In the last year the property prices in Sofia continued dropping. The sharpest decrease was of the prices of studios – which have dropped by 6.9% in comparison with April 2011. Now they sell for less than 700 Euros per square metre, while in 2011 their price was 733 Euros per square metres on average. Last year one-bedroom apartments used to sell for 770 Euros per square metre but now they sell for 723 Euros per square metre, a price drop of 6.1%. The prices of two-bedroom apartments have dropped less then the rest – by only 4.6% from 754 Euros in 2011 to 719 Euros now.
The one-bedroom apartments are the most popular ones and buyers prefer them to the two-bedroom apartments. The cheapest one-bedroom apartments last year could be found in the area of Tolstoy, 552 Euros per square metre, while this year the cheapest one-bedroom apartments are located in Malinova Dolina and fetch a price of 468 Euros per square metre. The most expensive one-bedroom apartments last year have been located in the affluent area of Ivan Vazov with an average price of 1286 Euros per square metre. This year, the most expensive one-bedroom apartments are located in the central area of Oborishte with average prices of 1167 Euros per squre metre which is a price drop of 9.3%.

The price drop of the properties in Bulgaria stimulated many people to buy properties with the aim to rent them as the price drop of the properties for sale is larger than the drop of the rents. Buying to invest has become a permanent tendency according to analysts.  A property purchased for 28 000 Euros can be rented for 150 Euros per month, i.e. and the annual yield is 6.5%. For the same period last year the yield was 4.5 %.

At the same time rental contracts have become shorter and now landlords are prepared to sign rental contracts for three months instead of for one year.

Purchases are only being made for properties with attractive prices and in affluent areas with good infrastructure. Many Bulgarians have sold the properties which they inherited or properties in a bad condition, so that they can invest in better quality new apartments with good location.

The estate agents expect a real drop in the number of purchases of holiday homes at the Bulgarian Black Sea resorts. Some expect a decrease of 20%, others a much higher drop of 40 – 50% in comparison with last year.

If in previous years most of the buyers were British, now it is expected that the market will be 100% Russian. However, the devaluation of the Russian Ruble means that despite that fact that Bulgaria is one of the most popular destinations for the purchase of second homes, it is likely that the property market will shrink by 40%. Some estate agent even think that the boom of the Russian market was last year and this year the results will be less encouraging.

Property prices of holiday homes at the Black Sea have dropped by 20% and for the new season and now they start at about 650 EUR per sq m.

The mortgage applications in Bulgaria have increased by 20% in April in comparison to March 2009. They are mostly young professionals who work for foreign companies and have good incomes. They would like to take advantage of the good prices and think that it is worth paying higher mortgage interest. Most of them have savings which can pay for 50% of the price of the property that they would like to buy and answer to the stringent requirements of the Bulgarian banks which do not lend higher than 50% mortgages.

In connection with this and with the decreasing property prices, the average amount of the mortgage in Bulgaria has fallen down to 35 236 EUR, levels typical for the summer of 2007.

According to a prominent Bulgarian banker, the property market in Bulgaria has grown at a 45 degrees but later it has dropped like a stone at 90 degrees. According to him in this situation profit or much smaller loss suffer the developers who sell first. According to him in the times of recession for the developers is crucial to have their own capital. The highest risk for him is if the recession lasts longer than expected in which case even companies with rich reserves might see them draining. The investors in property projects in Bulgaria should focus on the Bulgarian buyer and should drop the prices to levels attractive for him. In this way the developers will get cash so much needed during the recession.

According to the prominent banker, the Bulgarian banker should not be accused for the problems in the property industry in the last months. The banks follow the success and in the last years in the property business there have been no losers. The profits have been huge both for the good and for the bad companies regardless of the quality. The positive effect from the recession will be that the profit margins will shrink.

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.

