The luxury real estate market in 2023 in Sofia

Every second transaction has been made without a price discount, Unique Estates data show;
Redirecting buyers’ interest – from houses to large multi-bedroom apartments;
Rental prices in Sofia has increased by 5%;
Interest in new construction properties has increased.

Overview

In 2023, the luxury property market in Sofia saw significantly higher demand compared to the previous year. This was driven by forecasts of rising property prices and still low interest rates on mortgage loans. Between 5% and 10% growth in the prices of high-end apartments and 23% growth in the average one, this was reported by the analysis of Unique Estates, a luxury real estate company, part of the Realto Group.

The buyers’ interest was focused both on high-end housing in well-maintained buildings in the central part of the city and on properties under construction in neighborhoods close to the center – these areas have seen increased new construction in recent years.

And in 2023, customers looking for more space were focused on houses in the areas of the Vitosha collar. Others preferred to buy a penthouse in newly built buildings with well-arranged infrastructure and high-end living environment.

Supply and demand

The market of luxury apartments and houses in Sofia saw a significant growth in transactions in 2023. The number of purchases with an absolute value over EUR 600 000 also increased – compared to 2022, the company reported 50% more sales in this price segment. This was due to the relatively low growth in the prices of these properties.

“In 2023, trophy homes, which come on the market extremely rarely and at the same time retain the value of money, were actively traded. Luxury properties are an extremely safe asset – they are the most resistant to market turbulence and always increase their price in the long term. This makes them a preferred investment of funds in conditions of general uncertainty and inflation. In 2023, we also noticed another trend – investment properties in the high segment were not offered on the rental market, but after a certain period of time they appeared for sale again in order to make a bigger profit”, commented Vesela Ilieva, Executive Director of Unique Estates.

The limited supply in the most desirable areas of Sofia city will be a prerequisite for further price increase in the coming months, the company commented. The share of transactions with housing under construction continues to rise. This is a reason for the increased interest and transactions in neighborhoods with active construction – Vazrazhdane, Krastova Vada and Manastirski Livadi.

The market is also very attractive in traditionally attractive areas such as Lozenets, Iztok, Izgrev and the central part of the city. The Doctor’s Garden remains one of the most expensive areas in Sofia city along with other iconic locations such as the area around Alexander Nevsky Cathedral and the National Assembly.

In 2023, the house market expanded its scope – supply in the areas located along the Vitosha collar was unable to satisfy the extremely active demand there. This was a prerequisite to increase the areas with an active house market – Pancharevo, Kambanite, Malinova Dolina as well as the village of Lozen and the area of Bozhurishte are preferred by the clients of Unique Estates.

Another trend reported by Unique Estates was redirecting the interest of clients looking for a larger space to the purchase of a larger apartment. In 2023, a modern, luxuriously furnished apartment with two and three bedrooms, on the top floor, was easier to sell than a house requiring an additional serious investment for renovation, furnishing and, last but not least, significant maintenance costs.

Investment properties were offered for sale

In 2023, investment properties bought about 10 years ago for the purpose of renting out appeared on the market for sale. During the period completed, ready-to-let apartments were also traded. Quality investment properties with a good location and maintained common areas, as well as with established profitability, were realized within 1 to 2 months.

Price dynamics

The active housing market in the post-pandemic years, the rising costs of labor and building materials, the rising inflation led to a significant rise in property prices. In 2023, this trend was maintained in the average price class properties. In the high segment, the price increase was within the usual increase - between 5 and 10%.

According to data from Unique Estates, the average price of an apartment in Sofia has reached just over 2500 EUR/sq.m. at around 2200 EUR/sq.m. a year earlier. In the high-end housing, the price was around 3,500 EUR/sq.m., and in the emblematic locations in Sofia the transactions were carried out at twice higher prices.

Neighborhood	2021	2022	2023	Change
Center	2362	3078	3533	+14.7%
Boyana	1536	2192	2232	+2%
Vitosha	1364	1712	1893	+10.5%
Doctor’s Garden	3143	4217	4688	+11%
Iztok	1515	2485	3030	+22%
Krastova Vada	1511	2094	2129	+1.6%
Lozenets	2461	2847	3543	+24%
Manastirski Livadi	1597	1858	2149	+15.7%
Average price	1999	2238	2544	+13.6%

Source: Unique Estates

In 2023, the highest prices were achieved in the area of Alexander Nevsky Cathedral, with the location being the determining factor, regardless of the condition of the property. In this part of the city, a finished and luxuriously furnished apartment can reach a sale price of over 7,000 EUR/sq.m. It is in this area that the most expensive transactions were made in 2023.

The most expensive detached house sold is located in the central part of the city, in the area of the Vasil Levski monument. In the same area is also the most expensive detached office building sold, with an area of 1700 sq.m. Both properties, after having been renovated within three years, were sold again, fulfilling their investment purpose when originally purchased.

The highest price per square meter for a plot of land – 850 EUR/sq.m., was achieved for a property with a small area intended for residential construction in the area of Boyana. The highest sale price was given for a plot of land with an area of 4 decares, located in the area of Sofia Airport.

Throughout the past year, the active demand for high-end housing was accompanied by less pressure on offer prices. If in 2021 and 2022 about 30% of the transactions were concluded without comment, then in 2023 their share was 50%. In 15% of the cases, the sale price was even higher than the originally announced.

Average discount from the offer price

	Apartment	House
2019	-7%	-11%
2020	-10%	-12%
2021	-6%	-7%
2022	-6%	-10%
2023	-6%	-8%

New construction

Interest in new construction is also a current trend in the high-end housing market. In 2023, Unique Estates registered a growth of 15% more inquiries for new projects compared to the previous year 2022. Most attractive for buyers are closed complexes with overall maintenance and high-quality, luxurious execution. Customers are interested in smart buildings with functional and modern furnishings in common spaces and apartments with high ceilings, lots of light and innovative interiors.

Loans and interest

In 2023 also, about 50% of the housing transactions in our country were concluded with a loan, and in the luxury segment their share was 40%. The external financing used by buyers of high-end apartments and houses was about 70% of the transaction value.

“In early 2024 we faced a new drop in interest rates against the background of drastic growth in Europe. Our clients are traditionally people with a good financial culture and prefer to buy with a mortgage loan, as they are aware that money in our country is currently very accessible. And although the banks in Bulgaria slightly tightened their lending criteria, the loans they grant are larger. I think that we should be prepared for different scenarios and follow the course that the European Central Bank will take”, said Vesela Ilieva.

Rentals

The rental market in the capital is active again. After the slowdown of interest at the beginning of 2023, from the second half of the year a steadily increasing demand is reported. It is the result of the growth in the sale prices of housing and the expectations for a rise in interest rates.

At the same time, the supply is failing to meet the demand in this market as well, Unique Estates said. The deficit of nice houses and apartments at levels of EUR 1,200-1,500, together with the growth of rental levels, opens up the opportunity to redirect part of the clients to the new construction market.

In the last months of the year, the active tenants are mostly Bulgarians, since the relocation of personnel from abroad usually takes place in the period from March to September. The main market activity during the year was at levels between EUR 800 and 1300, Unique Estates said.

The rental levels have increased by 5% since the beginning of the year. The continuing trend of deficit in the supply of houses for rent, as well as high-end furnished three-bedroom apartments, in the presence of constant demand, is a prerequisite to increase the rental prices of such properties in the coming months.