Sofia is now Bulgaria's most lucrative property site with growing demand for business premises and homes
Issue 10, July 2007
by Stanislava Ciurinskiene; photography by Marin Karavelov
Last year Sofia was the site of about 60 percent of all foreign real estate purchases. This continues a three-year trend that has seen investing in the capital become more profitable than doing so at the seaside.
Demand for residential and commercial space in Sofia now exceeds anywhere else in the country. Sofia is also Bulgaria's most dependable investment location, unsurprising perhaps since the city of nearly two million people is the nation's business pulse. Many large foreign and local firms have opened at least one office there, leading to a 40 percent increase in demand for office space last year.
Another boost to the real estate sector has come from migration. Many Bulgarians have moved from rural towns and villages to the capital and need a place to live - either buying or renting. Returning immigrants, wishing to buy homes or invest their savings, have also bolstered demand.
Aside from the vibrant economic life, Sofia is becoming a safe bet thanks to clear rules outlined in the city's new master plan. The strategy, already officially sanctioned, defines construction specifications, area by area, as well as the parts of the city assigned for industrial, commercial, logistical and residential purposes. The plan, available in English on the Internet, ensures investors choose the right area as well as the exact site for their requirements.
There are four spheres of investment in Sofia:
Residential properties: The closer to the city centre, the more expensive they are - excluding luxurious suburbs like Bistrica, Simeonovo and Dragalevci where a built-up square metre often fetches 1,200-1,400 euros. For some reason foreigners find the Doctor's Garden the most desirable central district, with apartments costing up to 2,000 euros per square metre. The average price for a square metre in the centre is currently 1,600 euros. In less desirable districts like Mladost, you pay 900 euros on average; Iztok - 1,300; Krasno selo - 900; Strelbishte - 1,300.
A paramount issue is whether to choose a new or old block. Each type of building has its negative sides - the older ones have very badly maintained common areas and sewage systems, whereas more modern blocks may be of inferior quality or lack central heating.
If you're looking for a quick investment return, you're more likely to attract a higher rental price for a new apartment. And, sadly, old buildings are not always safe. Last year a building collapsed in the city centre, killing two people. It is estimated that there could be as many as 400 other so-called killer buildings in Sofia alone.
Office space: Sofia has been experiencing a serious shortage of office space, especially class A. And it's expected that over the next four years this market will increase by 300 percent. Last year only six percent of the city's offices remained vacant, a record even for an extremely busy real estate market. The average price for a square metre varies from 1,000 to more than 1,500 euros. According to official statistics, the cheapest offices are in Lulin and Druzba at 684 and 639 euros respectively. Offices cost the most in the centre although they lack parking spaces.
Commercial premises: Three malls and several large trade centres were built over the last couple of years but rental prices for shops in Sofia's main streets still vary from 40 to 180 euros per square metre. Since the city centre is now crammed full of shops, malls and markets, leaving little room for new commercial facilities, the area near the airport is likely to become the capital's biggest retail zone. Currently, this is the trade zone attracting the most investors.
Land: In the city itself, plots for residential purposes are very hard to find and prices are extremely high. The few available plots in the centre may be purchased for 1,000 to 3,000 euros per square metre. In suburbs like Bistrica and Simeonovo, prices do not exceed 250 euros, but it's only possible to build individual houses and constructions up to seven metres in height. It seems that buying land in Sofia is becoming an exhausted option but land for logistical purposes affords new prospects for a high investment return.
Now that Bulgaria has joined the EU, the country is expected to meet European requirements for safe logistical facilities. Currently there are few built in accordance with EU standards, and the country will soon face a serious shortage. That makes logistical premises one of the most promising areas for real estate investment. Warehouses are usually placed as far away from the centre as possible, in districts like Mladost or Lulin. Nowadays, however, every plot suitable for logistical purposes up to 20 kilometres from Sofia's ring road is considered an excellent investment.
Sofia is now the in-place for those with an eye on getting the best yield from their property purchase.
70 years ago, on 10 March 1943, Bulgaria's pro-Nazi government decided to defy Berlin and halt the deportation of Bulgaria's 50.000 Jews. This was down to the actions of one man - Dimitar Peshev. Just two years later he faced Communist justice and found himself on trial for his life. His niece Kaluda Kiradjieva remembers