Although construction of studio flats — which make up a third of Bulgarian real estate sales — has not kept up with demand, sellers continue to grant buyer concessions in a tough market. Slumping sales — including a fall-off in foreign purchases — could see prices decline through 2010, while joblessness in Bulgaria is shrinking the pool of prospective buyers. See the following article from Property Wire for more on this.
Demand for smaller real estate in Bulgaria could increase this year as the number of small properties being built has fallen so much that there is not enough supply, it is claimed. Small studio flats priced at around €25,000 have been accounting for 34% of total sales in the country’s real estate market but few new projects are due for completion, according to property consultancy Address.
‘The supply of such types of studios is decreasing while new construction for the moment is rather dormant. This is likely to create a demand that is likely to surpass initial forecasts,’ said marketing manager Kaloyan Bogdanov.
Buyers are bargaining hard and in 87% of cases they are asking for discounts on asking prices. In the first three months of the year the average discount amounted to €3,000.
The agency sellers are being urged by banks to keep the prices high but have to make discounts if they want to sell or risk losing buyers. On average, the discounts amounted to about 5% of the asking price.
The real estate market shows no sign of recovery yet, the agency continued. It reckons that a mild rise in values in local real estate is not to be expected until the third, or perhaps even the fourth quarter of 2010 because of the economic situation.
Other agencies think that the bottom has been reached. Aristo is even forecasting a 10% increase in prices by the end of 2010. But according to agencies such as Foros, Colliers, Address and Bulgarian Properties, real estate values will continue to depreciate until the beginning of June. They reckon on a further 10% decrease followed by a stabilization in prices.
And according to Industry Watch, real estate values are likely to drop by another 10% due to the weak influx of foreign capital and delayed bank credit in Bulgaria and the fact there is no sign of foreign investors returning to the market.
Bulgaria was once a favorite of overseas buyers especially from the UK, Ireland and Scandinavia. From 2006 to 2008 foreign investment in Bulgarian real estate accounted for more than €2 billion while in the preceding three years it was about €300 million a year.
But since the global economic downturn the flow has stopped. Real estate in Bulgaria's largest cities and towns recorded an average decrease of about 28% in the third quarter of 2009, compared to the previous year, according to figures from the National Statistics Institute (NSI).
In light of the economic crisis in Bulgaria and rising unemployment, the number of potential buyers in the country is only likely to decrease throughout 2010.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.