At the end of 2013 the Bulgarian property market sends signals of the beginning of recovery. This is evidenced by the growth in sales volumes, the stop in prices decrease, the start of new projects and the increase in the number of loans. Bulgarian realtors quite definitely say about the exit from the real estate market crisis.
Dreams Come True: The Russians lead in property purchases in Bulgaria
A year ago, experts shared their expectations and forecasts. They realized, however, not 100%. Hopes of the fact that the Russians will maintain and strengthen their leadership among the buyers of the Bulgarian real estate. By the end of 2013, it can safely be called the "Year of Russian buyers of resort real estate in Bulgaria."
At the top of the demand are the holiday properties, followed by the urban housing in the maritime areas of the country. Some rural homes are also being purchased. But the mission to attract the Russians to the active buying of properties in Bulgarian ski resorts ended with failure.
Before the beginning of the active "offensive" buyers waited more than a year. In 2009, property prices in Bulgaria fell by almost 50%, the market was frozen. During the crisis stagnation since the beginning of 2009 to 2011, the decrease in prices in different parts of the country ranged from 25% to 60%. In some regions seriously fell the prices on the non-resort property. In the segment of ski resorts maximum decrease was mentioned in Bansko (the drop reached 60%) and in Pamporovo (40%). On the coast, prices have dropped by an average of 30-40% compared to the peak values of 2008.
Balchik
But now those Bulgarian realtors and developers, who survived the two years of stagnation, remember the past period as a bad dream. The year 2012 was marked by a stabilization. And the 2013 has already cemented the positive trend.
According to "BULGARIAN PROPERTIES" Russian citizens amounted to no less than 40% of all buyers of residential and resort real estate. The second largest group is Bulgarians themselves who buy real estate in the major cities, mainly in Sofia.
"2013 has become extremely positive for the property market in Bulgaria. It will be remembered by constantly growing interest from the Russian buyers of real estate across the country - not only in the seaside resorts, but also in the capital Sofia and the Bulgarian picturesque villages. Bulgarian buyers also intensified on matter of buying properties in Sofia and other major cities of the country. All this has led to an increase in sales volume of approximately 20% year on year," - says Polina Stoykova, executive director of "BULGARIAN PROPERTIES."
"In 2013, we witnessed the intensive development of the office space, and the annual yield of such properties exceeded 3%. The foreign investments were the driving force of the commercial property market in Bulgaria in 2013. Multinational corporations optimize their costs and therefore are looking for more jobs in countries with lower taxes and wages, including Bulgaria. So the new corporate centers that cater to the international offices of various companies were established here in 2013, which led to a demand for new shopping and commercial area. In the manufacturing segment by the same scheme rose a demand for production facilities for companies importing their production in Bulgaria," - says Oksana Chizhdenko-Nikolova, Managing Director in "Alfasiti."
Nesebr
It was, but it gone: no more good apartments for nothing left
In Sofia, the prices in the last two years range between €720 and €750. In the Q3, the average price of transactions amounted to €741 per sq.m. (at €747 in the second quarter and €710 in the third quarter of the previous year). The average cost of an apartment in Sofia, according to real transactions, amounted to €64,200.
The entire coast from Balchik and Golden Sands in the north of Varna, Sveti Vlas, Sunny Beach, Burgas, Sozopol, ending with Primorsko, Kiten and Tsarevo to the south is being actively sold.
Today, as one or two years ago, the sales are often made in the segment of €35,000 — €50,000. There are more expensive deals, but such transactions are rare. There is quite a bit of those, who want to buy in Bulgaria for €1,000 and €1,500 for sq.m, although such properties are still being built and sold. There also are lots of properties, that are cheaper than the average. But the stories of the miracle-discounts on the miracle-apartments, even though they were true, very quickly became history, just like the stories about the wonderful communal resettlement St. Petersburg in the early '90s, when one room could be exchanged for three-roomed apartment.
Sofia
During the period of stagnation, in the year of 2011, at the Bulgarian Black Sea coast, you could sometimes find good views for sale on the secondary market for €25,000, which was being sold at a discount mostly by the Britons because of urgency. The market quickly absorbed such cheap and liquid proposals.
