Property prices in Bulgaria could drop another 10% in 2010 due to a lack of foreign real estate investors, it is claimed.
According to figures from the National Statistics Institute real estate in 28 of the largest cities and towns in Bulgaria have seen values decline by about 28% in the third quarter of 2009 compared with the same period as last year.
‘Bulgaria is poor in locally generated capital and most major projects here have been financed by foreign capital investments,’ Luchezar Bogdanov, managing partner in Industry Watch. ‘Readily available cash on the Bulgarian market continues to shrink and while this continues there will be little opportunity for flexibility in the market,’ he added.
From 2006 to 2008 foreign investment in Bulgarian real estate accounted for more than €2 billion compared with €300 million in the previous three years, the research group said.
There are some tentative signs of the market moving, according to Colliers International. The Sofia office is reporting that banking transactions have become more frequent. ‘There are more inquiries being made as well as more deals being completed,’ said Tatyana Emilova.
Inquiries though are not coming from foreign investors. Tsvetelina Tasseva from Address Real Estate said that some bargain hunters are aggressively pursuing deals but this is not the kind of activity that is going to result in a rebound in the real estate market.
She reckons that the overall decrease in transactions for 2009 will amount to about 35% compared with 2008 and although the bottom has almost been reached she expects prices to fall further in 2010.
About 21 000 residential units were completed and made available on the market in 2008, twice the number of new flats and houses built in 2004. Another 15 000 new units were constructed and floated on the market in 2009, according to the NSI.
Its data however also shows that sales of all kinds of real estate in Bulgaria’s four largest cities decreased by nearly 50% in the first six months of 2009.
The latest global property price report from international consultants Knight Frank published a few days ago put Bulgaria in the top four countries in the world in terms of falling prices for the third quarter of 2009.
According to Knight Frank’s report, which tracks 42 countries across the world, troubled Baltic states Latvia and Estonia have seen real estate valuations drop 34% in the third quarter, but still not as much as Dubai, where the slump in the local market has reached 47%.