Southern neighbourhoods are replacing central Sofia for the purchase of a luxury home
Overview
Newly completed, large multi-bedroom homes and garages have attracted the attention of luxury property buyers over the past year, according to luxury real estate company Unique Estates. According to them, one of the main groups of clients on the market - families with children, are showing increasing interest in the new neighbourhoods in the southern parts of Sofia, such as Manastirski Livadi and Krustova Vada. The interest in the center is preserved mainly in investment purpose transactions and in the search for smaller properties.
Over the past 12 months, the market has registered a growth in the buying and renting activity, accompanied by price reductions and a decreasing share of discounted deals. This indicates that bid levels are already close to actual market prices. With strong demand, activity in the luxury property segment is expected to remain high in 2020 as well.
Key metrics
Supply and demand
In recent months, the demand for finished and furnished apartments with an area of 200-250 square meters and two or three garages has increased. Offering similar properties is mainly found in fast-growing new construction sites, such as Krustova Vada, parts of Manastirski Livadi, Kambanite. Therefore, these neighbourhoods are attracting increasing interest, Unique Estates data show.
"The demand for such properties comes mainly from families with children who are deciding on housing needs. Some of them have initially set out to buy a house, but later decide that a large apartment is more in line with their expectations as infrastructure, accessibility, parking spaces,” summarized Svetoslava Georgieva, Unique Estates' Chief Operations Officer.
According to her, there is a lasting return of clients in the segment of large homes, with buyers mainly family couples aged 35-45 with three or more children. Proximity to private schools and kindergartens also determines the choice of location. Sellers are most often people over 50 whose children have grown up and left home. This eliminates the need for a large area and they move into a smaller property.
The company give an example with a late-2019 deal for a spacious apartment in the Boyana neighbourhood on the last two floors of a small residential building. The apartment has an area of just over 500 square meters, with 4 garages and a huge terrace, which creates the feeling of a house.
The demand for luxury new construction has led to a tangible increase in deals in the southern regions of Sofia and the Vitosha Collar neighbourhoods in 2019 compared to a year earlier.
Unique Estates’ statistics show more sales in Lozenets, Krustova Vada, Manastirski Livadi, Boyana… In these neighbourhoods the demand is for finished and furnished apartments with views of Vitosha Mountain. The advent of high-end complexes in advanced stage of construction or with a permit for use in the last year also contributed to the increase in the number of transactions. Price levels range from € 150,000 to € 400,000.
When buying a family home, the center of Sofia loses ground as a preferred location because of the very limited supply of new construction, poorly maintained common areas and the lack of garages for many buildings. In many cases, the entrances are in very poor condition or the home lacks ceiling height and views. The main group of buyers in this area are people looking for property to invest or rent through short-term rental platforms.
In the most prestigious area, the Doctor's Monument, supply is very limited, but this has not led to growth, but rather to price retention in 2019. This is an indication that they have reached the maximum levels and even if they increase, it would be at a very low pace.
Transactions and prices
Overall, Unique Estates data shows sales growth in the lower and middle-class luxury properties, covering houses and apartments of up to € 300,000 and up to € 500,000, respectively.
Luxury property deals by segment
As a total, luxury apartment prices declined by an average of 7% during the year, mainly due to a downturn in central Sofia. A more noticeable increase in the sales levels was observed in Mladost residential complex and neighbourhoods such as Lozenets, Manastirski Livadi, Krustova Vada, Simeonovo.In 2019, the market marked a normalization of the offer prices after a large number of overvalued properties were offered for sale a year earlier.
A lasting return of clients to the segment of large homes is observed |
Price dynamics
Against the background of the growth of transactions and the normalization of price levels in 2019, the share of sales at a discount from the offer price is reduced. According to Unique Estates, they declined to 66% of total sales compared to 68% a year earlier. There is a slight increase in the average discounts from 7.1% to 7.9%.
Average discount from the offer price
|
Apartments |
House |
2018 |
-6.4% |
-10.2% |
2019 |
-6.8% |
-10.5% |
Rental market
With a 19% growth in rental transactions compared to 2018, the luxury property market has been highly active over the past year. Demand is strongest in the highest price segment - over EUR 1,000 monthly rent, and in the low-price segment. In the middle-price apartments - with between € 500 and € 1,000 a month rent, demand is significantly lower at the expense of strong supply. One of the reasons for the increase in offers is the reorientation of many owners from short-term to long-term rentals, according to Unique Estates.
Rental prices remain almost unchanged from a year ago, with average levels for Sofia at EUR 8/sq.m. The highest levels are maintained by the Doctor's Monument, the center and the elite neighbourhoods, such as Iztok, Lozenets, Ivan Vazov. The demand for apartments and houses for rent in the gated complexes in Sofia remains strong.