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Bulgaria real estate market shows trends of becoming buyers' market

Date: 03.09.2008

The current supply of real estate properties in Bulgaria is much higher than the demand while there is a serious segmentation of the real estate market regarding the different types of properties, according to Lachezar Iskrenov, Chair of the National Real Estate Association, who spoke before Darik radio Wednesday.

Iskrenov believes that because of the high supply and the market division, a price increase of 35%, predicted by some other experts would be impossible.

According to the Chair of the National Real Estate Association, the most important current change observed in the real estate marker in the country, is the trend of becoming more and more a buyers' market.

"While we wish that real estate prices in Bulgaria reach the levels in outer countries in Central and Eastern Europe, we often fail to take into account the fact that the properties on those markets are offered fully completed," Iskrenov commented, adding that about 20 to 25 thousand residential properties remain unsold just in Sofia.

"The prices of luxury real estate in the country go up the most. However, we notice the biggest discrepancies between buyers' and sellers' expectations and between supply and demand in the middle segment. It is most difficult to make deals exactly in the middle segment. The price growth would remain permanent in the high segment since the price would stay high and there is going to be a 15% price increase on a yearly basis," Iskrenov further explained.

In the low segment the deals are conducted easily and the supply is very low with this trend most likely to continue, according to the Association's Chair.

When asked about the recent comment of a well-known Bulgarian banker that around the year 2011 the office real estate market would become fully saturated leading to the voting on the part of Bulgarian politicians of a law mandating that all companies move their offices to business buildings, Iskrenov offered the following comment:

"I have heart people talking about this for a while. Naturally, there are many new projects to build offices and business facilities in Sofia and the city could become over-saturated with them making the investments ineffective. Attempts to create such law are a possibility, especially in the presence of a strong investors' lobby, but right now those are just guesses. On the other hand side, moving offices away from residential buildings in downtown Sofia could help solve some problems such as heavy traffic and lack of parking spaces.

Iskrenov also explained that one such law would hurt small companies the most since big companies either have their own office buildings or can afford the higher rents of EUR 18 to 25 per square meter in those buildings. Small companies renting offices in residential buildings currently pay EUR 5-6 per square meter. One possible solution for smaller companies, according to Iskrenov, is that they rent smaller offices in offices buildings so that they can lower their expenses.

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