LM Legal Services Blog

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.

About 90% of the buyers of holiday properties in Bulgaria at the moment are Russians. More than 80% of them are prepared to purchase off plan if an agency gives them recommendation. 60 % of the Russians pay on the spot in cash. There are two groups of Russians on the market in Bulgaria. Russians from the large cities came a year ago and started purchasing bigger apartments for themselves. This summer the second group of Russians from smaller towns like Novosibirsk and Saratov appeared. They took the niche of the Brits and they look for smaller and cheaper apartments.

The Bulgarians are still not a market factor. Richer Bulgarians prefer to buy properties in Greece. The property crisis will kill the speculators and will allow bigger players to take a bigger share of the market. Only the investors of long-term projects will profit. Currently, in order to complete a project successfully, the investors need to sell off plan at least 30-40% of the development.

The sales of properties in Bulgaria have decreased for the first time in the last few years, according to the Land Registry. From January to June 2008 there have been 134 891 sales while for the same period of the last year their number was 136 457. The decrease is just by 1.1% but it is a fact. Since 2003 the number of the sales has been increasing by about 20% per annum and this has lead to a constant increase in the prices of properties. At the moment, the buyers are still active in Sofia, Varna, Burgas, Plovdiv and Pleven. The number of sales in these cities has increased, though insufficiently. However, in many regional centres like Shumen, Sliven, Smolyan, Pazardjik, Veliko Turnovo, Vidin, Vratsa and Gabrovo the sales have decreased, and in Ruse and Razgrad this decrease has exceeded 10%. Last year Ruse was the leader in the property price increase which reached 41% but the high prices have put off many prospective buyers.

On the Black Sea coast it seems that the buyers’ activity has moved south. The Land Registry in Nessebar which covers Sunny Beach, St. Vlas, and Ravda reported a decrease of 12.5% for the first half of this year. At the same time the sales in Tsarevo have increased by 50%.

The interest in agricultural land has not diminished at all, according to the activity of the most developed market of agricultural land in the country, which is in the area of Dobrich, Lom and Montana.

Despite this, Bulgaria is still in the first place in the world for the increase of property prices from June 2007 to June 2008. According to Knight Frank the prices of properties in Bulgaria have increased on average by 32.3%.