In about a year, the building permits already issued will be exhausted, and then we will see the effect. This will cause a vacuum, as demand is greater than supply. We will see movement in real estate prices. This was stated by Dimitar Savov, CEO of BLD, and Arch. Virginia Nikolova, Manager of Constructive Bulgaria, during a discussion from the multi-platform project of Bloomberg TV Bulgaria „Talk 25: Home and Office“ hosted by Kalina Donkova.
„Every delay and destabilisation of administrative bodies reflects on construction. In Sofia, the demand for housing and other properties will continue to grow, despite attempts to stop overbuilding. This is normal for a European capital,“ commented Arch. Virginia Nikolova.
In Sofia, problems come from uneven investment in infrastructure. Sofia builds infrastructure in old neighbourhoods, but new ones are not being developed. This creates the sensation of overbuilding. At the same time, areas where basic infrastructure is missing do not allow for construction there. „An example of this is „Mladost 5“, where nothing has happened for 15 years. This is a territory that could provide about 5,000 homes. Then investors would not build between blocks but would take advantage of this opportunity,“ explained Dimitar Savov.
According to Arch. Nikolova, overbuilding is a term that sums up a number of problems. The streets in the capital are overloaded and buildings are appearing in the spaces between blocks. The commissioning of a new General Urban Plan and its implementation will take more than 10 years. This idea comes from people who are not specialists. In fact, the problems come from the Detailed Urban Plans (DUPs). The current regulatory framework has some shortcomings, but changes happen slowly.
„If we look at Warsaw, we will see that the situation there is not so different. The advantage there is that the rules are the same for everyone and when a decision is made, it is implemented,“ noted Savov. In Sofia and Bulgaria, builders often build the infrastructure and donate it to the municipality. This is a problem because there is no common standard.
Arch. Nikolova shared that in small municipalities we also see problems with General Urban Plans. When they are missing or unclear, this creates a problem for builders. We often see subjective decisions made by municipal councils. Many people would live in the satellite towns around Sofia, but there is a lack of infrastructure and social environment. The state must stimulate the development of the social environment, which will also have a positive effect on the capital.
According to Savov, people's incomes are growing and this drives the market. Emotions around the Eurozone lead to frenetic deals happening in a week or two. This will subside within a few months. On the other hand, according to Arch. Nikolova, the factors driving prices are related to national psychology. The purchase of a home gives a Bulgarian a sense of security.
The guests predicted that there will continue to be stable demand in the market because people's incomes are growing. More and more people are looking for a different type of housing. Builders and architects must be visionary enough to anticipate trends.
You can watch the full interview here: Bulgarians feel secure when they own a home, and this drives the market