The real estate market for houses in residential complexes within the administrative boundaries of Sofia City and the surrounding areas has seen a significant increase in prices over the past few years. According to a recent analysis by Colliers for the first half of 2024, the average price of a newly built house in a residential complex in Sofia has risen by over 45% since the beginning of 2020.
The analysis reveals that a typical standalone house with a total built-up area of 370 sq. m, a yard of 580 sq. m, and 2.5 parking spaces now costs around €490,000 including VAT. On the other hand, semi-detached houses are priced at an average of €450,000, while regular houses are around €320,000.
The number of houses in residential complexes in the Sofia City region has reached 1700, spread across 112 residential projects. Interestingly, there has been a decrease in the average size of these houses, from approximately 435 sq. m in 2020 to 375 sq. m by mid-2024. This trend can be attributed to the increasing practice of relocating parking spaces outside the built-up area of the house and the growing popularity of the „vertical apartment“ concept, which features more compact rooms, reduced corridor space, and smaller yards.
Currently, there are over 1200 houses under active construction in more than 90 projects, with a third of them concentrated in the top five largest projects. Investors have shown a preference for locations such as the southern arc of the Ring Road, Bistritsa, Pancharevo, and Lozen. The number of transactions has averaged around 1200 per year since 2020.
The gross rental yield for a house in a complex is approximately 3.8% per year, making it an attractive option for investment. However, buying „off-plan“ and engaging in speculative resale at a higher price upon completion is the preferred investment strategy, according to Colliers.
Experts point out that construction costs have increased by 64% since 2020, and if this trend continues, construction companies may seek locations with cheaper land. The forecast suggests that property prices will continue to rise as the primary supply in this segment cannot meet the current demand.
In conclusion, the housing market in residential complexes within the Sofia City region is experiencing significant growth, with prices on the rise and demand outstripping supply. Investors are actively seeking opportunities in this sector, attracted by the potential for high returns and capital appreciation.