ECONOMY

Bulgarian real estate

A broad consensus of market experts is expressing skepticism about recent forecasts of sharp rises in Bulgarian property prices in 2006. «Prospective investors should painstakingly research the market so as to be sure that the prices at which they may buy property do not incorporate long-term future rises,» said the Greek Embassy’s Economic and Commercial Affairs (OEY) bureau in Sofia in a comment after the recent «Imoti» real estate exposition in the city. «The general conclusion drawn from the events of the fair confirms our cautious view regarding forecasts of a continuing general rise in demand,» OEY added. The Bulgarian property market, in regard to residential and holiday homes, seems to have reached equilibrium between supply and demand. Nevertheless, yields remain high (12-13 percent) in relation to other countries, where they vary between 7 and 10 percent. If prices continue to rise, the increases will not be above inflation, analysts argue. Interest may actually be gradually shifting toward office and industrial space, where yields are in the 9.5 percent order. «There is still a shortage of supply, vis-a-vis increased demand in the office and industrial buildings sector. This is where likely investors’ interest may lie,» OEY said. Bulgaria and Croatia share top spot in the holiday homes market segment, but with supply now tending to outpace demand. Yields are in the 8 percent region. The above estimates have been largely based on data published by Bulgaria’s National Statistics Institute. The data show that apartment prices rose 2.9 percent from the second to the third quarter this year in the country as a whole but fell 5.8 percent in Sofia itself, reaching an average of 1,256 leva (642 euros) per square meter, and just over half that for internally unfinished apartments. In the holiday city of Varna, average prices fell 0.5 percent to 1,192 leva per sq.m., while in Burgas they rose 2.6 percent to 1,142 leva.