LM Legal Services Blog

The Bulgarian Ministry of Finance has issued state bonds to the value of 35 million levs (18 million Euros) with maturity date in seven years time and a coupon of 4.45%, which shows increasing trust of the investors. The bonds were bought by banks (about 36%), pension funds (48%) and insurance companies (13%). The coupon of the state bonds is much higher when a country is experiencing financial difficulties like Hungary ( 10,04%) or when its economy is booming like Turkey (5,74%) and Poland (5,05%).

The prices of large properties in Sofia have dropped sharply. Only in the area of Oborishte where the most expensive properties in the capital are located, prices have increased by 4% and start at 923 Euros/sq.m. , reaching 4331 Euros/sq.m. At the same time in the affluent area of Lozenets the property prices have dropped by more than 1/5 in the last two years. The lowest price there is of 816 Euros/sq.m. The most serious price drop – of 23% – in the expensive areas of Sofia is in Beli Brezi. More than 700 apartments located in affluent central areas of the city have been put on the market.

The Daily Telegraph has published the ranking of The Global Property Guide Europe’s Top Places to Invest in Property. The Bulgarian capital Sofia took 17-th place overtaking Prague (18), Paris (20), Lisbon (22) and London (26). According to The Global Property Guide, the positive feature of Sofia is the pro-landlord rental market. The negative feature is that the rental yields are poor – 4,19% – the transaction costs are high, the rental income tax is moderate and the corruption is strife. The capitals of many other Balkan countries feature better than Sofia. Ljubliana, Slovenia’s capital is in place 14, Bucharest, the capital of Romania, is in place 12, Zagreb, the capital of Croatia is in place 5, Istanbul is in place 4 and Skopje, the capital of Macedonia is in place 2.

According to the analysts, there are three tendencies concerning the commercial property market in Bulgarian in 2012.
The first one is that the number of buil-to-suit industrial centres has increased due to the increased volume of outsourcing of light industrial production from Western Europe into Bulgaria. Bulgaria is attractive with low taxation and low cost of labour.
The second tendency is that the relocation of companies into newly build office centres has intensified due to the fact that the owners offer 5 to 7 year rental contracts at attractive prices and this allows the companies to cut costs during the recession.
The third tendency is that six new shopping centres are under construction throughout Bulgaria and of them three will open in 2012 – Bulgaria Mall, Paradise Centre and a new mall in Bourgas.

In comparison with the second quarter of 2011 the property prices in Bulgaria have dropped by 0,8% according to the National Statistics Institute., mostly in 20 regional towns. The highest decrease was in Smolyan – by 4,7%, followed by Yambol – 4,25 and Pleven by 3.7%. The average property price for the country in the third quarter of 2011 was 901.32 levs/square metre. The highest prices were in Varna – 1 493.33 levs/square metre, Sofia – 1456.48 levs/square metre and Burgas – 1184.41 levs/square metre.