Real estate in Sofia

 

Sofia is the largest market for modern office and retail spaces in Bulgaria. The volume of the industrial and logistic spaces is growing in line with the overall economic growth of the city. The supply of housing in Sofia is also on the rise.

Office and Industrial Spaces in Sofia

Class A and Class B offices 1.9 - 2 M m2

Class A and Class B offices

prime yield 7.50 %

Prime yield

Office inventory under construction 400 - 450 K m2

Office inventory under construction

Office space rent price 8 - 15 €/m2

Office space rent price - the lowest in CEE

1.1 - 1.2 M m2

Modern warehouse and logistic spaces

8.5 %

Prime yield

200,000 m2

Industrial and logistic spaces under construction

2.7 - 4.4 €/m2

Warehouse and logistic spaces rent price

Data provided by leading real estate agencies

Residential Estate Market Overview

The market for residential real estate remains very dynamic. Residential estate prices in Sofia grew on average by 8.8% in 2018.

Single-family as well as multi-unit houses are recognized as a viable investment. One of the reasons is that the 8.8% growth in prices in 2018 was 3 times the inflation rate in Bulgaria. Furthermore, 20% of purchases at the moment are made for investment purposes, whereas, several years ago only 5% of buyers had investment intentions. Residential estate investments provide 4-5% yield rate on average. However, studio apartments can reach a 7.5% return. In 2018, the regulators issued 69% more residential construction permits than in 2017, or 14 761 permits in total.

41% of buyers in 2018 acquired two-bedroom apartments. The prices in December 2018 started from 700 €/sq.m. in the boroughs Lyulin and Svoboda and reached 1 400 €/sq.m. in the City Centre and the neighborhoods Ivan Vazov, Lozenets, and Iztok. Most new residential dwellings in the last two decades were built in the Southern parts of Sofia. The city government is currently developing a strategy for the development of the Northern boroughs.

Source: Address Real Estate

Sales and Mortgages for Residential 

There were 28323 deals in 2018 in Sofia. Previously, there were 28175 deals in 2017, 26480 transactions in 2016, 24379 deals in 2015 and 20863 in 2014. Despite the significant growth in the number of deals, the market still lags behind its peak prior the Economic crisis. In 2007 there we 45015 purchases. The main  difference is that back then foreign investors gave a significant push to the market, whereas currently almost all buyers are Bulgarian.

The number of mortgage contracts continued to grow in 2018. Still, the market is stable. Pre-crisis crediting grew by 20% on an yearly basis, while the current increase is much lower. Mortgage interest rates in 2018 range from 2.9 to 6%. Buyers pay a substantial part of the listing’s price with their savings. In 2018, only 18% of mortgages covered more than 80% of the estate’s price.

In Sofia, 17941 dwellings were bought using mortgage loans in 2018. Previously, there were 18134 loans in 2017, 14209 transactions in 2016, 11497 loans in 2015 and 8641 in 2014. Pre-crisis levels remain higher with 21924 mortgage contracts signed in 2007.

Source: Registry Agency

High-end  Housing in Sofia

High-end housing in Sofia consisted of 8 870 units as of 2018. The demand for these is still very high and 30% of the purchases are made for investment purposes. In 2013, the average negotiated reduction of the listed price was 11%, while in 2018 the market saw discounts around 2%. 60% of all deals were made before the housing was completed. As of December 2018, 7% of the high-end listings were unoccupied. Two-bedroom high-class apartments range from €145 000 to €180 000, while renting them costs between €950 and €1200 per month. Prices are expected to remain stable.

Source: Colliers International

Residential Prices Development in Bulgaria compared to EU-28

Business Zones in Sofia

1. Todor Alexandrov blvd

2. Central Business Zone

3. Sofia Square Zone

4. Hladilnika Zone

5. Sofia Tech Park Zone

6. Capital Fort Zone

7. Grand Kanyon Zone

8. Business Park Sofia

9. Bulgaria blvd

10. Sofia Airport Zone

Co-working Spaces

Sofia has over 25 tech, art, social and other co-working spaces. With 2% of Sofia’s office stock leased by co-working operators, the city is in Europe’s TOP 5 after Amsterdam, London & Stockholm.

The first science and technology park in Bulgaria is also in Sofia. Sofia Tech Park supports R&D, innovations and the increase of Bulgaria’s technological potential. It provides selected technological companies with office space and 11 high-tech labs.

Some of the newly opened co-working spaces in 2019 include Missia 23, The Cooffice, Worky, This Way, Networking Premium Vitosha, Networking Premium Botev, and Networking Premium Rakovski.

Co-working Spaces

Industrial Zones in Sofia

Sofia-Bozhurishte Economic Zone is run by National Company Industrial Zones. The zone is located 15 km from the city center and 23 km from Sofia Airport. Its total area is 3 038 527 sq.m. 27 Bulgarian and foreign companies already chose the economic zones near Sofia. Among those are the names of JYSK, BHTC, Multivac, Reisswolf. 

Other major industrial and logistics areas are also marked on the map. They are concentrated in the western and northern parts of the city.

Source: Cushman & Wakefield Forton, NCIZ

Source: Doing Business 2019, World Bank

Construction Permits

According to a report by the World Bank, completing the construction permitting process for a simple warehouse in Sofia, including connecting it to water and sewerage, requires 18 procedures.

Among Bulgarian cities, Sofia has the easiest and fastest construction permitting process, taking 97 days with a fast-track option at an additional fee for several municipal services. The OECD average for permitting is 153 days. The building quality control index for Bulgaria is 14 (out of 15).

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