Analyst Warns of Potential Speculative Property Price Surge in Bulgaria Amid Eurozone Entry

Petar Mastikov, Chief Analyst at the Bulgarian National Registry for New Constructions and Reconstructions, has sounded a cautionary note, expressing concerns over a possible speculative surge in property prices across Bulgaria once the country enters the eurozone. Mastikov envisions a short-term upswing, less intense than the notable peaks observed in the past two years, followed by a subsequent stabilization in the real estate market. For the year 2024, he projects a growth range of 2% to 5%, citing the impending eurozone entry and full Schengen membership as driving factors.

While a slight cooldown is expected in residential construction, with a projected decline of up to 5% in 2024, office space appears poised to maintain its momentum, with an expected continuation of the 30% growth trend witnessed in 2023. The holiday construction sector is anticipated to see a significant surge, with projections exceeding 20%, a surge attributed to the anticipated positive impacts of Bulgaria's Schengen membership, with contributions expected from the Romanian market.

Mastikov highlights that 2023 marked a significant milestone, recording the highest volume of new construction in all functional segments since 2008, totaling 7,650 million sqm of useful floor area. Despite a year-on-year decrease of 6.56% in residential construction, other segments, including public and specialized buildings, hotels, and holiday spaces, experienced growth, effectively compensating for the slight decline in the residential sector.

The analyst underscores the rapid recovery in the office buildings segment, driven by the widespread return of employees to offices, leading to increased demand for high-quality workspaces. Holiday construction, especially along the southern Black Sea coast, demonstrated a renewed interest in 2023, with positive growth expectations for 2024, fueled by Bulgaria's Schengen membership, particularly benefiting from the Romanian market.

In 2023, specialized buildings such as hospitals, kindergartens, and schools recorded significant investment activity, marked by the launch of 16 hospital projects, predominantly in the private sector, but also encompassing state and municipal initiatives. The hotel construction sector experienced an impressive nearly 100% increase in 2023, escalating from 70,000 to over 140,000 sqm of useful floor area, with optimistic projections for sustained positive trends in 2024.

Retail space witnessed a 4% upswing in 2023, marked by the launch of construction projects totaling 400,000 sqm, primarily concentrated in retail parks. While Sofia maintains its leading position in new construction, Plovdiv and Burgas have emerged as dynamic regions, with Ruse and Pleven experiencing notable growth. The analyst anticipates that the development of highway links connecting Sofia, Pleven, and Ruse will contribute to a distinct trend in industrial construction.

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