2014 was stronger in terms of purchases’ volume on 2013. The market growth was due to the apartment segment. According to data of the National Statistical Institute prices in some cities like Sofia, Varna, Burgas and Plovdiv mark a sustainable, though slight growth of some 1 percent. Prices are still hesitating or marking a slight drop across other, smaller settlements.

Experts say that the reasons for the situation were related to the insecurity in the spheres of banking and finances, which made some people with serious deposits buy real estate properties, seeing more security for their money this way. Thus the crisis in the financial sector provides opportunities for real estate. The expectations for 2015 are the pace from the previous year to be kept and the market to continue with its slight recovery.

Several new real estate projects will be implemented across the southern Sofia neighbourhoods through 2015, but relatively modest in size – around 5 – 6,000 m2 of gross floor area. NSI data says that the average price per m2 over thethird trimester of last year was EUR 760, while branch people claim there are different offers, at prices varying between EUR 500 – 2,500 per m2, depending on the location, additional features and finishing features.

The interest drop that has started creates even more opportunities for business and logistic areas that will make in the long term “sleeping money” flow into economy. Ivan Velkov from the Real Estate national movement comments the process:

“The process is not that visible and traceable on markets with a higher risk, such as the Bulgarian one, where not only interest rates have an impact on different economic sectors, especially the real estate one. The results from one decision or another are much slower there as a cycle, compared to a series of other sectors and industries.”

The change in the levels of interest would lead to a greater usage of financial instruments, but the eventual effect will become visible within 6 to 12 months, not now. Mikhaela Lashova from the Forton consulting company comments branch expectations like that:

“If interests on investment loans go down, profitability on real estate properties will go up, meaning that with 4 – 5% of annual interest investors will look for a marge of some 3 percent. This is the standard for the market. An office building could be sold with profitability of 8 percent, of course, when all the other criteria are available – financial and political stability and an active market.”

Investment deals with real estate properties in 2014 are in several directions, Mikhaela Lashova goes on to say: a purchase of land with the goal of investment projects’ development or the purchase of office buildings with profitability of some 9 percent. There is a potential for the high class A of offices, where free areas are less than 5 percent, which opens new project opportunities, along with the demand of call centers and outsourcing companies.

The trend for rents is around EUR 12 per m2 for new buildings, responding to the requirements of international renters, while prices are to the tune of EUR 8 – 9 for the lower class”.

English version: Zhivko Stanchev