Bulgaria's Real Estate Market in 2021 and Forecasts for 2022

2021 - the best year for Bulgaria's real estate market in terms of transaction volume

2021 was one of the strongest years for the real estate market in the last 10 years. We witnessed an extraordinarily dynamic and successful 2021, with registered transaction levels not seen since 2008. Activity, measured by the number of concluded real estate deals in Bulgaria, is growing by roughly 20% per year.

We are observing a recovery across all market segments, even those hardest hit by the pandemic, an acceleration in price growth, and record trading volumes. Demand significantly outstrips supply, which is leading to a depletion of available listings, a shortage of properties for sale, and a limited choice for buyers on the market.

The trends that began in 2020 unfolded in 2021, the housing market continued to attract buyers looking to purchase for their own use and to live in better-quality conditions, in more spacious and light-filled homes. This shaped the continuing demand for more spacious apartments, and new-build properties remained the most preferred. This group of buyers was joined by those wishing to invest in real estate for investment purposes. This was driven by rising inflation, negative interest rates and high bank fees, as well as general political and economic uncertainty. All of this led to an intense and at times even euphoric housing market. 

Historically, the lowest mortgage interest rates and the increase in retail deposits, along with the introduction of «negative» interest rates on deposits above a certain amount, are among the main factors prompting buyers to make quick decisions to purchase a new home.

Investing in real estate is the most familiar and safest way of storing our assets, in contrast to cryptocurrencies, shares, precious metals and so on.

Buyers are well-informed and look for discounts, but sellers see the market dynamics and prefer to wait before making adjustments to their offer.

The buyer profile is becoming ever more affluent, and at the moment the market is more clearly positioned towards people over 50 who have lived through the devaluation of money. They prefer to place their bets on real estate as the surest step they know.

The largest share of sales is for one-bedroom apartments – nearly 45%. They are ahead of two-bedroom homes by almost 10%.

In 2021, investment deals approached a share of almost 30%. No lasting changes have been noticed in buyers' attitudes towards the most desirable property. Homes with a spacious living room next to a park and with a larger number of rooms remain attractive.

At present, the number of concluded rental deals in the major cities is more than 30% higher than last year. The pandemic forced some landlords, who were offering their properties at above-market prices, to bring them into line with current levels.

Covid-19 also set a new lifestyle trend — replacing small homes with larger ones, with more greenery or more spacious terraces. Two years ago, one of the hardest homes to sell was a ground floor with a yard; today they are among the first to be bought. Many people have started looking for refuge from the city in country-house areas or in resort properties. On the Black Sea coast we are recording record transaction volumes, reaching almost 100% growth compared with last year.

The migration of many businesses from office buildings to home offices has also driven up demand for apartments with the best characteristics on the residential real estate market. This has also had a negative impact on the office space market, which is still recovering from the effects of Covid-19.

Bulgaria's real estate market in 2022 – what's happening and what the forecasts are

Forecasts for 2022 on the real estate market are very difficult to give, in view of what is happening in the world, but in the first quarter of the first half of the year interest in acquiring property continues to grow. Fear for one's health, fear for the survival of one's business, fear of inflation, fear of the rising cost of building materials, fear of rising property prices. All of this leads to haste, crowds of people and a mild, unconscious panic — mainly among buyers. The exceptional draft we have observed over the past year has constantly pushed property prices upwards.

Three main factors need to be watched

• First, how mortgage interest rates will move. In all likelihood, the ECB will not risk the economy and raise them; on the contrary – a further decline is possible, which is a key precondition for an active housing market. 
• The second factor is consumer savings — in 2021 their growth led to the smallest share of mortgages in the number of transactions in the last 5 years. This factor still has room to play out, and in 2022 the money people have set aside will continue to be invested in real estate. 
• The third factor is rising inflation and the fear of money devaluation, which remains relevant for 2022. This will likely be reflected in growing market activity and a stable price level with the potential for moderate growth.

Which properties are the most in demand on Bulgaria's market in 2022

The largest share of sales is for one-bedroom apartments/studios – such properties account for almost 45% of all transactions. They are ahead of three-room apartments by nearly 10%, which can partly be explained by the demand for a larger number of investment purchases. Typically, around 20% of properties are bought for this purpose — at least this was the picture in 2021. However, in 2022 the share of investment deals approached almost 30%.

Clients buying for their own residence prefer new builds, apartments with more amenities of the same or slightly larger area, in view of the need for personal space for all family members.

Among the most sought-after resorts/cities on the coast:

Balchik, Saint Constantine and Helena resort, Varna, Sveti Vlas, Sunny Beach resort, Nessebar, Ravda village, Pomorie, Burgas, Sozopol  with the largest number of transactions in 2021/2022. 

We, as a company, are interested in a strong market, high prices and a large number of transactions; first and foremost, we are interested in the market having stability, predictability and logic.

The main rule in business is that it is not the big who succeed, but the fast and the adaptable. The last two years have confirmed this not only on the real estate market.