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No significant changes in prices or sale volumes in the Bulgarian property market have been recorded since the turn of the year. Prices will remain stable and are unlikely to increase by more than five to 10 per cent in 2008, Liron Or, Engel East Europe-Bulgaria's executive director, told investor.bg.
Real estate prices in the country, and particularly land and plots, have appreciated significantly. Currently, they account for as much as 35-50 per cent of the end sale price of enterprises developed on the plots. This is too large a share, compared to the average of 25-40 per cent in most European countries, Liron Or explained.
In light of the global credit squeeze, which will not have a tangible impact on Bulgaria in the short-run and the latest changes in the Eastern European market, Engel East Europe has decided to concentrate on the high end of the market, Or said, quoted by investor.bg.
Thus the Israeli company will unfold its competitive advantages – with regard to robust finance status and modern design, he added. Currently, the company is negotiating the acquisition of several plots in some of Sofia’s prime locations. Envisaged developments will be upmarket ones with prices exceeding 2000 euro a sq m.
Engel East Europe’s first completed project in Bulgaria was Boutique Apartments, located in the foothills of Vitosha mountain, offering 54 boutique apartments and maisonettes. The company has also invested 12 million euro in the construction of the Vitosha Palace residential complex and another five million euro in the construction of Slunchev Dom housing complex, both in Vitosha. Last summer the company acquired a 20-acre plot in Gorna Banya – purposed for the construction of a 30 million euro gated complex offering more than 400 residential units.
On several occasions, the Israeli group has told media that their interest in Bulgaria is limited mostly to the residential sector. They do not intend to pour money in holiday, industrial and commercial properties at this point. “We are doing what we're good at,” the executive said.
When asked by investor.bg about opportunities beyond Sofia, Liron Or said that they had been observing Plovdiv and Stara Zagora markets, but did not think that current sale prices could support the required investment and resources.
Given the parity in construction costs across Bulgaria, the cost of plot prices in regional cities and the low sales prices of completed developments, it's not a tempting prospect, he explained.
The sale value of Engel’s current projects in Bulgaria exceeds 20 million euro. It's planning to venture into at least five new projects, totalling 100 000 sq m in area, Or told investor.bg.
Engel East Europe – Bulgaria is a part of Engel East Europe investment company, which, in turn, is a part of the Israeli developer Engel Group, listed on the bourses in Tel Aviv, New York and London.