What is news? The fact that a chateau (palace) in Albena resort is on sale for EUR 3.5 million or that the one possessed by Catherine Deneuve near Paris is sold for EUR 4 million? A house in the Sofia city center is on sale for the shocking price of EUR 9.5 million and the fashion icon Nina Ricci sales her estate in Los Angeles for EUR 1.5 million. Bulgarians already got used to comparing the local prices with the world elite. The fact that the former residence of Bulgarian Communist Leader Todor Zhivkov in Ruse can not be sold easily, although its price amounts to only EUR 200 thousand, is also news to the Bulgarian people. Moreover, the most expensive apartment with a gold-plated toilet is situated in the Students' Town district in Sofia. What is happening in the Bulgarian real estate market?

Why Bulgaria

The news is that Bulgaria is again on the map of the foreign investors in business properties and one out of every four Bulgarians buys real estates, in order to invest his money. The prices of the apartments marked an increase after eighteen months of decline. Highest interest is shown towards the properties in the Sofia city center. Elderly Bulgarians sell their farmlands and invest the money in small houses and apartments and rent them later. The fact that many foreign investors are interested in Bulgarian real estates is proved by the ambition of Asian businessmen from China, Malaysia, Hong Kong and Singapore to build the biggest indoor aqua park near Sofia similar to the ones in Dubai and Las Vegas. The investment in the amusement mega project amounts to EUR 1.5 billion and will cover an area of 200 hectares. Although the Bulgarian business prevails on the market of business properties, a bigger interest by foreign buyers was registered recently. The rents in Western and Central Europe dwindled. That is why some investors started to look eastwards, including Bulgaria, where the effect is likely to be felt by the end of 2014. The real estate funds which are currently gaining capital are most active in their investments. Why they choose Bulgaria? They do so, because the market of business properties brings higher profitability of nearly 9%-10% as compared to countries such as Poland or the Czech Republic.

Competition among buyers

The real estate market was flooded by newly-built properties over the recent years. Many offers of apartments bought with investment purpose and ones confiscated by the Bulgarian banks, which were previously bought with mortgage loans, emerged on the market. The crisis, however, cut the number of the property deals in half. After a period of long decline, the activity on the Bulgarian real estate market started to grow. Biggest appetites are shown towards the newly-built properties and the ones in the Sofia center provoke highest investor’s interest. During the first trimester of 2014, the property deals in prestigious districts have increased twice. The competition among the potential buyers boosted the initial price by over EUR 7 to 10 thousand! Apparently, the wealthy Bulgarians think that it is worth investing in expensive properties in times of crisis. The middle class is also driven by this postulate, because 30% of the property purchases since the beginning of 2014 exceed EUR 100 thousand. Moreover, the Greenfield deals have also increased since the beginning of 2014. Usually, half of the properties in a high-quality project are sold before the building is actually finished. The time when customers were interested mainly in small properties is now gone. Clients currently prefer to buy homes with larger rooms and high ceilings.

Where is cheaper- in Bulgaria or in Switzerland?

Wealthy Bulgarians buy properties in Germany, France, Switzerland, Belgium and Greece, because they prefer to possess own real estates, rather than wasting money on rent. Bulgarian real estate agents for example offer two houses in Switzerland for EUR 2.2 million, way cheaper than a palace in Albena Black Sea resort!

Bulgaria continues to top the EU rankings regarding the possession of own properties, as nearly 90% of the people in this country live in their own homes. A real estate agent jokes that when all people possess own properties, revolutions like the one in Russia back in 1917 are impossible.

English version: Kostadin Atanasov