Bulgarian property market up and down but experts predict stable future

The slowdown currently affecting the Bulgarian residential property market should not last long according to the country's largest real estate investment fund.

But analysts admit that generally prices are treading water and holiday homes are the riskiest segment at present.

'The on-going fragmentation of the market will be short-lived and it should regain its brisk momentum within the next couple of years,' said Petar Syarov of REIT managers.

He added that it is good news as the current price adjustments will protect the market from a bubble scenario.

Supply exceeding demand, unfavourable credit terms and overpriced offers are among the factors responsible for the stagnant market, according to the firm.

However Todor Stoyanov of Prime Property BG said that although the holiday homes segment had been on the back foot interest is picking up again.

But the performance of the market very much depends on location. Interest is high in popular resorts but in some areas the market is virtually at a standstill.

One real estate agency in said it has not sold a single apartment or house since the beginning of 2008. Agencies have also said that residential property in the Danube region has not triggered the same interest from foreigners as other parts in the country.

In the commercial sector the market is doing well according to the latest report on the country from CB Richard Ellis. With most investment taking place in the capital, Sofia, there is, however, increasing movement towards regional cities such as Varna, Burgas and Pleven.

The strongest property sector is retail but mixed use developments with a residential aspect are not as popular with investors.

The report concludes that the first half of 2008 has seen a period of continued growth in investment volumes in Bulgaria with significant building in the major cities. High quality developments are predicted to perform well.