Sofia Property

Sofia is a dominant city and the strongest economic centre in Bulgaria. It has the highest wages, the lowest unemployment and the highest FDI inflow. All foreign companies operating in the country have their head offices in Sofia.

Well-paid jobs create a sophisticated middle class in the city. The aspirational middle class is crucial for the property market - this group consists of the largest number of potential buyers.

SOFIA PROPERTY SUPPLY VERSUS DEMAND

The total housing stock in Sofia is around 526,000 units and is increasing steady on yearly basis.

Most of the new supply is located in the southern parts of the city - in districts like Vitosha, Manastirski Livadi and Gotsche Delchev. Simply, there's plenty of building plots available.

Currently, the demand can't be met by the supply.

The demand comes mainly from middle-class people, who want to increase their standard of living and can afford a mortgage. There are few signs of local speculators - a sign the market is healthy.

SOFIA PROPERTY PRICE GROWTH

According to the official statistics, secondary property prices in the capital city increased by 35% between 2006 and 2007. Varna noticed similar growth of 33.9%.

Strong capital growth is another sign the market is at the beginning of the emerging stage of development.

New buildings in Sofia increased by 25% in the same period. An interesting fact is that old constructions are sold at higher prices than off-plan properties. The difference is around 10% and is a result of better location and more developed transport links in older residential zones.

New builds are being built mainly in suburban parts of Sofia.

However, in the case of Sofia - a city that doesn't have a strict city centre, the city is developing from the outside in. That's why new, developing districts with all facilities are the best investment locations.

SOFIA DEMOGRAPHICS

There are a number of demographic factors that put Sofia in pole position for the investor.

The fluctuation in a city's population and its future population prospects are two essential considerations.

Many countries in the CEE are experiencing a combination of falling birth rates and large-scale emigration. The reason for the emigration is overwhelmingly economic - the search for better paid jobs in other, richer countries.

While this can be viewed as a brain drain problem, it can also benefit large cities that offer, on a smaller scale (but with easier access), the same prospects of better pay and a better future as would migrating to the UK or Eire.

Another benefit is that many migrants who go overseas - although by no means all - will either return eventually (with their money), or invest back home. This is especially significant for property investors because the number one investment choice for an émigré is usually property.

Currently, Sofia is relatively small capital city with a population of just over one million in a relatively small country. Nevertheless, it is a very dominant capital city representing some 16% of the country's population.

Official figures are, of course, somewhat unreliable as huge numbers of migrants remain uncaptured by the statistics. So, it is real growth rate is likely to be far higher than this.

Various forecasts have been made about the rate of increase of Sofia's population from the conservative to the numbers that will double its population wihtin 10 years. All we can be very confident of is that its population will grow rapidly and fairly dramatically as a result of inward migration.

To estimate Sofia's potential to attract far greater numbers over the long term - and therefore increase demand for housing - we can look at the economic advantage it offers.

In Sofia's case this economic advantage is huge.

Sofia's salary levels represent more than two and a half times the country's average - plenty of incentive then to go to the capital and find a job.

This level is well above the norm in CEE countries - where perhaps 40 to 50% more than the country average is standard.

Sofia property is really the only consideration for investors looking at Bulgaria right now, offering strong capital growth and excellent fundamentals for years to come.