Despite the crisis that hit the real estate market the worst, deals worth millions of US dollars were concluded in 2011. While the world was bracing for a second wave of recession, the Russians made a few world records on the real estate market. The most expensive estates sold out in 2011 were in the United States, and the fiercest buyers were the Russian oligarchs. Thus, first in the Top 10 of the most expensive deals was Russian billionaire Yuri Milner, who purchased an estate in the Silicon Valley for the record sum of USD 100 million. The most attractive deal on the real estate market in 2011 was the purchase of the 300-year-old palace Park Place located near London that even has its own ghost. Another interesting deal was the sale of the Jamesburg space station that transmitted one of the first images from the Moon.
In Bulgaria, on the other hand, there has been little interest in purchasing real estate on the part of the key players on this market. The biggest deal was the sale of the Mall of Sofia, which changed hands for the second time. According to the official information, it was sold to the Rockefeller Group for EUR 100 million. The investment market in Bulgaria in 2011 amounted to nearly EUR 200 million, with the deal on Mall of Sofia accounting for half of it. However, compared to previous years, this is a sign that investors have demonstrated an interest in real estate deals. The new players on this market are the banks. They began selling the mortgaged property of bankrupt companies. And a third player entered the real estate market, the National Revenue Agency, which promised five times cheaper deals than the free market.
Another important trend on the Bulgarian real estate market is its stratification. The real estate agents recorded a boom in the purchase of luxury condominiums in the centre of the capital city along Oborishte and Shipka street, where prices went up by nearly 4%. At the same time the largest number of customers is interested in buying flats in more remote residential areas with good infrastructure, where not only demand, but supply is also greater.
The Bulgarians started withdrawing their savings from the banks and investing them in real estate. And that is the hit on the market these days. What are the reasons? The fear of the future of the euro, the anticipated high inflation rate, the unstable situation in many European countries? The Bulgarians have a huge amount of savings in the banks that reached the record high of BGN 30 billion. According to data of the Bulgarian National Bank, together with the citizens’ deposits and the corporate business money the sum exceeds BGN 58 billion. Despite the good revenues from bank deposits, the Bulgarians started redirecting the free capital to the real estate market. Genuinely worried by the situation within the European Union and the collapse of certain currencies, the conservatism of the Bulgarians reigned supreme once again. And they resorted once more to the old-fashioned purchase of real estate. This trend is new, but should not be underestimated, because according to data of various agencies, the share of such transfers has reached nearly 20% of the current deals. And what is more, this is a safe haven for the Bulgarians nowadays. And it is certainly a national trait, because 70% of the total wealth of the Bulgarians are due to housing property.
The interest of the major investors in profitable real estate is also rekindled by the conditions on the Bulgarian market. The crisis has led to the lowering of the price of real estates, and the offers become ever more appealing now that the interest rates on credits have become acceptable to the Bulgarian market. The latest ranking done by the British Daily Telegraph reads that the revenue from the renting of business property is what attracts foreign investors to Bulgaria. Thus, Sofia climbed to the prestigious 17th place well in advance of one of the most coveted cities in the world, Paris.
English version by Radostin Zhelev
