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Sofia home price up, supply of holiday homes slows

The Sofia residential market stayed strong throughout the second half of 2007 and, according to the latest research findings from Colliers International, displayed significant price increases in most locations. The largest increases were in the Ivan Vazov neighborhood with a hike in average asking sales prices of 33% in H2 2007, followed by Lozenets with a 29% increase. Doctor’s Garden remains the most expensive residential area with average asking sales prices in excess of 2,000 euro/sq m. In the emerging neighborhoods Manastirski Livadi saw the largest increase with 25%, bringing the average asking sales price above 1,000 euro/sq m. Gotse Delchev remains the most expensive of surveyed emerging areas with average prices of 1,144 euro/sq m, according to the Colliers report. In general, prices for properties under construction are approximately 20% lower than for finished products.Rental rates also increased in the second half of 2007 but at a slower pace than sales prices. This means that the profitability of buy-to-let investments depends more on capital gains than rental income, said the Colliers report. The second half of 2007 saw a slowdown in the supply of holiday homes. According to the latest research findings from Colliers International the increase in supply was 16% in H2 2007. This should be seen, however, in the context of an annual increase in supply (H2 2006 to H2 2007) of 170% in the mountain resorts and 65% in the coastal resorts respectively. The global credit crisis resulted in the withdrawal of a core target market for holiday homes - the British and the Irish, compensated however by a new wave of Russian speaking individuals, Romanian and Scandinavian buyers. Demand is shifting towards high-end, finished properties with more rooms and a superior level of service. The span of sales prices narrowed in the second half of 2007, with an average asking sales price of 1,210 - 1,420 euro/sq m in the mountain resorts. The lowest average prices were seen in Pamporovo with the highest in Razlog. The lowest average sales prices in the coastal resorts are in Kavarna (1,020 euro/sq m) with the highest in Sozopol (1,425 euro/sq m). Colliers research further shows that the Elenite had the highest absorption rates in H2 2007 with 84%, while Ravda has seen the largest decrease in absorption - from 65% in H1 2007 to 41%.