Outlook for real estate in Bulgaria subdued but owners have enjoyed 300% appreciation in last decade
Real estate remains the best long term investment prospect in Bulgaria even as prices continue falling and analysts predict further declines in the coming months.
The country’s leading real estate consultancy, Address, points out that values have increased by more than 300% over the past decade, and as such, the sector remains the soundest investment in Bulgaria.
‘Regardless of the decline in value over the past two years, Bulgarian real estate remains the best form of investment,’ it said in a statement reads. It also revealed that based on actual transactions prices are down a further 14.5%.
Tsvetelina Tasseva, chief executive of Address, said that sellers are hanging onto their property rather than accepting lower prices. ‘Most vendors are poor, people who rely on a minimum monthly income and their house is their only real asset. This is why they are reluctant to part ways with their property at any price. On the contrary, they wait it out, hence most of the best property in the country remain on the market longer as people seek better offers,’ she explained.
According to Address, substantial discounts are still available on the market. A flat of about 90 square meters in the centre of Sofia was recently sold for only €50 000, a 45% markdown on the original asking price. In the elite Sofia borough of Lozenets an apartment was sold recently for €58 000, down from the initial asking price of €78 000, representing a discount of about 35%.
Address also reveals that towards the fourth quarter of 2009, demand increased by about 7% and continued upwards until April when it slumped by about 15%.
It is clear that prospects for the real estate market in Bulgaria remains uncertain for 2010 and even into 2011. According to some agencies the bottom has been reached and values can only increase. But others such as Foros, Colliers, Address and Bulgarian Properties, real estate values will continue to depreciate until the end of June. They are talking in terms of another 10% decrease followed by stabilisation. Other property agencies like Aristo, Yavlena and B&H, however, argue that the bottom of the market was reached in March and April.