Real Estate Is the Fastest Developing Sector In Bulgaria

 Real Estate Is the Fastest Developing Sector In Bulgaria

The real estate market is the fastest developing sector in Bulgaria. This was stated at the Balkan Real Estate Conference held today in Sofia. The real estate sector is generating around 10% of the country’s GDP said Martin Gikov, real estate director in UniCredit Bulbank. In 2006 the sector attracted about one third of the foreign investments in the country which is almost double the amount a year ago.

Globalization in the sector has favored the development of the real estate market in the country, which has recently attracted a lot of attention from individual and institutional investors.

Another tendency pointed out in the presentations was the fast development of the construction sector and the increasing construction costs which are threatening profitability.

At the same time Mr. Gikov emphasized on facts as the increasing transparency of real estate deals and the lower risks in the sector.

While methods for financing construction projects are increasing in number there is a lack of suitable and attractive sites which brought to the increase in the prices of land parcels in the country.

A total of 60% of the approved construction projects are in the residential sector and the percentage is likely to remain unchanged this year.

Foreign investors are involved in 30% of real estate deals. Investors are avoiding the densely built residential regions and prefer areas near golf courses and SPA centers.

Interest in properties in the biggest cities is continuing to grow mainly due to the migration of people from smaller cities to bigger cities.

These factors have contributed to the 20% increase in home prices last year and the 10% rise since the beginning of this year. Rents in big cities are stable.

Investors are choosing the projects to finance considering a few key factors as good location, good communications and infrastructure, originality of the project and the design and avoiding densely built residential areas.

As far as office investment is concerned presenters pointed out that demand for class A offices and class B offices will continue to increase and the companies mainly looking for such are businesses from the IT sector, the insurance, financial and pharmaceutical sectors.

As far as commercial areas are concerned it was pointed out that there is significant pressure on rents of properties in the main commercial streets and areas of big cities as a result of the growing number of big commercial centers.

The main factor for the success of a commercial center is to be situated in an area with a population of at least 140 000 people. Foreign investment in such type of centers is increasing.

Logistics centers are mainly concentrated in Sofia, Varna and Plovdiv. The sector is less developed than the above mentioned although foreign investors are showing a lot of interest in it as well.

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