Industry Watch: value of Bulgarian property likely to drop by a further 10%
Real estate values are likely to drop by another 10 per cent from current levels due to the weak influx of foreign capital and the delay of bank credit in Bulgaria, Industry Watch said, quoted by Stroitelstvo Gradut weekly.
Real estate in 28 of the largest cities and towns in Bulgaria indicates an average devaluation of about 28 per cent in the third quarter of 2009 as opposed to figures from last year, the National Statistics Institute (NSI) has indicated. From Industry Watch, the estimation is that this is equivalent to a six billion leva loss sustained by all property owners in the country.
Their loss is likely to hit harder because fuel and electricity prices are rising whereas direct foreign investment is lacking.
"Bulgaria is poor in locally generated capital, and most major projects here were financed by foreign capital investments," Luchezar Bogdanov, managing partner in Industry Watch, said, as quoted by Stroitelstvo Gradut on December 14 2009.
"Readily available cash on the Bulgarian market continues to shrink and while this continues, there will be little opportunity for flexibility on the market," Bogdanov said.
For the period 2006-2008, foreign investment in Bulgarian real estate accounted for more than two billion euro, while in the preceding three years it was about 300 million a year, before the global economic downturn eventually constricted the flow of cash.
Meanwhile, Tatyana Emilova, from consulting firm Colliers International, says that there is some movement in Sofia's market and that banking transactions have become more frequent. "There are more inquiries being made as well as more deals being completed," she said.
Tsvetelina Tasseva, from Address Real Estate, also said that there is greater activity from potential customers aggressively pursuing deals, but, overall, this would not offset the downward trend, at least for the moment. She says that the overall decrease in transactions for 2009 will amount to about 35 per cent as opposed to 2008 figures, implying that prices could slide further down, although the "bottom has almost been reached".
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.
Simultaneously, purchase in all kinds of real estate in Bulgaria's four largest cities decreased by nearly 50 per cent in the first six months of 2009, down to 20 500, Stroitelstvo Gradut weekly said.
On December 10 2009, real estate consultants Knight Frank said that Bulgaria (at a 28 per cent decline) ranks in the top four countries across 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 per cent in the third quarter, but still not enough to rival Dubai, where the slump in the local market has reached 47 per cent.
Text source: sofiaecho.com
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