By the first half of 2024, the number of houses in complexes reaches 1,700, distributed in 112 housing projectsColliers research shows. A decrease in their average square footage from about 435 sq.m. in 2020 to 375 sq.m. by the middle of the current year.
This is due, on the one hand, to the tendency to move the parking spaces outside the built-up area of the house, and on the other hand to the increasingly common “vertical apartment” concept – with more compact rooms, reduced in size corridors and yards.
Over 1,200 houses in more than 90 projects are under active constructionwith a third of them concentrated in the five largest ones. The locations chosen by the investors are the southern arc of the ring road, Bistrica, Pancharevo and Lozen.
Almost all existing complexes are located along the southern arc of the Ring Road. Builders are increasingly focusing on the detached house as a product to meet the available demand. This type of property remains the most popular, followed by a terraced house with a small yard.
The number of house transactions during the period under review (2020 – H1 2024) is around 1,200 per year. The highest number of transactions took place in 2021, which can be explained by the COVID-19 pandemic and the increased desire of people to secure a home with additional space that can be set aside for work/office, as well as a yard or garden attached to the property .
The majority of all transactions were realized without the use of bank financing, despite the continued availability of favorable credit conditions and low interest rates. The level of affordability (salary to price per sq.m.) of houses in complexes, calculated on the basis of average price per sq.m. and official gross wage statistics are improving. This is mainly due to the increased wages. By the middle of 2024, the indicator is at the level of 0.90 (sq.m. with one salary).
The gross rate of return on a house in a complex for rent is about 3.8% per annum. Buying in the green and then speculatively reselling at a higher price after completion is the preferred investment option.
The prices of houses in complexes have increased by more than 45% since the beginning of 2020. At the same time, construction costs have risen by almost 64%. If this trend continues, it is likely that the focus of developers will shift to locations with cheaper land for construction. Prices are expected to continue to rise as a result of the primary supply in this segment (by investor) not being able to meet the available demand, as well as in view of increased construction costs and rising real estate prices.
According to Colliers, the construction of large projects will continue to be realized in more remote locations, due to the lack of suitable land for construction or its high cost. Despite the serious development of the southern part of the capital, the short-term outlook for the development of residential projects with houses continues to be focused there. This is due to the built road and public infrastructure and easy access by car and public transport. In recent years, increased activity has also been observed in South-East Sofia – around the villages of German and Lozen, due to their communicative locations and the lower prices of landed properties.
There is an increased demand for houses with sustainable design and technological solutionswhich, in addition to energy efficiency, also create a more pleasant living environment. This trend is expected to continue as more developers integrate green technologies into their projects to meet increased demand from buyers.
According to Colliers’ forecast, investment house purchases will continue to lose their share as the purchase of a house for the purpose of living prevails as a reason for purchase. In contrast to the significantly rising interest rates in Western Europe in recent years, the price of mortgage loans in Bulgaria remains close to its lowest level so far. Banks are in a situation of over-liquidity and buyers can get an interest rate at a level below 3.0%, with the deductible amounting to at least 20% of the price of the property.
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