies offer holiday apartments in the Bulgarian resorts at prices which 35% lower than the original ones. Part of the offer is that if the purchase is completed by the end of the month the buyers will save further 500 Euros.

In Sunny Beach on the Black Sea cost the cheapest offer is 24 990 Euros for a studio apartment. At the same time in the ski resort of Bansko studios are on offer for 20 000 Euros and generally prices at the mountain resorts are lower.

Construction projects in Bulgaria exceeding 2,5 billion Euros have been put on hold because of the recession. There are a few large projects, which do not have problems with financing. The fear of bankruptcy and the lack of free money is the reason for the investors to give up their plans for big projects and to sell their business. Some developers are prepared to sell parts of their future developments at lower price just to be able to finish their projects. On 2 April 2009 they met with Russian investors at a business meeting organised in the Russian capital Moscow. There were different projects on offer – holiday homes, residential homes, power plants, regulated and unregulated land, concrete buildings and whole residential areas. However the accent was on holiday homes and golf courses throughout Bulgaria.

Apart from the Russians the other type of investors interested in Bulgaria are those from the Middle East. Some of them are prepared to put on hold their projects in their home countries in order to buy at low prices attractive projects in Europe and in the USA.