The Changing Face of Sofia

27th November 2005
By Gillian Nelis
The Sunday Business Post

But while it's certainly nowhere near as scenic as Prague or Budapest – and has away to go before it catches up with either of those cities in terms of infrastructure - Sofia is surprisingly vibrant.

Home to more than 1.2 million people, the city has more than a few things in common with Dublin. Many of the locals are driving shiny new cars, trendy coffee shops are offering vanilla lattes to go, and stylish bars and restaurants are doing a healthy trade. Where it differs vastly to Dublin is in its prices. This is a city where a double room in a new five-star hotel can cost as little as €100 per night, where a glass of wine will set you back about 80 cent, and where main courses in up market restaurants range in price from around €4.

Despite the fact that property prices in Sofia have risen sharply in recent times - prices are up over 20 per cent on this time last year - it is still possible to source investment s for we l l u nd e r €100,000. For buyers in Bulgaria who are seeking a pure investment, and who have no desire to use their unit themselves, it is here that they will most likely find a suitable property.

“On average, prices in the whole of Bulgaria have gone up by around 18 per cent over the past year, but in Sofia the rate of appreciation has been around 22 per cent,” said Robert Jenkin of Bulgarian Dreams.

“Even though a large number of overseas investors have bought in Sofia over the past year, I don't believe it's a speculator's market. The property sector is simply reflecting the city's changing prospects - average earnings have risen by over 20 per cent, unemployment in the city is at 3 per cent and the economy is growing rapidly.”

Jenkin has just finished selling units at Iskar Central, a development of 40 studios, one and two-bedroom apartments in the Oborishte district, close to the city centre and Sofia's most famous landmark, Alexander Nevski Cathedral. Aimed at the upper end of the market, the scheme will include a concierge service, gym, sauna and underground parking when it is completed in mid2007.

The building will replicate the traditional style of Sofia's period buildings, and the individual apartments will have kitchens with granite worktops and parquet flooring among other up market features. Two-bedroom apartments started at around €90,000. While apartments can be bought for a lot less in outlying areas, Jenkin believes the potential for capital appreciation in the city's central districts is significant.

“Parking and traffic congestion have become huge issues in Sofia. Over the next few years it's likely that more and more people will want to live within walking distance of work, and close to public transport. There's a limited supply of accommodation in the city centre and, as the city continues to grow, it's likely to become increasingly sought after.”

Choosing the right location in Sofia will become more and more important for investors as the supply of new residential units increases in the run-up to Bulgaria's scheduled accession to the EU in 2007. A report on the performance of the Sofia market during the first six months of this year by Colliers International states that while demand was the dominant market driver in 2004, during the first half of this year supply began to catch up.

The firm predicts that prices in the middle of the market will continue to grow “but only gradually, and this market is expected to experience the greatest demand. In the high-end market, prices are expected to remain stable in view of the relatively limited demand and the increasing supply'‘.

The report states that average rents in the city for unfurnished apartments are between €5 and €9 per square metre per month, with furnished units making between €7 and €14 per square metre.

On the market

* Bulgarian Dreams will begin taking bookings over the next few weeks for The Residence, a centrally-located apartment development which will be built in a similar style to Iskar Central. Studios are likely to start from around €37,000, one beds will range from €65,000 to €70,000 and two-beds will be available from €90,000 to €120,000. Parking spaces will cost around €12,000.

The firm will also be launching a 17-storey residential and commercial scheme within a short drive of the city centre. As the scheme is not due to go onto the market until next spring, prices have yet to be set.

Contacts

Bulgarian Dreams, 0044207-6141240, www.bulgariandreams.com

 Available properties in Sofia