The crisis with COVID-19 is different from any previous crises and its impact on the real estate market has nothing to do with the collapse of the real estate market in 2008.
The pandemic found us in a very well-functioning, rising real estate market. Over the last 3-4 years a lot of people have invested in real estate in Bulgaria. In 2008, the crisis came at a peak of the prices, which this time was not even reached. 12 years later, we were left with between 15 and 20% to reach the prices of 2008 with much higher incomes of people, a better functioning country and economy.
The situation with COVID-19, the uncertainties facing the economy and our entry into the waiting room of the Euro zone has made people continue to invest in real estate in order to preserve their capital. In addition to the traditionally strong market in the capital and major regional cities, many real estate deals have been concluded in the last three months for properties located in the outskirts of large cities. The isolation due to the virus made people appreciate again the opportunity to own a family home outside the big city, which prompted Bulgarians to buy apartments, houses and plots in the sea and mountainous regions of the country. This has led to an unprecedented increase in recent years in transactions with such properties purchased by Bulgarians by about 30-40% on an annual basis.
In recent years, many new construction has begun in major cities. The pandemic hit us when many people had bought a property "off plan" and had made their first installments. After the corona virus, people did not give up their purchases, as happened in the crisis of 2008-2009. 95% of buyers who had entered the process of buying a property "off plan" continued the deals, and banks did not withdraw so abruptly as 12 years ago. There are many indications that the virus will not stop the development of the real estate market.
Due to COVID-19 and the summer holiday season, the luxury real estate market in Bulgaria is not as euphoric as before. The prices of the best properties are holding up for now, but the buyers are not in a hurry to buy, they are looking more and more. As a result, properties stay on the market longer, which means that there will be fewer transactions. If the trend continues for a long time, prices may fall, but it will not be as much as in the previous crisis, because people have switched to storing their capital in real estate. In September-October it will become clear where the prices will go.
Luxury in real estate is not just a matter of budget, price and money, but a combination of elegance, quality, details and most of all location. Some time ago there were not many luxury properties on the real estate market in Bulgaria. It was not until a decade ago that developers began to rely on new concepts as buyers became increasingly demanding. The market always follows customers, especially in the real estate business. The thinking of buyers is changing and we observe this phenomenon not only in Sofia, but in all cities of Central and Eastern Europe.
The prices of luxury properties worldwide are still maintained and there is even a strong dynamics in suburban properties - houses in the countryside in France, Italy, Spain and Bulgaria. The reason is that during the pandemic, some people realized the need to buy a second home outside the big cities in which they live.