Properties in the lower price segment are always in demand, but you can forget of the apartments for €25,000 with a sea from the window. Maybe forever. Today you'll need to double the budget in order to buy something standing and eye pleasing. A price tag of €25,000 corresponds perfectly to the standard options a studio or a one-bedroom apartment in the Sunny Beach, 3 km from the sea.
The average price of apartments sold in Sunny Beach in the Q3 is €570 per sq.m. compared to €490 for the same period in 2012 and €550 in the Q2. The average price of apartment purchased in Q3 is €33,700.
Nesebr
Bulgaria can not sell its mountains
Traditionally, Bulgaria faces the minimum demand for apartments in the ski resorts. This is the only segment that still shows a decline in prices. The answer to the question "why" lies in the answer to the question "who buys". Before the crisis, the main buyers of real estate in the mountains of Bulgaria were the British, for whom the sea has never been an end in itself, but in general their activity covers all the market segments - the Sunny Beach to Bansko, including farmhouses and even sheds.
Until now, the local editions of the real estate love to show off an article about what luxury homes with the latest fashion and art, rebuilt from the former stone barns and stables by the British aesthetes, may be found in the Bulgarian rural areas.
Russian buyers are peculiar to more standard approach, multiplied by the traditional love for the warm coast. Hence the pattern of demand and, consequently, the dynamics of changes in prices.
"It's obvious that the real estate market in this segment is the most difficult to settle down after the crisis. But this situation prolongs the opportunity to make a deal, as long as prices are at a minimum," - says Polina Stoykova.
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The average price of sold apartments in Bansko in the Q3 of 2013 amounted to €375 per square meter, which shows a 6% decline compared to the Q2 (€400) and a similar decline on an annualized basis. While buyers continue to shrink their budgets: in 2013 the average cost of purchased apartments in Bansko was €25,400, in 2009 and 2010 - €40,000 in 2011 - €35,000. However, realtors say that during the summer of 2013 there were more trades in Bansko than a year ago.
The situation is similar in Pamporovo, where the average price of apartments was €375 per sq.m. It is gratifying to note that an interest in the resort significantly increased in recent years from both the Russians and Bulgarians.
Borovets continues to maintain high prices and deals are made at price levels ov average about €600 per sq.m.
Rural houses belong to the segment of the creative demand
Third year in a row the market operators mark the new trend: the growing interest of the Russians to the deals with rural houses in Bulgaria, in marine areas and in the center of the country.
Prices in this segment start at €8,000 – €9,000 for homes "under repair" (25 km from the sea and further inland), on the coast - from €50,000 – €60,000. A Private House at the sea is usually more expensive than an apartment with the same location in two times. Besides that, there are no " absolutely on the Shore" properties. The coast is built up with the complexes, and the homes are separated from the coastline, usually by 2-3-5 km. Considering this feature and the prices, the main demand is aimed at businesses in the area from 25 to 100 km from the coast.
The most frequent buyers are the people close to the retirement age, counting over time to move to Bulgaria permanently, as it is the only country in Europe which provides the Russian pensioners with a residence permit under the simplified scheme. But among the buyers there also are young families with children. The driving force for such a purchase is the dream of a home of their dreams, unattainable in Russia for the reason of price. The good climate and the cost of living are a nice bonus.
According to "BULGARIAN PROPERTIES", this year the share of Russian buyers in the segment of rural houses reached 30%. "Their main interest lies in the suburban real estate in the regions of Burgas, Stara Zagora, Plovdiv and Yambol. The second largest group of buyers of rural property are the British (20%)" - sums up Polina Stoykova.
At the end of 2013, by the cumulative data provided by the Bulgarian realtors, the average price of the sold suburban real estate amounted to €22,300 (€19,400 in the previous quarter). The sales of suburban real estate is still about 80% lower than during the boom, and the average transaction prices are about 20% lower than at its peak. However, it is also important that both the quality of rural homes is now better. If on top of the market for €20,000, you could buy only properties in need of serious repair, now with that kind of budget you can buy a great country house, 30-50 km from the sea.
Average price of sold homes in rural regions, according to the third quarter of 2013:
| Burgas |
€37,500 |
| Plovdiv |
€35,250 |
| Stara Zagora |
€10,250 |
| Vidin |
€5,100 |
Text: Julia Lozovskaya, especially for ee24.com.