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Rental income returns in Sofia – 5.4% in 2015 on average

Polina Stoykova MRICS, Managing Director & Head of Research
 
The property market in the capital city of Bulgaria is on the upturn trend after a few years of stagnation.

Data by BULGARIAN PROPERTIES shows that property deals in Sofia have risen with 30% this year and prices of residential property have increased with 6% giving opportunities for capital gains in the medium to long term. Apart from that, the rental market in Sofia is one of the most developed in the country, and demand is growing. Thus, residential market in the Bulgarian capital is back into the focus of local and international property investors.

The calculations of BULGARIAN PROPERTIES also show that returns from properties in Sofia are much higher than the deposit interest rates in local banks. Currently the average return form properties in Sofia is 5.4%, and the average interest from bank deposits is around 1%, according to the latest data from the Bulgarian National Bank.

Monthly rents for 1-bedroom apartments in Sofia are in the range 300-550 Euros. For 2-bedroom apartments they vary between 400 and 800 Euros per month and for large apartments – from 900 Euros per month.

Which districts in Sofia offer the biggest returns?

Returns of 6% and above can be achieved in the Southern and Eastern districts like Vitosha, Mladost, Manastirski livadi, and the prestigious areas at the foot of Vitosha Mountain.

Returns of above 5% can be achieved in districts like Lozenets, which is one of the most prestigious quarters in Sofia and traditionally generates high rental demand. Also districts like Hipodruma, Beli Brezi and Medical Academy attract tenants because of their proximity to a large number of public transport vehicles, the Medical University and the established business region along Bulgaria boulevard. Properties in Strelbishte are also close to the Southern Park in Sofia, which again makes the demand high and respectively a return of over 5% can be achieved.

New-build properties offer above average returns

Due to the higher demand and the insufficient supply of high-quality new-build apartment buildings, there is a need for construction of such high-quality buildings. Calculations of BULGARIAN PROPERTIES show that investments in new-build apartments have the potential to generate above average returns – between 6 and 6.5% depending on the type of apartment. This can be explained with the fact that the properties in these new buildings are still offered at attractive prices although there is already a trend for an increase of these prices. On the other hand, these apartment buildings have modern and functional designs, offer different amenities like garages, increased safety and these things make them more desired by tenants and respectively higher rents and returns can be achieved.

*This material provides information about potential returns from properties, if they are purchased at the present moment. For the purpose of this analysis offers of apartments for sale in Sofia that can be rented out were selected. The calculations are made based on the monthly rental income that these properties can generate and it is compared to the overall costs for the purchase of the property (asking price + all additional expenses + furnishing when needed).
 


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