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Trends And The Property Market In Bulgaria

On April 5th 2011 the Bulgarian National Statistical Institute (NSI) announced the express data of the national census which took place in February 2011.

The demographic factors, including the growth in population, the internal migration, the age of the population, etc. are considered fundamental factors in defining the trends on the real estate markets and property price fluctuations in the long run. This data is a good basis for analyzing the Bulgarian property market so that it can be seen what influence they have on the real estate sector in the country. Recently BULGARIAN PROPERTIES published its overview of the Bulgarian property market for the decade 2000-2010 and now the census data will help us see the interrelations between the demographic trends and the Bulgarian real estate market.

The NSI express data show that 73% of the population in Bulgaria lives in cities and 27% - in villages. In the last 10 years the population in Bulgaria decreased by a little over than 580,000 people or by about 7%. It is exactly in the regional cities that 55 to 60% of the total number of property deals in Bulgaria are concluded, according to the data of the Registry Agency deduced by BULGARIAN PROPERTIES.

We will follow the data for the regions with the biggest growth in population and with the negative growth in population, as well as the number of deals and property prices so that we can make conclusions about the interrelations between the demographic factors and the property market.

In five regions around Bulgaria the NSI reports positive growth in population as a result of internal migration in the last 10 years. These regions are Sofia (capital) and the regions of Plovdiv, Varna, Bourgas and Veliko Tarnovo. These are also the regions with the biggest populations in the country.

The data of the Registry Agency shows that it is exactly in the cities-regional centers that most property deals are concluded. The share of sales in these regional cities for the past few years is as follows: Sofia - 20-25%; Plovdiv - 10-11%; Varna - 8-11%; Bourgas - 4-7%; Veliko Tarnovo - 3%. In total this makes about 50% of the general volume of property deals in the regional cities.

According to NSI data apartment prices in the abovementioned cities were the highest in the country in 2010: Sofia - 1568.81 BGN/sq.m. (about 808 EUR/sq.m.); Plovdiv - 1036.39 BGN/sq.m. (about 534 EUR/sq.m.); Varna - 1579.03 BGN/sq.m. (about 813 EUR/sq.m.); Bourgas - 1196.34 BGN/sq.m. (about 616 EUR/sq.m.); Veliko Tarnovo - 817.82 BGN/sq.m. (about 421 EUR/sq.m.). For the whole country apartment prices exceed 1,000 BGN/sq.m (about 515 EUR/sq.m.) only in Sofia, Plovdiv, Varna and Bourgas.

In these same regions with the biggest growth in population as a result of internal migration the prices of rural properties are the highest - average prices are between 15,000 and 20,000 EUR as per the data of BULGARIAN PROEPRTIES based on actual concluded deals in 2010:

• Sofia Region villages - 17,900 Euro
• Bourgas Region - 26,400 Euro
• Varna Region - 15,500 Euro
• Plovdiv Region - 18,000 Euro
• Veliko Tarnovo Region - 17,150 Euro

• Stara Zagora Region - 13,900 Euro
• Yambol Region - 13,300 Euro
• Kardzhali Region - 11,300 Euro
• Pleven Region - 7,800 Euro
• Vidin Region - 6,800 Euro
• Montana Region - 4,900 Euro

The seven biggest cities in Bulgaria whose population exceeds 100,000 are as follows:

1. Sofia - 1,270,284 people - +16.4%
2. Plovdiv - 331,796 people - -1.9%
3. Varna - 330,486 people - +5.6%
4. Bourgas - 197,301 people - +2.6%
5. Rousse - 146,609 people - -9.2%
6. Stara Zagora - 136,363 people - -4.9%
7. Pleven - 106,011 people - -13%

Statistics shows that there is growth in population only in 3 of the big cities - Sofia, Varna and Bourgas while the population growth as a result of internal migration includes the regions of Plovdiv and Veliko Tarnovo. This means there is a more dynamic property market and higher prices in the cities of Sofia, Varna and Bourgas.

In all other regions of the country the population has decreased, as it has increased by as high as 20% in the regions of Vratsa, Vidin and Montana (northwestern Bulgaria). The share of property deals in these regional cities is between 1-3% of the total number of deals in the regional cities around the country and property prices there are among the lowest in Bulgaria - about 600-700 BGN/sq.m. (about 309-370 EUR/sq.m.) for apartments in these regional cities and 4,000-6,000 EUR on average for rural houses in these regions.

From the shown data of the growth in population, the volume of property deals and the average property prices the direct link between the growth in population, property prices and number of property deals is obvious. It can therefore be concluded that the demographic factors define the long-term trends on the Bulgarian property market. Even though the property market was strongly influenced by foreign demand and direct foreign investments during the mark-up phase of the market cycle, in the long run the demographic factors in Bulgaria are also defining of property prices and market trends.

Here we can conclude that in the next couple of years the main activity on the Bulgarian property market and the greatest potential for price growth will be focused on the regions with the biggest population and highest growth in population as a result of internal migration - the cities and the regions of Sofia, Varna, Plovdiv, Bourgas and Veliko Tarnovo.

The capital Sofia - the city with the biggest population and the biggest growth in population in the last 10 years - will maintain its leading role in defining market trends, it will have the biggest share in the number of deals and will maintain the highest property prices.


Author of the article - Polina Stoykova, Chief Operations Manager of BULGARIAN PROPERTIES