The largest real estate market in the country – the one in Sofia, is already dominated by new construction properties. This could lead to a deficit in the supply of old construction and significantly shorten the period for concluding a deal in 2022. The forecast was made to Dnevnik by representatives of real estate agencies and builders in the capital.
Despite rising prices, interest in buying housing continues to grow and no one expects stagnation.
Demand precedes supply
The experts from “Address” comment that the market is dominated by the purchase of completed homes with Act 16 – the document by which the state establishes the suitability for use of the building after construction and installation work is completed, contracts are concluded and individual accounts for plumbing, district heating, etc., so that the homes are already habitable. Completed housing transactions significantly exceed those concluded before a building was licensed for use.
According to the brokers from the agency, there are still clients who choose the old construction. At the same time, in the newly built neighborhoods such as Manastirski Livadi, Krastova Vada, Ovcha Kupel, the number of deals is higher. The reasons are that there are many new projects, customers have a great choice in different price segments. The company is increasingly hearing from its younger clients that the description of their future home includes the characteristic “no one has lived there before”.
On the other hand, in the old most desirable neighborhoods – Doctor’s Garden, “Ivan Vazov” lower “Lozenets”, “Yavorov” supply is not so great, because, and due to lack of sufficient vacant land, few new projects are being implemented.
At the same time, prices in these neighborhoods are high and most homeowners rarely release a range of products.
At first glance, especially in Sofia, it seems that new residential buildings are constantly growing. This is especially true in some neighborhoods. According to market players, however, the construction of residential buildings is a relatively long life cycle, plots are limited, there is a significant increase in the price of construction materials, and administrative burdens are also a big obstacle to building new projects. For this reason, the demand for new construction continues to seriously outpace supply.
“If we talk about relatively new, ready-made buildings, I think that even now the interest in them dominates over the old construction,” Georgi Shopov, chairman of the National Association of Construction Entrepreneurs, told Dnevnik.
Smaller but more functional
In the general case, the newly built dwellings are smaller, and the area described in the documents includes the common areas, unlike the older construction. There is also a tendency in the new buildings for the apartments not to have a separate kitchen. However, Shopov believes that the new homes have better functionality.
“Housing today is built according to the modern way of life of people. They are built to meet certain requirements. An example of this are garages. Today they are a must, while in the old construction – rather rare,” said the builder.
According to him, another advantage of the new construction is the fact that it is new, ie. there is no depreciation or need for urgent repairs immediately after purchase. In addition to this – even when repairing the property itself, the cases with the maintenance of common areas in the old construction often become a problem. The third factor is that new construction is sold faster and easier, ie. new properties are an easier-to-manage investment tool.
Old but gold
The choice between old and new construction is related to the buyer’s profile – age, income, method of financing the purchase, but also to the better distribution and more spacious premises in buildings that have not emerged in the last 10-20 years, experts say.
Georgi Shopov also points out that among the old buildings, especially in the center of the capital, there are facades of historical and cultural value. Very often these are single-family houses, and the whole context of their construction is different. “The new projects do not have the architectural value and history of these monuments, they are designed to best meet the housing needs of people and be accessible.”
Another added value of the old construction, which he notes, is related to the area in which it was built. Usually, new projects are built in areas further away from the central part of the city, while some quality old buildings are located in neighborhoods with already built social infrastructure.
According to Imoteka’s estimates, the housing market in Sofia is already dominated by new construction properties, which could lead to a deficit in the supply of old construction and significantly shorten the period for concluding deals in 2022.
At the same time, the prices of apartments of old construction are balanced around the current levels or their growth is smooth, while those of new projects are difficult to predict as a result of a serious jump in prices of construction materials, experts say.
According to Lyuba Atanasova, executive director of Imoteka, many construction contractors are likely to delay sales at construction sites in order to orient themselves in the final price of the product and calculate correctly for end customers. “At the moment, however, there is no slowdown in the pace of construction,” she said.