A recent article in Capital newspaper (one of the most read newspaper for economic news in Bulgaria) reviewed one subject which was sort of a mystery for many years – the price of construction works. According to the calculations provided in this article (which source is the Bulgarian Construction Chamber) the price of construction varies between 940 to 1380 BGN per sq. m. less the investment for the plot of land. That price is for “turn key” completion and excludes just the furniture and if we are to believe then the builders in Bulgaria are making huge loss.
It is not a secret that even in this survey the data is quite exaggerated and the real prices are almost half of what is quoted.
The article, however, is an attempt to justify the prices and to make the picture more “optimistic” and that what is on the market at the moment seem logically priced.
It is not a secret again that being owned by one industrial group the newspaper is “defending” in a way the position of the developers and trying to bring a calmness among the people in Bulgaria. Judging from comments (286 so far), most of which negative, obviously this article does not serve its purpose but on the contrary.
One very interesting comment sheds some light onto the market mystery and raises the logical questions about the buyers.
Who is supposed to buy at these prices?
There are three main groups of buyers, who were pushing air into the prices’ balloon and they are not difficult to guess:
- buyers from abroad / foreigners
- Bulgarians living abroad
- Bulgarians living in Bulgaria, who managed among the property boom to sell something somewhere in Bulgaria and get enough money to buy directly or apply for mortgage
Now, from this picture from where will come any new buyers? Foreigners who bought here are looking to sell. The salaries in Bulgaria are going down and many people are losing their jobs and the Bulgarian abroad are also not in very good situation. Who will pay the “reasonable” prices of the developers?
It not a secret also that many buyers who bought with mortgage are getting harder and harder to repay them and the market is getting flooded with more and more properties for sale from the banks (so called secondary market of properties).
The logical end of the comment is that when there is no demand nobody cares about the price of construction. In a market economy the demand (not the supply) is the main factor for the price of one product so it seems that somebody has to do the maths again…
Related posts:
- When the prices go down
- Apartments’ prices in Sofia reached the top
- Property market in Bulgaria – the party is over?
- Why do the Brits leave?
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by Davin Rental
28 Feb 2009 at 09:38
Edinburgh and Glasgow saw below average increases in average property price, 8% and 6% respectively. Davin Rental
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by Survival Bulgaria Blog » Blog Archive » Deals with properties drop by 35%
11 Aug 2009 at 02:20
[...] in dnevnik.bg states that deals with properties in Bulgaria have dropped by 35%. Knowing the position of the newspaper and its publishers you can easily expand this figure to 50% as the facts for the construction [...]