According to the IMF report about Bulgaria, 3,5 billion BGN from the planned budget income will not be collected in 2009 due to the recession. This will mean automatic activation of the so-called 10% rule – shrinking of the expenses of all ministries and government agencies by 10% in order to achieve an annual budget with a small profit.

The current IMF mission in Bulgaria aims to establish the economic situation in the country. The most dramatic development is the inability to collect VAT to the value of about 3 billion BGN from the initially planned amounts. The most optimistic forecast of the National Revenue Agency is that the VAT collection will be 5% less than the planned for 2009 or an amount exceeding 110 million BGN, which still will be an increase of 6% in comparison to last year.

Generally, the tax collection might increase by 12% in comparison with last year.

Concerning the collection of Capital Gain Tax, the optimistic forecast underlines that 14% or 360 million BGN will not be collected. Still the collection of Capital Gain Tax will be 2% more than last year.

According to the IMF report, the decrease of income will force Bulgaria cut the budget expenses to the value of 1,7 billion BGN in 2009. The state expenses must be cut, as well as the salary increases, because the economic growth in 2009 will slow down to 1%.

The decrease of lending and of the foreign investment will lead to the shrinking of sales in the country. This in combination with the decrease of property prices and the possible increase of the number of bad debt might lead to shrinking of the economy and a negative GDP growth of – 3,5%, according to the pessimistic forecast of the IMF.

Sofia is in third place among the European capitals in terms of profitability of office space. A high quality office building can have a 10% annual return. Only the Russian capital Moscow (11.5%) and the Ukrainian capital Kiev (14%) are rating better than Sofia. The profitability of office space in the Bulgarian capital has increased by 3% or 300 points from its lowest position three years ago. The figures for Belgrade are similar – 10% – while for the other Balkan cities this ratio varies from 7% to 8.5%. Only offices in the Romanian capital Bucharest show higher annual return of 9.5%. The more developed markets of office space like Prague, Budapest and Warsaw have much lower levels of annual returns of 6.75 % – 7.75%.

The rent of office space in the Bulgarian capital has actually decreased by 6.85% in the last year and now is 17 EUR/sq.m. on average as it is linked to the decreasing prices of properties in general. There is similar decrease of office rent in Madrid, Dublin, Moscow, Kiev, Belgrade, Budapest, Warsaw and Bucharest. In the 15 older EU-member states the office rent has decreased by 4% on average.

The number of purchases of property in Bulgaria is expected to increase in the summer according to analysts. However, there will be no growth unlike the last two years due to the lack of fresh money and the stricter rules for lending of the Bulgarian banks. The prices of properties in Bulgaria are expected to decrease by further 15% by the end of the year.

The investment funds will be able to buy properties on territory of EU-member-states, according to the draft amendments of the law for the investment funds suggested by the Committee for Financial Supervision. Until now these funds could invest only in Bulgaria. The other significant amendment is that the minimal capital will increase from 600 000 levs to 1 million levs. The funds will be able to cooperate and work together on large property project which they would not be able to do on their own. The requirement that the depository bank which holds the money of the fund should give credits to them shall be removed. Other amendments include the possibility for investment in bonds and futures issued with the aim to finance major infrastructural projects. The requirement to obligatory increase the initial capital in order to get the right to operate as a fund will be also removed.

The rules for terminating the license of the company. The fund will be able to request it and in such case it will continue to operate as a normal company not as an investment fund.

While the property prices in Bulgaria fall, the business of letting luxury properties flourish. The rent of luxurious apartments range from 400 to 2000 Euros per month, depending on the quality of the interior. The rent of luxury villas in the beginning of the Vitosha Mountain can reach up to 11 000 Euros per month. Estate agents expect that the rents of luxury properties, especially if they are located in and around Sofia, will steadily increase during the recession. Such properties are often rented by Bulgarian emigrants who come back to Bulgaria to work for large international companies, foreign diplomats and Hollywood stars who shoot films in Bulgaria. The properties fetching the highest rent are located in the central parts of the city, close to all administrative centres and institutions. When they are vacated, they do not stay long on the property market but are rented again within 2-3 weeks. Very often luxury villas in the outskirts of Sofia are rented by people with good incomes who have homes in Sofia but need a high quality property for a short term for their guests.

