The capital of Bulgaria, Sofia, is an attractive real estate investment destination in the European Union. This article discusses three reasons for investing in real estate in Sofia, namely, (i) the high return on investment rate, (ii) the steady increase of the prices of real estate, and (iii) the high demand for rental properties.
The high return on investment rate
The return on investment rate in respect to real estate in Sofia is up to 4,2% higher than the rate in other European cities. For example, one can purchase four two-bedroom apartments in Sofia at the price of one such apartment in Berlin or Munich and, if rented, those four two-bedroom apartments will pay back the investment in them two times faster than the single apartment.
The steady increase of the prices of real estate
The prices of properties in Sofia have been steadily increasing since 2010. In 2017, the prices of properties in Sofia rose by nearly 10%, which made them the fastest growing real estate prices in the European Union. The main reason for the increase is the income growth in Bulgaria. To illustrate, the average salary in Bulgaria in January 2018 was BGN 1075, whereas the average salary in December 2018 was BGN 1205. The average salary in 2016 was about BGN 900 and in 2014 less than BGN 800. It is expected that in 2019 the prices of properties in Sofia will continue to increase.
The high demand for rental properties
The real estate market in Sofia is very dynamic and there is a constant demand for rental properties. For example, in 2018, only 9% of the offices in Sofia were empty and the prognosis for 2019 is that the number of empty offices will decrease further. 9% is the lowest number compared with the numbers for the previous ten years. The decrease of the supply of office spaces will likely increase the demand for them as well as their rental prices.
In addition to offices, the demand for commercial spaces in shopping malls in Sofia also increases. In 2018, 9% of the commercial spaces in shopping malls were empty, but the arrival of new brands in Sofia (e.g., The Body Shop) may lead to a further decrease in their number.