Foreign Investors Push Up Bulgarian Property Prices
As the growth of the property market in Bulgaria begins to build up momentum, property experts within the country have predicted a sharp increase in property prices in 2006.
According to the Sophia News Agency, sales prices in prime residential areas in the last six months have been somewhere in the region of €820 to €1,650 per square metre and investors from Europe and further afield are beginning to take advantage of the potential for considerable capital gains.
Demand in Bulgaria is currently high for both commercial property and residential property and EU accession in the next couple of years will only add impetus to the already healthy market.
With the UK set to complete parliamentary procedure on the ratification of the accession treaties for both Bulgaria and Romania in the next few weeks, it is looking as if both countries will be ready to enter the EU sooner rather than later.
Atanas Garov, managing director at Colliers International Bulgaria, has told the Sophia News Agency that the number of foreign investors is now crucial to the growth of the market. He revealed that new companies looking for more space and residents moving to Bulgaria would both have "a positive effect on the property values and prices".
Mr Garov conceded that residential property investment had attracted most interest in 2005 with construction permits issued for around one million square metres of residential buildings during the year. He also highlighted a distinct split in demand, with portfolio investors buying properties in resort areas and locals tending to snap up the property in Sofia.
As Bulgaria begins to strengthen its reputation within the European community, business links will also be boosted, with many expecting Sofia to develop into one of Europe's key commercial centres. The knock-on effect in terms of demand for office property is perhaps inevitable and Mr Garov has seen signs of the office market improving already.
"The office market has been stable for more that two years in terms of prices, while demand has been growing faster than supply. This has resulted in much lower vacancy rates at the end of 2005," he observed.
"The overall vacancy rate for Class A and Class B offices in Sofia has fallen in the second half of 2005. Mirroring higher demand for quality premises throughout the second half of 2005, the overall Class A vacancy rate marks a decrease to 10.6 per cent. This gives very good prospects for developers in 2006."
Looking beyond the capital city, Mr Garov has picked out Varna as a city to watch, with a thriving social scene and burgeoning commercial reputation.
As is inevitably the case in emerging property markets, cautiousness and forethought are advisable when purchasing property in Bulgaria as some areas develop much more rapidly than others. Nonetheless, with properties around ski resorts proving popular and both Sofia and the Black Sea regions also attracting investment, it is certainly one of the most significant and attractive emerging markets in Europe.