Russians started buying apartments in Bulgaria in bulks of 300. They buy everything at prices ranging from 300 Euros to expensive attic apartments at 2000 Euros per sq m. The Russians are attracted by the drop of prices in Bulgaria which exceeds 20% in comparison with last year. “We buy properties in bulk!” is written on billboards on the streets in Sofia and in the Bulgarian Black Sea resorts. Many Russians have decided to invest heavily in property in Bulgaria in an attempt to protect their savings in the climate of uncertainty about the future of the major Russian banks. At the same time this is badly needed influx of fresh money on the Bulgarian property market.

Last year 60% of the mortgage applications in Bulgaria have been made for the purchase of a second home, according to Bulgarian bankers. Bulgarians used to buy properties for investment, expecting high returns and constantly increasing property prices.

This year the number of the mortgage applications have decreased ten times. According to bank managers this is due to the different expectations of sellers and buyers. The buyers expect prices to go further down and do not rush to buy, while sellers do not drop the prices of their properties and wait for the market situation to change back to the time of the property boom.

The banks lend much less money than before and cover a much smaller proportion of the price of the properties. At the same time prospective buyers are unwilling to take large mortgages and prefer smaller ones. Most of the buyers now have savings but they still need to borrow some money to buy a property.

Leading bankers think that the lending will not go back to the levels during the property boom of the last two years. They expect that at the end of the recession the ratio of the savings to the size of the mortgage will be 50:50 and in the following new boom it will go to 30:70.

The Bulgarian bank managers expect that in the next 6 months two new types of clients will enter the property market. The first type are people with good incomes and substantial savings. Currently, in Bulgarian banks there are 110 000 savings accounts with amounts exceeding 30 000 levs (15 000 Euros) with 76 000 levs (38 000 Euros) on average per account, according to the official statistic of the Bulgarian National Bank. Obviously, these people wait for the right moment to invest.

The second type are people who are not covered by the official statistics. They either keep their money at home or have incomes from the grey economy. Such kind of customers usually apply for mortgages that cover 20% to 30% of the price of the property.

At the moment the mortgage interests of Bulgarian banks are between 8% and 10%. Nobody expects any change until the end of the year, as bankers wait for the first encouraging signals from the U.S.A and Europe, in order to make a move.

The real increase of property prices in Bulgaria for the last year was 2.25% according to the Global Property Guide. This puts the country in the fourth place for price increase among 32 property markets across the world. In 2007 the nominal property price increase in Bulgaria was 19.68%. The United Arab Emirates hold the first place for 2008 with a price increase of 40.86%. Shanghai in China is in second place with 4.83% and Switzerland is in third place with 4%. Nominally, without taking the inflation into account, Bulgaria is in second place with a price increase for 2008 of 11.72%.

The property market in Bulgaria showed a decrease of 5.31% taking the inflation into account or nominally 4.15% in the last three months of 2008.

In the last year the property prices have increased only in eight of the 32 countries taking part in the survey, while in 20 there has been a decrease when compared with the inflation. In 2007 the situation was strikingly different – only in six of the countries there was a price decrease, while in 24 there has been an increase of the property prices.

