REAL estate prices in Bulgaria will keep on rising by up to 10 per cent until the end of 2005, according to a survey by the real estate agency Yavlena published on October 14.
Prices will go up by 40 per cent year-on-year in cities and towns, where real estate prices are currently lower. The mortgage credit expansion of local banks and the rise in number of signed mortgage contracts will influence the development of the domestic real estate market in 2005.
The number of signed mortgage contracts in the country will go up to 32 400 in 2004 compared to 29 000 in 2003. Mortgage interest rates in Bulgaria, however, remain high at eight to 12 per cent compared to six per cent in other countries.
Investments in Bulgarian real estate made by locals living abroad will exceed 800 million euro by the end of this year, the survey showed. This source of funding will be playing an increasingly important role on the property market, the experts of the agency believe.
The number of real estate sales has nearly reached 195 000 this year.
Meanwhile, the REMI real estate price index stood unchanged in the third quarter of 2004. According to experts from the real estate agencies that compose the basis of the index, low trade activity in the summer season should not be regarded as indicative of future trends. Market expectations are, however, mixed, with many observers regarding current real estate prices as unrealistically high, the Economist Intelligence Unit said. Forecasts based on fundamental demand factors suggest further price hikes, though at a slower pace than in the past three years, as rising incomes, improved access to bank credits, EU integration, migration to the capital city and purchases by foreigners push up demand.
On the supply side, the large number of new buildings is regarded as the major constraint on price growth. However, there is little consensus regarding the extent to which the old age of many existing buildings will continue to exert an adverse impact on real estate supply in the medium term.
The average price of apartments in the country rose by a nominal 12 per cent in the third quarter, according to the National Statistical Institute. The growth rate, however, was two times slower at 4.9 per cent in the capital Sofia.
The growth pattern could be seen as a correction of the trend of the past three years when the prices in Sofia surged at a much faster pace than those country-wide. The average price in Sofia is estimated at 543 euro a sq m, which is 87 per cent above the average for the country.
The past month brought two newcomers to the real estate market in Bulgaria.
The first was the recently established real estate investment trust BenchMark Fund Estates, which targets an annual return on investments of 25 to 30 per cent. The local financial company BenchMark Group manages BenchMark Fund Estates.
The second such fund in the country, which received an operating licence from the Financial Supervision Commission on October 13, was established in June with an initial capital of 500 000 leva, owned by 25 individuals and two companies. According to its prospectus, the fund will soon be registered on the Bulgarian Stock Exchange - Sofia.
BenchMark Fund Estates plans to develop a diversified investment portfolio in the next two or two and a half years. According to initial plans, the fund will invest up to 55 per cent of its assets in business properties, up to 45 per cent will be in hotel buildings, up to 35 per cent in residential buildings, up to 10 per cent in properties for sports and entertainment use, and up to 10 per cent in agricultural land.
In another development on October 22, the website www.bulgarianpropertyworld.com was launched, creating an impressive online directory for the future purchasers of property in bulgaria .
The website is mainly aimed at UK and Irish private individuals looking to purchase in the newly opened market of Bulgaria.
- Business Staff
Prices will go up by 40 per cent year-on-year in cities and towns, where real estate prices are currently lower. The mortgage credit expansion of local banks and the rise in number of signed mortgage contracts will influence the development of the domestic real estate market in 2005.
The number of signed mortgage contracts in the country will go up to 32 400 in 2004 compared to 29 000 in 2003. Mortgage interest rates in Bulgaria, however, remain high at eight to 12 per cent compared to six per cent in other countries.
Investments in Bulgarian real estate made by locals living abroad will exceed 800 million euro by the end of this year, the survey showed. This source of funding will be playing an increasingly important role on the property market, the experts of the agency believe.
The number of real estate sales has nearly reached 195 000 this year.
Meanwhile, the REMI real estate price index stood unchanged in the third quarter of 2004. According to experts from the real estate agencies that compose the basis of the index, low trade activity in the summer season should not be regarded as indicative of future trends. Market expectations are, however, mixed, with many observers regarding current real estate prices as unrealistically high, the Economist Intelligence Unit said. Forecasts based on fundamental demand factors suggest further price hikes, though at a slower pace than in the past three years, as rising incomes, improved access to bank credits, EU integration, migration to the capital city and purchases by foreigners push up demand.
On the supply side, the large number of new buildings is regarded as the major constraint on price growth. However, there is little consensus regarding the extent to which the old age of many existing buildings will continue to exert an adverse impact on real estate supply in the medium term.
The average price of apartments in the country rose by a nominal 12 per cent in the third quarter, according to the National Statistical Institute. The growth rate, however, was two times slower at 4.9 per cent in the capital Sofia.
The growth pattern could be seen as a correction of the trend of the past three years when the prices in Sofia surged at a much faster pace than those country-wide. The average price in Sofia is estimated at 543 euro a sq m, which is 87 per cent above the average for the country.
The past month brought two newcomers to the real estate market in Bulgaria.
The first was the recently established real estate investment trust BenchMark Fund Estates, which targets an annual return on investments of 25 to 30 per cent. The local financial company BenchMark Group manages BenchMark Fund Estates.
The second such fund in the country, which received an operating licence from the Financial Supervision Commission on October 13, was established in June with an initial capital of 500 000 leva, owned by 25 individuals and two companies. According to its prospectus, the fund will soon be registered on the Bulgarian Stock Exchange - Sofia.
BenchMark Fund Estates plans to develop a diversified investment portfolio in the next two or two and a half years. According to initial plans, the fund will invest up to 55 per cent of its assets in business properties, up to 45 per cent will be in hotel buildings, up to 35 per cent in residential buildings, up to 10 per cent in properties for sports and entertainment use, and up to 10 per cent in agricultural land.
In another development on October 22, the website www.bulgarianpropertyworld.com was launched, creating an impressive online directory for the future purchasers of property in bulgaria .
The website is mainly aimed at UK and Irish private individuals looking to purchase in the newly opened market of Bulgaria.
- Business Staff
