LM Legal Services Blog

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.

According to analysts the prices of apartments in Bulgaria will not decrease further. The experts refer to the prices of actual purchases, underlining that the advertised prices sometimes are unrealistically high. There is already are a mismatch of the demand and the properties on offer. The most desirable properties have sold and there is a lack of good quality homes. At the same time developers can not launch new projects because there is no financing. The off-plan sales have completely stopped. Some experts recommend that the properties prices in Bulgaria should not be calculated per meter, as this can some times lead to confusion.

In the next four to five months the property price drop in Bulgaria will be much of smaller scale, according to analysts. After that the property market will hit the bottom.

According to the statistics, the property prices in Sofia drop slower in the last months. In February the price drop was of 6.88 % while in August it was 3.84%. The slowing down of the recession can be also seen in the rents . In May the rents in Sofia were by 2.8% lower than in April, while in June they were by 1.9% lower than in May and in July by 1,6% lower than in May.  In the end of August the  price drop was only by 0.6 in comparison with July.

The same tendency can be observed in the other major Bulgarian towns.

The developers in Bulgaria still find it very hard to sell. Those at the Black Sea coast claim that they mainly rely on buyers from Russia who look for finished apartments, positioned right on the sea coast, close to the beaches.

It is expected that the prices of apartments in Bulgaria will reach a new bottom at the end of this year and in the beginning of the next one.  The analysts predict that the further decrease will be moderate and will not exceed 10%.  The property prices will stabilize in the first half of 2010.

So far this year apartment prices have slumped by 10% on average and the highest drop is of apartments in prefabricated blocks from the days of socialism – 12%.  The lowest drop is of finished new properties – by only 4%.

The highest decrease of the property prices in Sofia has been in the top notch areas of the Doctor’s Garden (by 33%) and in Ivan Vazov (by 17%)

Many new construction projects situated beyond the ring road of Sofia and in Manastirski Livadi have been put on hold due to the recession. At the moment all off-plan purchases have stopped.

The construction of two new shopping malls in Sofia have been stopped – Europe Mall and the Mall of the Spanish company Riofisa. Currently the rent of commercial space in shopping malls have fallen to 41 EUR/ sq m while in the central boulevards of Sofia it is 100 EUR/sq m. Big retail chains – Billa, Carrefour, Kaufland and Piccadilly – have taken advantage of this situation and have opened new shops. Analysts think that the rents will not go up before the shops start making much higher turnover.

In the first half of 2009 the rental space in shopping malls have increased by 50 000 sq m and have reached 220 000 sq m in total.  This is the reason why it is more and more difficult for their owners to find tenants for all empty spaces. In Sofia the situation is better and there almost no malls with empty shops. However in the country the situation is different. Retail centres with good location have 3% of their space free, while the others have more than 10% of their space empty.

Concerning office space, 13.4% of it in the central parts of Sofia and 20% of it in the outskirts of the city have been empty. In the central parts of the city prices are still high but in the greater center of Sofia the prices have fallen by 1.5 EUR/ sq m. In the outskirts this decrease has reached 12 EUR/ sq m or the levels of 2006.

According to specialists the freight forwarding and logistic centres and warehouses have been doing better than any other properties in the country. Their rents are the same as last year due to the fact that these properties have developed later than all other types and currently there is a demand for logistics’ space.

Until now the information about repossessed properties offered at auctions was only available at the offices of the private judges, in the municipalities and the in the regional courts. Often this information which had to be available a month before the auction disappeared.

Now, the cheap repossessed properties which judges sell in Bulgaria can be found on the web. The Chamber of the Private Court Executors publishes information for upcoming auctions at http://www.sales.bcpea.org

At the moment there are 164 announcements for the sale of all types of property – apartments, houses, warehouses, plots of land, etc. The information is constantly updates. The highest number of announcements have been made by the Sofia City Court. Among them are auctions for apartments with a starting price of up to 60 000 levs (30 000 Euros) . For example, the bidding for a one-bedroom apartment on Alexander Stamboliysky Boulevard will start at 52 400 levs, while the bidding for the same size of apartment by located in Hadji  Dimitar at 65 000.  Bidding for apartements in the areas in the outskirts of Sofia start at under 20 000 Euors.  The announcement coming from other Bulgarian cities are quite interesting.  In Varna the bidding for a two-bedroom apartment will start at 80 000 levs and for a villa at 105 000 levs.  In general currently there are eight houses in the country at prices under 10 000 levs.  The most expensive offers are: a factory in Burgas with a starting price of 29 826 750 levs and a house in the affluent Dragalevtsy in Sofia with a starting price of 760 000 levs.

If an auction fails and nobody bids for a property, there is a second auction and the price drops by 20%. The successful bidders must pay the whole amount of the price of the property within 7 days. Potential bidders’ only worry is that the former owners of repossessed apartments can appeal against the repossessions.