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Land owners in Sofia and Bucharest speculate with land prices, agents said.
Most land owners fail to understand how land prices are formed and offer high prices because of the high demand, investor.bg reported.
The land price should add up to no more than 20 per cent of the total value of a residential project, US investment fund Heitman said during a discussion on residential property market in Bulgaria, Romania and Serbia.
Private property owners in Bucharest demand 30 per cent of the total project value, Capital Investment and Consultancy representative David Erickson said.
Intense increase of land prices in Bucharest encouraged most investors to focus on the construction of tall buildings. The number of residential projects in Bucharest was only three in 2005 and increased to 19 in 2006. Residential property prices in Bucharest in the end of 2006 range between 900 and 1850 euro per sq m.
Residential property offering in Sofia continues to increase. Half of the sale and rent offers focus on two-bedroom apartments. Prices vary between 700 euro and 2800 euro per sq.
Residential property price per sq m in Sofia increased by 203 per cent from 216 euro to 654 euro over the past nine years. The most sufficient increase was registered in 2004. The increase is attributed to the higher number of foreign investors and easier access to financing. The number of residential mortgages in 2006 increased by 70 per cent compared to 2005, Address real estate agency managing director Katya Tsenova said.