Property prices in Bulgaria in 2012 will remain under pressure and will continue to decrease. This is the prevailing opinion of experts from industry in the early days of the year. The grounds for such projections are more than convincing – firstly this is the lack of solvent foreign investors to raise the level of market prices, as happened in 2007-2008. What should not be ignored is the fact that the crisis took away the desire of Bulgarian clients, too, to buy properties on credit and forced them to limit purchases within the resources they have. Lowering the sale turnover by over 10% throughout 2011 led to the closure of many small commercial sites and to reducing the demand for retail space. The withdrawal of the British national from holiday villages continues, in some cases, forming a panic trend and has caused serious losses. There has been also a reduced business investment in fixed assets which are part of the production area, offices and retail space.
According to the Bulgarian Industrial Association the decline in business investment spending in 2011 reached 62% on 2008. At the same time indebtedness among companies in the sector increased, it has sky-rocketed to the staggering for Bulgaria BGN23.6 billion. All this is of course reflected in property prices. And in the first ten days of January there was a new record-low in Sofia – on the basis of tenders submitted in one of the largest Internet portals, the average price per square metre in the capital reached EUR724. On an annual basis in only two of ten randomly selected areas of the city there has been a slight increase – by about EUR17 to EUR20 per square, while in the remaining areas there has been a drop from EUR18 to EUR125. As much as bids can’t be a 100% guarantee for actual prices at which transactions are made, the trend is unlikely to change this year.
Urban properties in other regional centres have various fates. In Plovdiv, Sofia repeat situation – a decrease in varying degrees throughout 2011 and a forecast to continue falling. In the first ten days of January there prices also reached a bottom according to the bids – EUR507 per square metre. But in some other major cities prices in early January remained at the level from November-December 2011. This is the case in Burgas, Varna, Stara Zagora and Pernik. The bottom of these prices was reached in November, then a slight increase began leading to a point of stabilization continuing through January’s first days. Experts from the industry still warn that this could be due to inertia and weak market at the beginning of the year, rather than forming a new positive trend. Moreover, the trends in the capital are ahead of what happens in other cities where similar developments can follow two or three months later.
Between EUR600 and EUR700 per square metre is the average price for apartments in major cities that are expected in the sector by the end of 2012, as price differences between urban areas will increase. This can be seen very clearly now in Sofia – the lowest prices for the concrete blocks of flats in some not so prestigious suburbs are around EUR400-450 per square, while the desired locations continue to quote prices over EUR1,000 per square metre.
