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Bulgaria Real Estate Report Q1 2011
Business Monitor International, Nov 2010, Pages: 70
Bulgaria Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bulgaria's Real Estate industry.
Bulgaria is a country where prices and asset values have to adjust in response to imbalances around a fixed currency peg. In our interviews with in-country sources at the beginning of 2010, we learned that rents had fallen by around one third in all three sub-sectors and in all three of the cities for which we have gathered data – Sofia, Bourgas and Varna – since early 2009.
Pessimists indicated that further decreases in rentals were likely through 2010. Bulgaria remains in the grip of a long and deflationary recession, characterised by weakness in investment, net government spending and – in particular – consumption. Consumer sentiment and spending is likely to stay soft as unemployment remains high. Only a major devaluation of the lev relative to the euro could change the dynamics of the economy.
The implication of all this is that Bulgaria is a country where there is unlikely to be substantial supply of new office, retail or industrial space over the coming years. Some of our in-country sources also suggest that the lack of greenfield development sites represents a constraint on new supply. However, demand for new space is likely to remain weak.
Overall, the property market is struggling. Real estate prices increased fourfold over the course of 2003- 2008, with demand artificially inflated by the global credit bubble. Cheap credit has since dried up and house prices are down around a third since the peak, with losses nearing 50% in some areas. The latest data for Q310 show prices falling 1.2% compared to the previous quarter. Even though the market appears to be stabilising, a return to the 2008 highs remains a long way off.
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