Property Market 2021 – the important news

Confirmed by you: The construction of the Golden Age skyscraper continues

Supreme Administrative Court (Supreme Administrative Court) confirmed the annulment of the decision to stop the construction of "Golden Age" in the sofia district "Lozenets"

After the state stopped construction two years ago for PR and advertising on the back of business and on absolutely populist grounds, the rule of law ultimately defeated the investment of the construction company, as well as the people who bought properties there... they won't go to waste. 

It is important to note that such repression of businesses for political advertising purposes, in order to satisfy legally unfounded requests of a group of people, end in court decisions in favor of investors, and the state (we taxpayers pay the bill) pays compensation for lost profits.

Also in such cases, no one thinks about the people who bought properties in these construction sites with their hard-to-earn money.... it is a misconception that people who buy property have made their money in an unfair way, but unfortunately the media often plant it.

The number of property transactions in Sofia in the first quarter for 2021 with a record since 2008 (13-year peak)

The first three months of 2021 were also strong for the markets in Plovdiv, Varna, Burgas, Stara Zagora and Ruse. 

In Sofia between January and March 2021 In addition, this is a record for the number of transactions concluded since the global financial crisis in 2008.

Even higher are the growths in Plovdiv 3644 property transactions in the first quarter of 2021, which is 34.1% more than the same period in 2020 and 21.3% more compared to the first quarter of 2019.  In fact, the number of transactions in the first quarter of 2021 is an absolute record since 2005 for Plovdiv, whose industrial zone attracts both investors and workers. 

In Varna in the period January-March 2021, 2578 property transactions were recorded – a record since 2008.

Property Market 2021

House prices in rich countries rise 

In the US, january's rise was 11% year-on-year, the fastest rise in 15 years. Since.

In the UK, house prices have risen by 8% in 2020, in Germany growth over the same period is 9%.

U.S. home prices rose 11 percent in January on an annual basis, the fastest pace in 15 years. Those in the UK rose by 8% last year and 9% in Germany. The model is visible in much of the rich world.

In Sofia, the growth is more conservative, the average price for the first quarter of 2020 was about 1100 EUR / m2, and for the same period of 2021 it was EUR 1150 / m2, which is an increase of 4.5%.

What is expected for the supply of the housing market in Sofia in 2021 ?

According to data of the NSI, in the first quarter of 2021 in Sofia were issued building permits for 229 residential buildings, with 2 920 residential units and 370 988 sq.m. m. built-up area. This is 16% more housing than in q1 2020.

This is a clear signal that confidence in the industry has returned after a significantdrop in the number of dwellings for which building permits were issued between January and September 2020 compared to the same period in 2019 (-37.5%).

It follows from these data that most buyers will continue to enter into transactions at the "under construction" stage due to the slowdown in the production of dwellings in Sofia in 2020, and the completed properties (with ACT 16) new construction will continue to maintain significantly higher prices due to the lack of sufficient supply.

Urban planning

Development of the northern regions and overcoming the imbalance between southern and northern Sofia – among the main tasks of the "Sofia Programme" for the absorption of EU funding in the 2021-2027 programming period.

"Program for Sofia" is the successor to the integrated plan for urban regeneration and development. More detailed information can be found on the company's website. 

In the following image taken from the GIS you can see a definition of priority micro-areas in Sofia that will benefit from EU funding. 

Priority impact zones under all objectives for the 2021-2027 programming period 

https://gis.sofproect.com/portal/apps/webappviewer/index.html?id=7458e84c5835445eabea730cadbc08ac

Property Market 2021

The construction industry: inflation is already here

For the past 6 months there has been a serious appreciation for basic raw materials such as steel, aluminum, copper, timber and CO2 quotas.

The invisible factor besides inflation caused by the printing of unprecedented amounts of money, which will become more visible is the record appreciation of CO2 allowances, which are paid by both energy companies and manufacturers of building materials and other companies along the chain. In a month, CO2 emission allowance prices broke records, reaching their historic highest level so far of €45.76 per tonne on April 21. 

The latest "green tax" will play an increasingly serious role in pricing. This is a typical example of a "political solution" to such an important problem.... because scientists clearly show that even with a complete cessation of co2 (carbon dioxide) discharge into the atmosphere, the problem will not be solved because carbon dioxide (CO2) has been accumulating in the atmosphere since the beginning of the industrial revolution. The solution is different and much simpler, it was presented by the Minister of Agriculture of France at the Forum on Climate Change in Paris 2014, among other politically meaningless speeches – industrial agriculture must change, because the conversion of forests into agricultural land, the stripping of soil from vegetation for most of the year, the exhaustion of the soil, the chemical treatment caused by this exhaustion.... All this leads to the release of more CO2 from the soil into the atmosphere, and in fact it must be the opposite, namely plants, by photosynthesis to capture CO2 from the atmosphere and bring it into the soil that needs it and store it. but.... this is another topic for which you can find more information on the Internet. 

Here is what inflation in the prices of basic building materials looks like:Property Market 2021

Warehouses displace malls

The logistics giants are responding to higher demand due to the boom in digital trading during the pandemic. 

According to JLL data, in 2020  growth in the busy logistics space is as follows: + 16% in Europe, 21% in the US and 32% in Asia. 

25% of rents concluded in 2020 in Western countries are related to online commerce, JLL estimates, compared with 12% in 2019. 

JLL estimates that investment in logistics assets has risen from 10% in 2015 to 20% in 2020 (or a 100% increase) from all property investments. In 2020 Amazon has increased its logistics and warehouse network by an unprecedented 50%.

However, the place for warehouses around the major cities is decreasing ...

London lost 11% of its industrial land between 2006 and 2015. 

All this clearly shows us that the industrial parks in Bulgaria are a good idea for investment. 

Prologis expects rents of logistics properties and warehouses to increase by 6% globally during the year. Bad news for traders, but very good for investors.

More on the topic:

  • DHL's cargo division is building a new base for $9 million. Lv. to the airport.
  • The logistics base of DSV in Sofia was sold for over 18 million euros. Lv. And hired back at a yield of about 8% a year.
  • The company, which operates the logistics park near Elin Pelin station, reported revenues of nearly $23 million for 2019. Lv. mainly from the sale of parcels – 7 times more than the previous year. 

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