Sofia’s investment ‘master-plan’

A new ‘master-plan’ to find housing plots in the Bulgarian capital of Sofia represents a golden opportunity for investors looking to cash in on the city’s predicted 25% growth in 2008...

This huge growth is being driven by an unmet demand for new homes from a growing population of more than 1.2million people, who enjoy average salaries up to 2.5 times the national average.

Petar Dikov, Sofia's chief architect, faced a challenge creating the new master plan for the city, which is the most densely populated and built-up area in Bulgaria.

A lack of available construction sites in the city has forced planners to earmark almost every free stretch of land, within the city’s boundaries, for construction.

Pressure for urbanisation

Pressure for further urbanisation of the Sofia region is very strong. That is mirrored by the new plan, which is focused on expanding into suburban villages and redeveloping the industrial parts of Sofia in the north.

Converting the north of the city into the prime residential locations will be difficult, but also necessary to balance the spatial development of the city - currently the Southern parts are developing, leaving behind other areas.

Northern districts are the least desirable and the cheapest residential areas due to the high concentration of old industry plants, pollution and lack of infrastructure.

Already development has been taking place in the south of the city with newly-emerging districts such as Vitosha and Manastirski Livadi in Greenfield areas.

But there is a shift now in the property market as sites close to the city Centre are becoming increasingly rare and developers are now turning their attention to brownfield sites.

The Lagera District in the south west, a former industrial area, is undergoing huge regeneration, which is breathing new life into the local property market. It has been chosen as the site for the prestigious Europe Towers, a 40-storey building, which will be the highest building in Bulgaria.

Strong economic Centre

Neil Lewis, CEO of property market analysts, Property Secrets, said: “Sofia is a favourite hot spot for property investors as it potentially offers ultra-high returns, combined with excellent long-term prospects.

“It is just at the start of its growth curve so there is plenty of room for growth. Last year, new builds in Sofia rose by 25%. Prices started from a very low base, so we predict that 2008 will bring further growth of between 20% - 25%. Currently, you can pick up a new studio for around £37,000 and a two-bed flat for £100,000, which is still well below other EU and CEE countries.

“As a capital city, it also has a strong, advanced economic and business Centre with low unemployment, high FDI inflow and high wages. That is why Sofia attracts a large amount of inward migration. This has have helped create a new middle class, which demands new, modern housing. Growing demand for housing and a lack of building plots is causing a rapid increase in property prices and is forcing the expansion of the city out from the city Centre.”

He added: “Sofia is about a year behind the Bucharest market, but with the announcement of these latest regeneration plans it is set for a further boom. Now is the time to invest in Sofia, but you need to look for the high growth areas which are close to major employers and have good transport links into the city Centre.”