The recession has led to diversification of the rental market in Bulgaria. Many tenants are unable to pay high rent because of decreasing incomes and the landlords have reacted accordingly – in the last 12 months while in some parts of Sofia rents have increased by 15 %, in others it has decreased by 20%. The area where the property is situated is of primal importance, as well as the condition of the property itself. The size of the property is more and more important. It is very difficult to find studios as they are in demand. Their rent have remained more or less the same in the last twelve months, even in expensive parts of Sofia like Lozenets, Oborishte and Yavorov. In these areas studios can be rented for 250 Euros per month, while in the central parts of the capital the rent has decreased from 291 Euros to 257 Euros. At the same time studios is in the area of the Medical Academy now rent for 22% more than last year, the highest increase in the city.
The rent of one-bedroom apartments in the expensive areas like Boyana have decreased by 25% as there is no demand. In March 2007 a one-bedroom apartment in Boyana rented for 400 Euros per month but now it rents for 300 Euros. The tendency is the same in affluent Dianabadt and Strelbishte, while in Kniazhevo, Lagera and Mussagenitsa rents of one-bedroom apartments have increased by 15%.
The recession is most seriously felt in the renting of two-bedroom apartments. The demand is so limited that although landlords have put down rents, still tenants can not be easily found. The decrease of rents have reached 20% and in upmarket Lozenets such apartment can be rented for 570 Euros on average, which is 100 Euros less than last year.
Generally,the purchase prices of the most popular apartments have gone down to the prices of 2007.

Despite the recent credit boom, Bulgaria still is in one of the last places in EU concerning the number of mortgages per capita, according to the European Mortgage Federation.

In 2008 the total amount of the mortgages in comparison to the country’s GDP is 12%, while at the same time the other EU citizens have taken mortgages to the amount of 6.1 trillion Euros or more than 50% of the total GDP of the EU. In the U.K. and Germany alone this rate is 70%.

This ratio shows how important is crediting for the EU economy. The bad debt is mainly due to mortgages. Mortgage landing has allowed 70.4% of the EU’s citizens to buy property and this ratio is similar to the one of the USA.

Despite the growth of the mortgage market in the last two years, the Bulgarian economy is still not fatally dependent on mortgages. Apart from the very low level of lending from which the boom started two years ago, the other positive factor is the high level of home ownership -  90% of the homes in the country are private property.

At the same time, the largest mortgage market is the U.K. The debt of the Brits to the banks amounted to 1.75 trillion Euros in 2007.

The high level of debt of the European citizens alongside the fact that European banks which have invested in the USA now have “toxic” assets in their portfolios are the major reasons for the growth of the crisis in Europe. The result is stagnation of the credit market – the banks’ requirements are restrictive and the price of the mortgages is high.

According to the European Mortgage Federation, in the last three months only 12% of the purchases of property in Bulgaria have been carried out with the help of a mortgage. In Sofia alone for this period, 34% of the purchases of properties have been at prices ranging from 30 000 to 40 000 Euros for properties with living area of 40-45 sq m, mainly in the less prestigious areas of Liulin, Drujba and Ovcha Kupel.  30% of the purchases of property have been at prices ranging from 50 000 to 70 000 Euros for properties with living area of 45 – 67 sq m  in the areas of Liulin, Mladost and Drujba.  According to the federation the buyers and the developers still can not adapt to the situation of falling prices and still accept prices of last year. This is why between the advertised and the real price of the purchase there is a difference of 10%-20%.  The newly completed properties sell for prices which are up to 15% lower than in 2008. The sharpest drop of prices is of off-plan properties, of prefabricated apartment blocks and of agricultural properties. In such cases in comparison with last year’s prices drop by 40%. The most insignificant reduction of the price is for newly completed properties which have received Permission for Use (Protocol 16).  Only luxury properties have kept their prices from last year and this is only in case that their owners are not desperate to sell.

According to the European Mortgage Federation many estate agencies in Bulgaria will close this year. In January alone between 150 and 200 agencies have closed down. In comparison in Spain in 2008 60% of all estate agencies have gone bankrupt.

The demand for properties in Sofia has sharply decrease int he last six months and the prices have subsequently fallen in all areas of the capital.

The lending of mortgages has decreased by 80% by November 2008, totalling 82 million Euros. The interest rate has increased by 2 points.  The banks have decreased the size of mortgages from 90% of the price of the property to 50% – 70%. Buyers do not buy off plan.

