Bucharest & Sofia faced a price collaps at residential prices

Induced by the financial and economical crisis there have been some price adjustments on the residential market in Eastern Europe. For 2010 we expect a price stabilisation.

Eastern Europe faced a dramatical downturn of prices for residential real estates. Most heavily affected were the markets in Romania and Bulgaria. In the capital cities of these countries, which had a busy building activity in the past years, prices went down considerably. Thus prices for old residentials decreased by 40% and for new residentials by 50% in Bucharest and in Sofia by 25% on average.

The residential markets in Bucharest and Sofia were characterised by highly speculative investments. Many building licences have been accorded in the past years, although only a fractional amount of residential spaces have been completed. Besides this the supply was not always aligned to the needs of the local people. The average sale price per sqm for new residentials in Bucharest was at about 1 800 euro per sqm and thereby over the level of Riga and Budapest. In Sofia the prices were at about 1 250 euro per sqm and corresponded to the level of Tallinn.

For 2010 there is expected that prices stabilise. Prices should stay on the level of 2010. Optimists who look forward to an improvement of the economical situation for the second half of 2010, expect an increase of 5%-10%.