“Sofia is growing, but not aging“. Over the past 20 years, the appearance of the Bulgarian capital has changed significantly, mostly thanks to housing construction, which has “spilled” far beyond the Ring Road. New neighborhoods have been formed, a number of territories have been improved. This has inevitably burdened the city's infrastructure - starting with the road and ending with water supply and electricity. The main reason for the city's growth is the huge deficit of plots of land for housing construction, not only in the center and neighboring neighborhoods, but also in more distant ones. “In Sofia, there are no more plots of land with ready urban development and built infrastructure“, says in an interview for the largest real estate website in our country imot.bg the general director of NovaCity Group Dilyana Hristova. Most clients are looking for properties in the area where they have lived so far, and the high price, according to clients, is justified by the higher quality of the product being offered. Investors themselves are not interested in selling at inflated prices, as sales are happening more slowly. What else is happening on the plot market in the capital?
Ms. Hristova, it is no secret that the deficit of plots of land in Sofia is large. How is it most expedient for both business and the client to use the ones that are still available? For example, a new territory is being opened around the “Vranya“ park – quite an attractive place.
Of course, we as investors would like to have more plots with the possibility of development. However, we must note that a conscientious investor is against overdevelopment, because this reflects on the end user.
Let's take the area around the park “Vranya“, which you mentioned, as an example. First of all, a meaningful and intelligent urban planning must be created so that the end user can receive a product that is not only technologically sound with the introduction of modern technologies into homes, but also aesthetically sound.
Another very big problem is transportation. Again, I will take the area you mentioned as an example. “Vranya“ is not a small project. Questions arise such as: how will transport be provided in this area. We see how some areas that were previously empty and vacant and in the next stage become modern and accessible for development, the transport infrastructure is dying out, both in terms of public transport and accessibility from streets and boulevards. This is also a very serious problem and when urban planning is done, a transport analysis is also required. However, it is not always done.
A third problem is that when the transport analysis in question is done and it is seen that a given territory will produce a certain number of housing units that the transport infrastructure cannot cope with. Quite often, the investor is required to ensure this transport infrastructure. This is an extremely expensive undertaking. Realistically, this should be the job of the Sofia Municipality, not the investor.
The Sofia Municipality has defined an area with specific parameters, where a certain developed built-up area (GFA) with a certain number of residential units is achieved, and then it turns out that the transport infrastructure cannot withstand this load. A paradox arises, since the Sofia Municipality itself approved the plan in question.
The intelligent investor is against overdevelopment. The idea is not to populate an area with people and with the maximum number of apartments. There are even cases in which the investor himself does not want to achieve the maximum total area for several reasons - aesthetically, he does not like the architectural solution that can be achieved with the maximum total area.
This also reflects on the quality of the product you offer. The apartment is perfectly built, but there is no road to the building.
Very often small streets - from 50 to 100 meters, are built by investors, but when it comes to expanding boulevards, this cannot happen. When this street infrastructure is built, the sewage system and everything else must be built.
What should be done to gradually clear up this problem, since there is no quick and effective solution?
Investors and buyers are ahead of Sofia Municipality with our solutions.
Which is a problem.
That's right, but we will not slow down. The logical conclusion is that Sofia Municipality should hurry up.
For us, this is a business and we cannot stop building because we are more efficient than Sofia Municipality.
We are even in a slightly offended position, because anyway, the builders build a part of the infrastructure, which is not our job and we donate it, and even pay guarantees for good performance within 5 years.
What are the other stumbling blocks for investors?
Unsettled bills under regulations. How can you build infrastructure when it passes through private properties that have not been alienated.
In order to build the infrastructure, regardless of whether it is a water supply or a street, I have to alienate property that is not mine and pay for it if I want to build. This is not the investor's job, but he does it.
How long does the regulation procedure take, because with new technologies the construction itself is a quick process?
We include the relevant property that we need or that is interfering with us in the Sofia Municipality's program for investment expropriation. This is followed by going through the Sofia Municipal Council. The owner may not agree with the expropriation decision or with the amount he will receive as compensation and we go to court. The procedure can last for years. It can easily last 4-5 years.
Are there any problem-free plots of land in Sofia?
There are none anymore. Urban planning needs to be done and infrastructure built. There is no ready-made property. If there are such plots, the owners ask for a high price that the investor himself cannot afford.
We try to avoid infrastructure problems. Urban planning procedures do not scare us, no matter how complicated and lengthy they are.
Urban planning procedures also depend to a large extent on the local administration, not only on the Sofia Municipality. We know about the intervention of district mayors who block construction.
How is the area around the construction of the metro to Levski G developing?
This area is developing very well at the moment. The investor interest there has not been for the last 1 year. Every entrepreneur, when he sees where the metro is going, is directed to these areas.
Where is the interest of buyers directed?
People prefer to buy a home in an area where they have already lived. This is one of the reasons why Studentski Grad, for example, has developed in this way. There is a certain target group there. These are people who have come from other cities and lived there during their studies. They are used to the area and consequently buy properties there.
It is rare for those who grew up in the center and bought an apartment in the western part of Sofia, for example. People orient themselves to a familiar environment.
The same is true of the area near the airport - people who lived there are used to it and will buy an apartment, regardless of the noise.
What should we advise clients when buying a home?
They are now more educated.
What exactly does this education consist of, since all intermediaries talk about it?
For example, once no one knew what Act 16 was. Now everyone knows.
Clients are also more demanding, since the quality of construction is different. The extras that builders offer, the added value, is already different because we are competing, even though we are colleagues.
The client now has more serious claims regarding the product he buys.
What I would recommend is that when choosing a home, they research who the investor and the builder are. This is important. In fact, many clients do it.
However, for most buyers, properties are expensive. How can we explain that every quality has a price?
You are right - every quality has a price. If in a given area the differences are in the order of 400-500 EUR, then there is a reason for this difference. No investor will "inflate" the price to the point where he cannot sell the homes.
Quality has a price - there is no way. In truth, many people think that construction is a business in which a lot of money is made. First, however, we must say that the investments in this industry are huge. Second - the profit is not as drastic as people imagine. Third, to be a good investor and builder, you need to have experience and know-how. It is no coincidence that many people from other types of businesses had money saved up and decided to focus on construction. The percentage of unsuccessful such investors is high. The fact that an entrepreneur has a few million to spare does not mean that he will earn a few more million by doing construction.
Detailed statistics on the average property prices in Bulgaria by cities and neighborhoods can be seen HERE