The price of properties in Sofia started falling from the middle of the last year. In comparison to the first half of 2008 the decrease of the prices of newly built southern areas of Sofia, like Vitosha is 9%; in affluent Lozenets is 8% and 2% in Ivan Vazov.

In Iztok area the prices have been catching up and they grew by 18%, while in the area of the Doctors’ Garden they grew by 11%.

In the first six months of 2009, the recession will influence the property market and most of the future projects will be put on hold or delayed.

The existing infrastructure, the positioning of the property and the access will influence prices much more than before.

The demand for middle and high class properties will decrease, as there are difficulties in finding mortgages. The market will rely on buyers who have enough money to pay the full price and on different leasing plans offered by the developers.

The situation on the Bulgarian property market in the beginning of 2009 remains similar to the one in the end of 2008. There are no deals, the number of the properties for sale increase, while serious buyers take their time before they commit themselves to a purchase. The new features are – perks offered by the developers, estate agencies who do not take commissions and the birth of a new type of property in the property web sites – “property with falling prices”. Only on 3 and 4 of January 2009 the number of the properties with falling prices increased to fifteen. In this category the decrease of the prices of  houses beats all other properties  -  15 – 20%. Plots of land are in the second place, closely followed by offices and garages.  House prices fall everywhere – from Sofia to small towns like Smolyan. Even prestigious locations in the centre of Sofia can not prevent prices from falling.  The price of a house in Dondukov Boulevard in Sofia which has been for sale for some time has dropped by 40% to 450 000 Euros. It is difficult to say whether this will attract new buyers. One thing is certain, the Bulgarian property market has entered a period at the end of which the prices of properties will be very different from the price of the last two years.

The developers are the ones who experience the harshest problems. This is the reason why they look for solutions in all possible ways. Apart from dropping the prices, they have started to lease the apartments built by them to buyers with a minimal interest. Their return has been delayed by 15 years in some cases, thus preventing them from making new investments. Other bonuses include fitted kitchens costing up to 3000 lv and in the cases of two-bedroom apartments complete furnishing plus one or two parking lots. Some developers add to this a plasma TV. However, the analysts do not believe that these perks will do the trick and attract more customers. All these bonuses can not solve the problems of the buyers in getting a mortgage.

According to Bulgarian estate agents in the first half of the year it will be more sensible to rent rather than to buy. Although property prices have decreased in comparison to the last year, they are still high. At the same time, mortgages have become more expensive because of the high interest. As result, mortgage instalments are higher than monthly rents.

However, those who offer their property to tenants can not expect high profits. The number of prospective tenants is on the decrease because of the recession. High number of people from the country who had been looking for work in Sofia have gone back to their home towns and villages as there they can survive better during the recession due to the fact that living costs are cheaper.

On the other hand, those who have bought properties for investment can not sell at the moment and try to rent them. The supply of apartments for rent has increased while the demand has decreased and it is expected that this will lead to the drop of prices and of rents.

It is expected that in the second half of 2009 it will be profitable to buy property. Prices of properties are expected to drop further and by the end of the year it is expected that the mortgage interest will start decreasing, as of 1 January 2009 the Bulgarian National Bank has decreased the basic interest from 5.77 to 5.15, which is the first decrease since June 2005.

By the end of this year it is expected that the unoccupied space in Sofia will rise two fold. According to the predictions this will be about 10% of the total volume of the space for rent in the Bulgarian capital. At the moment the office space in Sofia is 874 100 sq. m. of which 80 000 sq m are unoccupied.

