The property market: who will survive?
The investors who are relying on own finances are the one that will most probably survive on the real estate market in the city of Sofia. The policy of the banks in Bulgaria has changed drastically in the last six months and the money that the bank is willing to loan now goes to 65 % versus the 85 % given before the world financial crises. Even if the state is economically stable and there are no inner factors for recession, the property market is in waiting because of the growing insecurity.
At the same time, the buyers are also waiting to see whether the interest rates of the mortgages will go up or down and whether the prices of the properties will drop or not. The truth is that in the last six months the increase in the prices in Sofia has gone up drastically, with 25 % in Mladost district, 23 % in the Students’ Town and 21 % in Lyulin district. The prices remain stable in the newly-built ad off-plan complexes and end to go down for the old panel blocks built during the Communism.
The adjustment of the local and the foreign buyers is however for investments in real estates and each group has its reason for that. The foreign investors know well that the property prices in Sofia and the other parts of Bulgaria are still much lower than the prices of the same type of properties in the rest of Europe. The local investors are subordinate to their mentality, the high percentage of ownership, and the migration towards the large cities, factors which keep the market stable.
A special research made by one of the leading banks in Bulgaria reveals that in the next ten years more than 15 % of the Bulgarians make plans for buying a property. This statistic should keep the investors on the alert so that when the time comes they should be ready with the product that will satisfy these potential buyers. They should be also aware of the serious requirements of the foreign investors who will come back once the financial crisis is over. Setting aside the alarming newspaper titles, the truth is that the euphoria has ended and time has come for the true property market.
