LM Legal Services Blog

Although that according to the estate agencies, the number of property sales in Bulgaria has increased by 22% in 2011, it must be underlined that this includes the sale of Mall Sofia for 100 million Euros which in fact was about 55% of the investments in the last year. In the last quarter of 2011 the investments in property have reached 186 million Euros which was the highest level since 2008. The Bulgarian market has shown vague signs of recovery but in practice the property prices in 2012 remained the same as last year. The British and the Irish buyers have almost disappeared from the Bulgarian market and the hopes that Russian buyers will enter the market in their place proved to be ungrounded. The property sector is not the major driving force of the Bulgarian economic growth and thus the direct foreign investments are not plenty in it at the moment. This is why the expectations are that the property prices will further decrease by 10-20%.

According to the Land Registry, the property sales in the Bulgarian capital Sofia have increased for a second consecutive quarter reaching 3324 sales in the first three months of 2012. On the average in Sofia have been completed 37 sales per day – an annual decrease of 8.8%. The property prices in the capital have increased on the whole and now properties in Sofia are more expensive than properties in Varna, Bulgaria’s Black Sea capital, where for years property prices have been the highest in the country. The average price in Sofia is 1 453.30 levs (appr. 750.5 Euros)/square metre, while in Varna it is 1439.00 levs (appr. 740 Euros)/square metre. In third place are property prices in the second largest Bulgarian city on the Black Sea – Burgas – 1158.83 levs (appr.592 Euros)/ square metre.

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.

Globally, the investments in business properties have increased by 14% in 2011 in comparison with 2010. The highest growth was in North America – 52%, followed by Europe and the Middle East – 17%. In Central and Eastern Europe, these investments have reached 19 billion Euros in 2011, which is a growth of 76% in comparison with 2010. This is 68% of the volume of their volume during the property boom years.
In 2011 the investments in business properties in Bulgaria have increased sharply in comparison with 2010. In 2010 they were 20 million Euros, while in 2011 they reached 198 million Euros, which has put the country in the first place regarding this type of investment. In the second place is Slovakia with an annual increase of 534%, followed by the Czech Republic with 366%, South Africa with 269% and Switzerland with 216%. However, the annual yield in Bulgaria has not changed – for office spaces it is about 9,5%, for shops – 9% and for industrial space it is 12%.

The priceses of houses on the Black Sea coast in Bulgaria have fallen on average by 26% and in some cases they go as low as 200 Euros per sq m.  However, the supply of properties for sale has dimished as only owners who need cash urgently sell.  The supply of properties in the southern part of the Bulgarian Black Sea coast has dimished more then the one in the northern part. The prices in the south vary from 400 to 935 Euros.  In some villages the prices of houses have fallen from 13% to 26%, while in other the prices have not changed and even increased by 3%.  The prices in Sveti Vlas for example have gone up by 4% because the number of old houses for sale has descreased while the number of the luxury newly built properties has increased.  In one year the price has risen from 887 Euros/sq m to 923 Euros /sq m.  Similar is the situation in Chernomorets, which has  become popular in the last four years.

In comparison to the south, the properties on the Bulgarian northern coast have always been more expensive. However, the tendency there is exactly the opposite – the prices of houses have decreased and now they vary from 300 to 730 Euros/sq m. The highest price drop is in Kichevo where last year the choice of houses for sale was twice greater than now and the average price was 764 Euros/sq m.  Now, the average price is 593 Euros/sq m.  In other places like Shkorpilovtsy the number of the properties for sale in June 2008 is exactly the same as in June 2009, but the price has dropped by 14% to 593 Euros/sq m.

In general, the analysts think that the prices of houses on the Bulgarian Black Sea coast will not drop too much as their number is limited and already their price is lower than the one of the apartments in the newly built developments.