The supply of office space already has overcome the demand. The difference between the beginning of the year and the end is significant. For comparison in June 2008 the office space was just 3.8 % of the rental space. Despite the recession, the construction in the autumn months has not stopped and in September alone new 65 500 sq m of office space have been newly completed, 81% of them in the outskirts of the city, where most of the offices are unoccupied. Alongside the recession, the reason for this is the unfavourable location of these offices. They are mostly in places  with poor infrastructure and bad transport connections. According to the analysts the high number of empty offices is mainly due to the completion of two large office buildings – one near Sofia Airport and the other in the area of Business Park Sofia – where the rent of 18 Euros per square metre is unreasonably high.

Mortgage interest rates offered by Bulgarian banks have reached their peak in November. According to the specialists the increase of the interest rates have stopped rather then the lending of new mortgages itself. Most of the banks have tightened their conditions last month and the largest mortgages now cover not more than 75% of the price of new properties in the big Bulgarian cities, while in smaller towns they do not exceed 65% of the price. Concerning apartments in prefabricated blocks from the days of socialism, mortgages do not go over 60% of the price.  At the same time, the number and the size of the new mortgages have decreased in November.

The notaries at the Black Sea reported that the number of deals have decreased  sharply in comparison with last year. In the last 2 wees there have been days without a single purchase. The purchases for investment have almost stopped. Only people who need cash urgently sell. In such cases prices drop dramatically up to three times.

Purchases are made only of home to live. They have drop by 50% in Kavarna, while in Balchik by 10%.  Concerning the plots of land, the tendency is similar. Only agricultural land sells.  In some cases prices have fallen from 20 to 5 Euros per sq.m. due to the lack of buyers.

The total amount paid cash in hand by Bulgarian companies to their employees totals 4 billion levs (2 billion Euros) per annum according to Mediana social agency. More than 50% of the Bulgarian workforce confess that they receive part of their income unofficially, according to the Ministry of Social Affairs. The average income for the country is 523 lv. At the same time many Bulgarians have bought new homes and cars.  According to the General Labour Inspectorate,  90% of the inspected companies have labour contracts with their employees at the minimal wage.  The loss of the state in unpaid tax is enormous.

Each week about 20 new repossessed properties are declared at Sofia Regional Court. All repossessed properties are listed in the Third Civil Department of the regional court.  Most of them are apartments, houses and bigger buildings, agricultural land and regulated plots.

One-bedroom prefab apartment in Liulin gets a starting price of 36 000 levs, while an apartment of the same size in Mladost 4 -  74 000 levs.

A three-storey building in Vassil Levski Boulevard in the centre of Sofia has a startign price of 821 000 levs, while an apartment of 100 square metres in Strelbishte has a starting price of 205 000 levs. At the same price will start the auction for a plot of land of 5 000 square metres in Vrajdebna, a suburd of Sofia. The most expensive repossessed car has a starting price of 4 800 levs.  In the process of auctioning the price very often is increased by 100%.

The average price of properties in Bulgaria in the first half of the year has been 1418 levs per sq.m. according to the National Statistics Institute. The most expensive properties have been in Sofia where on average they sold for 2470 levs per sq. m. Varna has been in the second place with 2130 levs per sq.m. In third place was Burgas with 1755 levs per sq.m., closely followed by Plovdiv (1655 levs per sq.m.) and Veliko Turnovo (1331 levs per sq.m.). The cheapest properties have been in Kiustendil (751 levs per sq.m.) and Silistra (763 levs per sq.m.).

According to the analysis of UniCredit Group presented at the Euromoney Conference in Salonica, the average Bulgarian household consists of 2.8 rooms, while the average for the European Union is 4.2 rooms. However, the size of the living area in Bulgaria fairs better than in many other countries in Eastern Europe like: Romania (2,6 rooms), Ukraine (2.3 rooms), Lithuania (2.5 rooms) and Latvia (2.4 rooms).

According to the UniCredit Group Bulgaria has the highest number of home owners in the EC. There are on average 486 apartments per 1000 people in the country, while this ratio for the EU is 472 apartments and in South-East Europe – 413.15% of the Bulgarians intend to buy their own property in the next decade. However, according to the legal and financial advisers the recession will lead to slowing down in crediting. The growth of crediting in 2007 has reached 63%, while this year it will barely come to 40% and it is expected to slow down to only 25% in 2009.

