Market analyst, Property Secrets, is predicting that shortage of supply will push prices up 25% in the coming months.
The city currently has a population of around 1.2 million but rural Bulgarians are flooding in, mainly because the average salary in Sofia is 2.5 times the national average.
In response to the influx, leading architect Petar Dikov has been commissioned to draw up a new master plan for the city.
Neil Lewis, chief executive of Property Secrets, says: 'Sofia is a favourite hot spot for property investors as it potentially offers ultra-high returns, combined with excellent long-term prospects. It is just at the start of its growth curve so there is plenty of room for growth.'
The city will be expanding into its suburban villages and there are also plans to redevelop industrial areas in the north of Sofia, although pollution and poor infrastructure are likely to continue to restrict the popularity of these areas.
At present an apartment in Sofia costs around £37,000 and a two-bed flat can be bought for £100,000.
Mr Lewis describes the city as 'about a year behind the Bucharest market' and advises: 'Now is the time to invest in Sofia, but you need to look for the high growth areas which are close to major employers and have good transport links into the city centre.'
The City's council has approved several projects to improve infrastructure. Sofia's annual budget for 2008 is higher than in 2007 and aims at improving a wide range of infrastructure.
A main priority is reconstruction and expansion of main streets and boulevards, which will improve the traffic in the city during the peak hours. The City's department responsible for transport and infrastructure plans to build up to six underground car parks in the city centre.
The Metro line extension is expected to be finished before 2010 and will connect the university with the city centre. Some important external transport links are also planned for Sofia. The railways linking Sofia with the Black Sea coast are currently being upgraded using EU money in 2007-2013.
The construction of the Sofia ring-road is part of the Trakia motorway concession deal with Portugal's and Bulgarian state-owned companies and is under construction.
