Unique Estates for the property market in 2023

BALANCED SUPPLY AND SENSIBLE BUYERS

The decline in transactions in the capital is already 15% on an annual basis
Expected annual price growth of up to 5% in Sofia, depending on the type of housing and the area
A serious increase in the number of tenants, the prices of rental housing are rising
Inquiries are down by 30%, but buyers are aware and motivated

The activity of the market in Sofia at the beginning of 2023 is marked by a slowdown, which is most visible in the number of inquiries from buyers. According to aggregated data of all agencies, part of the Realto Group, the drop in inquiries is more than 30%, but in actual deals it is only 15%, because buyers are more motivated, reports the luxury real estate company Unique Estates.

"After stagnation at the beginning of the year, in the second quarter prices started to rise smoothly again. Buyers' behavior has also changed, as the overall rate of increase is commensurate with inflation," commented Vesela Ilieva, managing partner of Unique Estates.

Another change that is clearly visible in the market in April and May is related to mortgage loans. After more tension from the first months of 2023, buyers are currently more prudent than worried. This is also seen in the share of credit transactions, which for the first five months of the year are 55% of all.

In the luxury segment in 2023 dream trophy properties and those that can retain value for money are trading. Traditionally, the luxury segment is significantly less affected by economic changes. Therefore, neither the growths nor the declines are record-breaking.

Prices by districts /Sofia/

The growth of prices in individual districts of the capital is visibly different – a trend that deepens over time. On average, prices have increased by no more than 100 euros per sq. m., and the changes are within the statistical error.

In neighborhoods where there is no new construction, for transactions on the secondary market, the growth is quite small. It is more significant in the new districts, where the snowball principle is triggered - new projects of higher quality appear, they attract interest to the area, and the interest leads to an increase in prices. This growth has a direct relationship with the construction stage of the project – prices increase as it gets closer to a permit for use, regardless of external factors.

Prices of transactions for sale /price/ sq.m/
	2021	2022		Amendment
Downtown	2362	2817	2890	2,59%
Boyana	1536	2036	2050	0,69%
Vitosha	1364	1830	1800	-1,64%
Doctor's garden	3143	3986	3950	-0,90%
Iztok	1515	2124	2150	1,22%
Krustova vada	1511	1980	1960	-1,01%
Lozenets	2461	2920	2900	-0,68%
Manastirski livadi	1597	1898	1900	0,11%
Average price	1999	2449	2450	0,04%

according to data from Unique Estates

Rentals

The rental market in the capital is in an improving phase - a trend that has been visible since the beginning of 2023. It has not only recovered to pre-crisis levels, but is also showing extraordinary interest. One of the reasons is the rise in property prices in line with the expectation of rising interest rates. The rise in apartment rental levels is over 10% since the beginning of the year. So they are actually outpacing inflation, but despite the high prices, demand exceeds supply. Limited housing supply and low unemployment rates are reasons to expect growth in the coming months.

There is renewed interest from investors in buying buildings for management purposes. New projects are mainly being selected where a combination of short and long term landlords can achieve rental yields between 3 and 5%.

"This segment will continue to grow. At Unique Estates, most of our clients in this segment are Bulgarians living abroad who trust us to manage their properties on a long-term basis," says Vesela Ilieva.

Discounts

For the first time we have over 50% of transactions with negotiated discounts and a 15% increase in exclusive sales contracts, which is further proof that sellers do not expect the deal to happen easily and quickly. Properties that are listed at market price sell within 3 months and those at a higher price in over half a year. Discounts are up to 5% of the originally listed price.

Credits

Half of the transactions on the market continue to be concluded with available funds, according to aggregated data from Realto Group agencies. On average, 54% of all purchases since the beginning of the year have been with external financing. Loan amounts are increasing as a result of higher property price levels. The pace of interest rate increases in the country has been significantly slower than expected, which is a prerequisite for maintaining demand levels. The size of the average loan is reporting growth of around 20% year-on-year in 2022. The average deductible is around 30% of the home value.

In the luxury segment, 65% are privately funded.

New construction

In the second half of 2022, project phase transactions stopped. Towards the end of the year, mainly pre- and Act 14 homes started to be sold. In 2023, the positive trend is that properties in the initial stage - with building permit - are also being considered and purchased.

"New build is attracting with flexible schemes - 10% on retention and 90% on transfer. We have had a 3% increase in planning permissions year on year. This shows the stability of the market - balanced supply and reasonable deals," said Vesela Ilieva, who also manages the new construction company New Estates.

Unique Estates specializes in luxury property transactions - an exclusive partner of Luxury Portfolio International. It serves clients in the premium and corporate segment, representatives of diplomatic missions, expats - offering properties in Bulgaria and selected global destinations.

New Estates is a company specializing in the sale of new-build residential properties, complete implementation of exclusive projects, consulting services and market analysis in the field of investment projects.

Realto Group holding companies generate the largest volume of residential property transactions in Bulgaria and develop the largest network of consultants - professionals in the sale of new construction and secondary market. Our team consists of nearly 900 professionals. The companies in the group operate throughout the country.