The slowing down of the Bulgarian property market is most obvious at the Black Sea resorts, namely the Sunny Beach and the Golden Sands, and in the mountain ski resorts like Bansko and Pamporovo. The price of properties there have reached their peak levels and the number of purchases has been falling. There is no demand for such properties, while the the properties on offer are many. This is the reason why the Bulgarian banks avoid financing such purchases, as well as the construction of properties along the coast. According to leading business and legal advisers, the prospective investors can not  rely on off-plan sales at the moment. Many hotels along the Bulgarian Black Sea coast have been put up for sale and there are no prospective buyers interested in them. This means that most of them will be acquired by the Bulgarian banks which credited their construction. In the long run if the intensive construction does not stop, many hotels along the coast will have to be demolished like in Spain. However, in order to do this, a new legislative framework needs to be introduced by the Bulgarian parliament, and leading solicitors have been investigating the Spanish experience and preparing the necessary amendments to the current Bulgarian laws. Generally, the lawyers and the law companies seem to be more occupied than anybody else involved in the construction business.

Away from the Black Sea and the mountain resorts, the Bulgarian property market keeps moving because traditionally Bulgarians consider buying a property not only an investment but  most of all a form of security.

Despite the looming global financial crisis. New developments open in the Bulgarian Black Sea resort of Sunny Beach.

Oasis VIP Homes and Blue Pearl Apartment Complex in Sunny Beach will be presented at the largest property exhibition on the Balkans – BalPex. Oasis VIP Homes is the first luxury development of Galaxy Property Group in Sunny Beach. The development is in Mediterranean style with a park of more than 10 000 sq.m. and with three swimming pools. This project includes also Royal Sun development with 530 apartments.

The other project Blue Pearl is a development with apartments situated in the central part of the Sunny Beach. It comprises of 85 apartments overlooking the bay with Nessebar and St. Vlas, 16 shops, barber shop, gym and two swimming pools with a bar.

The sales of properties have decreased twice in the first three months of 2009 in comparison with the same period in 2007. The main reason is the shrinking of the market. The investments in the property market are much less than in previous years.

In order to attract clients the construction companies now tend to building longer – up to 3 years. At the same time they  accept smaller instalments during the construction and a bigger final instalment when the project is ready. It is difficult to make predictions at the moment but for the time being there are no significant changes in the cities.

Despite the financial crisis, the property prices in the suburbs of Sofia have been constantly increasing due to the migration of people from smaller towns and villages who seek employment in the capital. In the last year, more than 30 000 people have relocated to Sofia, while 12 000 people have moved to Varna, the second largest Bulgarian city. The same tendency can be seen in Plovdiv, Russe and Burgas. The newcomers to the cities usually look for cheaper properties in the suburds. As result the prices of apartments in those areas keep rising. The average porperty price in Sofia is 1094 Euros per square metre, while in the county it is 588 Euros per square metre. The studios seem to be very popular and their sales have increased by 17% in the last months. At the same time the demand for one-bedroom apartments have decreased by 28% and of larger apartments by 3%. Most of the sales are of newly built properties.

The Bulgarian banks have introduced tougher rules for lending money after two days of stopping crediting. Now they lend money only for the purchase of properties which can be easily sold if reposessed. Families with total income under 1500 levs per month can not take a mortgage to purchase an apartment in one of the larger cities. To such families the banks offer only small size credits with monthly instalments not exceeding 50 Euros. While in the past the banks were satisfied if the monthly repayment instalments were up to 50% of the total income of a family, now they restrict the instalments to not more than 39% of the monthly income. The average mortgage interest is 8.2% per annum and the average instalment is 360 Euros per month, which is an increas of 40 Euros for the last six moths.