Sofia - Advice please

I agreed to buy a one bedroom off plan apartment in the Central Oborishte District of Sofia in early 2006. The Development should be completed towards end of this year. I bought the Apartment through a prominent UK agent, and through later research I gather that I may well have paid over the odds. The Developer is willing to return the amount I have so far paid. I paid close to 1500 euros per sqm back in early 2006.

Clearly the agent believes the apartment can be sold at a better price.

Should I stick with this for the long run ? Have prices increased significantly and would I be able to sell relatively easily when the apartment is completed ?

Appreciate the advice of any Sofia experts.

We recently looked at the possibility of doing a residential developement in Sofia and have now ruled it out.
The residential market there is very weak. I will have to consult the map again as my head has moved on from Sofia to see where that area is but I would think that €1500 is expensive for any area unless you are getting something very special.

PHARTLEY said:

I agreed to buy a one bedroom off plan apartment in the Central Oborishte District of Sofia in early 2006. The Development should be completed towards end of this year. I bought the Apartment through a prominent UK agent, and through later research I gather that I may well have paid over the odds. The Developer is willing to return the amount I have so far paid. I paid close to 1500 euros per sqm back in early 2006.

Clearly the agent believes the apartment can be sold at a better price.

Should I stick with this for the long run ? Have prices increased significantly and would I be able to sell relatively easily when the apartment is completed ?

Appreciate the advice of any Sofia experts.

Click to expand...

Property price inflation Q1 2007.

According to the latest figures from the National Institute of Statistics for Bulgaria, property price inflation of the top 28 cities indicated a 9% property price inflation for the first quarter of 2007. In relation to Sofia property price inflation for the same quarter was was 14,3%, AVE. price for Sofia per square meter was BGN 1588 (please note not €). The average price in established 'emerging markets' for new builts, for example Budapest is around €1500 per square meter. Also, did this price include the full VAT? and was it fitted out?

Please note: While the price inflation seems great- "the day you buy is the day you sell" and I do fear this is going to be a problem for the immediate future. Having said this, if you were buying in Bulgaria, then Sofia would have been the best option; however, for that type of money I would have considered other locations in Europe.

Have you overpaid- certainly. This is typical for these type of projects on the market in Ireland.

A question for you- did you do some market analysis to compare similiar project and did you travel over yourself (not with agent) to investigate the area etc. If not, then certainly do this in the future.

If you were to take back your funds- have you an alternative to switch to (besides Bulgaria?)

Does seem rather steep. Think prices now are around 900 to 1000 euros/sqm on average. If you are not happy I would get back your money. Better to be safe than sorry. Do not think it will be easy to sell either as many new apartments for sale in Sofia and everywhere else in Bulgaria.

Rachel
http://www.thetravelbug.org

Thanks for the help. To answer your questions Zulu; my research was minimal. I was motivated by greed and stupidity.

In terms of an alternative, my outlook has changed, so I will not be tempted to buy property abroad.

The hassle factor of overseas property was underestimated.

If you are a first time overseas buyer it is important to manage you cashflow properly and travel over and find a very good rental management company.

The bigger the portfolio, the more work. A property investment certainly perform more consistently than most asset classes with average increases world wide of 8.5%. While this does not seem that high, the leveraging factor is what makes it attractive.

Why dont you consider a location like Germany for example. Lower risk investment location, rental management companies can very good, rental yields high- only negative factor is the low LTV financing option for foreign buyers which is around 60%.
If you are a first time overseas investor this may be the one of the 'lower risk' locations and it is easy to get to if there is any major problems.

Additional locations which should would be lower risk is the likes of Sweden, UK, Northern Ireland, Canada. The legal system is much more transparent and you can do your research it much easier as information is readily available.