Sofia acquired the status of the capital in 1879. The then-built Alexander Nevsky Temple, the buildings of the People's Assembly, the Judicial Chamber and the Sofia University formed the characteristic appearance of the historical center of the city. But the buildings of the socialist era, both public and residential, differ little from the Moscow buildings of the same period. Since the 1990s, Sofia has returned to the traditional Bulgarian housing construction format - compact houses of 3-5 floors with a small number of apartments.
Sofia is located in a natural basin at the foot of the Vitosha and Lyulin mountains. The Aleko ski resort on Vitosha Mountain is one of the most famous resorts in the country. The company, which owns the ski infrastructure, plans to invest about 50-80 million euros in the modernization of the resort.
According to the Dream Home company, only every tenth purchase in Bulgaria falls on Sofia. Nevertheless, the Sofia market may potentially be of interest to investors.
Stable prospects
Since joining in 2007 In the European Union, the Bulgarian real estate market has gained new prospects. Integration into the European space attracted new buyers to the country, foreign investment and outlined new standards for housing construction. European business has come to the capital, there is a need for high-quality housing for employees of Western companies. The British and Irish, attracted by low prices, began to actively buy housing for subsequent resale. Now this boom has decreased, Russians are increasingly showing interest in Sofia, and mainly with long-term investment goals.
Over the past two years, Bulgaria has attracted more foreign investment than in the entire period from 1990 to 2005. According to the National Institute of Statistics, income from the sale of real estate to foreigners has increased by more than 50%. The global financial crisis has not affected the Bulgarian real estate market as significantly as in other countries, due to the relatively small volume of borrowed funds and weak integration into global financial markets.
In 2007, real estate prices in the capital increased even more than on the coast. According to Dream Home, in the first quarter, the price increase was 16%, and then – 20% or more, depending on the area of the city. In 2008, price growth continued at a more modest pace. According to Knight Frank, in 2008, prices for residential real estate in Sofia increased by 25% compared to 2007.
Despite such a significant increase in prices, real estate in Sofia has remained more affordable than in other capitals of the EU member states. This attracts foreign capital to conduct business. In recent years, large retail chains have entered the local market, logistics centers and several business parks have been built. For example, the Mall of Sofia (with an area of 70,000 sq. m. m) with the Sofia Tower office complex – by far the largest in Sofia. But interest in the real estate market is growing not only from large corporate clients, but also from private buyers.
According to official data, in the last months of 2008 and at the beginning of 2009, real estate prices in Sofia did not fall and were fixed at the summer level. But in fact, real estate is sold 5-10% cheaper than the declared value. Investors prefer not to publicly declare discounts and benefits, but agree on individual, extremely flexible terms with each client. For example, many investment companies in Sofia offer installments of up to 5 years, leasing – up to 10 years or more.
Ilya Komitov, Marketing Director at FairPlay Properties REIT (FPI), considers this period of time a good one for investors: "The sales boom observed from the mid-90s to the present has been completed. The dynamics of sales is decreasing, and thanks to this, buyers can purchase high-quality objects at more favorable prices than yesterday."
On average , 1 sq. m . the cost of housing in Sofia is about 1000 euros. There is a tendency to lower prices in remote neighborhoods, so, in the secondary market and suburban areas of the city, you can find offers at a price of 550 euros per 1 sq. m. At the same time, in well-located areas with a limited number of offers, the cost of housing ranges from 2000 to 4000 euros per 1 sq. m. m and continues to grow.
The price level for a particular object depends on the stage of construction, the location of the house, the height of the floor, etc. The average price of the objects offered by Dream Home at the finishing stage in prestigious areas is 1,600 euros per 1 sq. m.
Rental issues
To date, the average rental price of a good apartment with an area of about 100 sq. m. m in prestigious areas varies from 800 to 2500 euros per month. The apartment is in a middle class area of about 80 sq. m. m – 400-600 euros.
So, in the prestigious Iztok quarter, FPI offers for rent two-bedroom apartments in the Apartment House Iztok residential complex for 1000 euros per month. Iztok is an area of embassies. Inside the residential complex is the most luxurious restaurant in Sofia – Moderato. You can purchase these apartments for the price of 2200-2500 euros per 1 sq. m. According to Dream Home, the average payback of an apartment in a fairly good quarter is from 8 to 12 years.
It's no secret that not all new buildings in Sofia meet European standards in their class. Therefore, some developers, in order to emphasize the quality of their complexes, rent apartments to Europeans in the first stages of their complexes. Says Ilia Komitov: "We are creating residential complexes that are serviced with white gloves. We are developing the facility as a home for wealthy representatives of foreign companies who pay high rents by Sofia standards. After the complex becomes known, there are many people who want to buy housing in it. We consider the most important difference between our facilities is that they are managed by a professional team of FPI Hotels & Resorts."
According to surveys of the Global Property Guide portal, from the point of view of foreigners renting apartments, a positive factor in the Sofia rental market is its orientation to the interests of employers. And the negative is the high prices for the services of intermediaries. For Sofia, the topic of good management companies also remains relevant.
Quality and prestige
The districts of Lozenets, Dragalevtsi, Simeonovo, Ivan Vazov, White Birch are considered the most elite in Sofia. Ownership of property here is a matter of prestige. Prices are high here, and, as a rule, demand in these areas exceeds supply.
The blocks in the southern part of Sofia are considered promising from the point of view of investment: Iztok, Izgrev, Borovo, Krystova Vada, Manastyrski Livadi, Malinova Valley. "The most promising for living and investment are new gated complexes in the southern regions," says Ilia Komitov. – The more services are provided in the infrastructure of the complex, the more interesting they are. The campus, Vitosha and Herman are good for buying new buildings under construction. Borovo, Iztok, Izgrev are areas of prestigious completed residential complexes."
In the Krystova Vada quarter, Dream Home Company offers a new Dream Residence facility – a fashionable complex of 4 buildings with 51 apartments and underground parking. The area of the apartments is on average 70 sq. m, the price is from 1300 euros per 1 sq. m. The delivery of the object is scheduled for early 2010. To the north of the complex is the prestigious Lozenets quarter with shopping and business centers. To the south is the elite Dragalevtsi district and the majestic Vitosha Mountain. The ski lift can be reached in less than 10 minutes on foot.
In the central Borovo district on Bulgaria Boulevard, FPI offers for sale apartments in the Apartment House Bulgaria residential center at a price of 2000-2200 euros per 1 sq. m. Borovo is the residence of the Bulgarian establishment, and the largest shopping mall in Sofia, Bulgaria Mall, will be built directly on Bulgaria Boulevard. In the complex itself there is one of the best spa centers in the city.
We can say that now Sofia is pulling up the quality of housing and infrastructure to European standards. The stability of the country's development is linked to its recent entry into the EU. Of course, in the conditions of the global crisis, it is hardly worth expecting a sharp economic take-off from Bulgaria, but it is Sofia who will be the first to feel a new upswing. And, perhaps, now is the best time to invest in real estate in Sofia.
