Despite a temporary livening up of the residential property market in Bulgaria over the past year, the prospects remain gloomy, concluded participants in a real estate conference in Sofia.

The experts discussed the matter at a panel discussion during the 2011 BalREc investments and real estate market conference taking place in Sofia Wednesday.

The enthusiasm of potential customers and banks for financing new projects will remain moderate for the next 1-2 years, the experts agreed.

Despite that, from a mid-term perspective, the potential of the market, especially the one in Sofia, remains high, said Maximilian Mendel from the Warsaw-based REAS market research company.

To prove his point, he mentioned the insufficient supply of residential properties that meet up-to-date requirements, as well as the long-term positive perspective for the Bulgarian economy.

Mendel also said that housing prices are expected to drop further in the near future, which for the moment discourages buyers. At the moment, prices in Sofia are back to their levels from 2007, he specified.

According to Lembit Tampere, CEO of Estonian real estate group Arco Vara Group, the price drop can not last forever. High and low points are equally unstable, he pointed out.

"It would be ridiculous to expect that the price of an apartment could be EUR 500 per sq m in five years", Tampere added. He also explained that the first signs that the market is about to hit the bottom are showing. As an example he cited the increased sales volumes on the market in Sofia.

Georgi Pavlov, executive director of Adres Real Estate said that 96% of the deals carried out with the assistance of his company over the past few months were sealed at what he called "attractive prices" in the respective segment.

This shows that prices remain a decisive factor in purchases of real estate.

The entrepreneurs who took part in the discussion agreed that in this respect the market is expected to remain unchanged in the next few years.

The average residential property prices in Sofia have dropped by 9.4% in the first quarter of 2010 year-on-year, according to the Raiffeisen Real Estate index. In comparison with the last quarter of 2010, the prices have decreased by 5.2%

According to a recent research conducted by Sofia-based real estate agency Bulgarian Properties, the prices of residential property in Sofia came in at about ERU 830 per square meter in the first quarter of 2011, down from EUR 930 in the last three months of the previous year.

Sales of residential property in Sofia in the beginning of this year nearly doubled in comparison with the same period in 2010, a trend, which stands in strong contrast with the slump in sales volumes across the country, the same research shows.

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