2). Design and area (ie is the development appropriate for the location – prime / 2ndary prime / suburb) and what is being developed around the new property?

So, when looking at areas that are going to develop first and fast, we need to look at those with the best road and public transport.

However, at the moment, a lot of the developments are focussed on the managerial middle class and they like to use their cars. So, road transport – ie fast access to a major boulevard – preferable the fastest boulevard – is highly desirable.

At the same time, the city is extending its metro – which currently runs from the North West suburb of Lyulin and reaches the centre but will shortly be extended across the city to the east.

Given that the Lyulin neighbourhood will be less car based and more dependent on public transport this is a key development for this area. It is also an area of 'middle class' panel blocks and so car usage will be lower.

Mean time, to the south of Sofia, and beyond the one-lane ring road, the mountains rise (which are visable from the city centre) and here the villas of the super-rich are being built.

There actually already are old villages in this area – and very expensive villas too (allegedly one sold for 3m Euros recently) so this will naturally draw the newly wealthy in this direction. These will become the urban villages of Sofia - like Hamstead in London.

Lastly, the district immediately south of the centre – Lozenets – is the location of the US embassy and is probably the prime central district of Sofia.

So, to put this together, the city is developing middle and upper middle class units to the south (as described above) and also adding blocks in a fairly random spread in the outskirts.

Many developments are being built too close together and there is quite a lot of evidence of planning rules being ‘adjusted’ to accommodate non-standard request (and extra floor height here and extra 3 metres there) which can affect the immediate environment of small developments. Therefore, larger developments – with a unified plan and control over the environment – will probably command a premium if well built (ie quality of materials plus the design and layout of the blocks is well thought through and well implemented).

But the killer factor for any development will be the infrastructure – roads for the well-off but metro and trolley bus too.

Hence, Sofia will develop from the outside-in.

And, parts of the old centre will continue at low prices – and very poor conditions – and poor desirability – as the shopping and office spaces are built around the edge of the town.

This is typical in a city that is the size of Sofia – and allows developers to create new areas and business parks with relative ease (as there is a lot of land) in the fringes and on the edge of town.

It also explains why the centre can continue to feel a little run down.

One thing I noted, is that the centre was pretty empty after 11pm on a weekday night. Again, suggesting that not so many people live there.

This is why all the action is taking place out of the centre for the time being. And this is where property investors should focus their attention – whilst not forgetting the critical value of infrastructure and the immediate neighbourhood.

But there is another reason why I believe that Sofia and Bulgaria are emerging from austerity beyond the run-down feel of the central area… and this will have a significant impact on how this market will develop in the next 5 years.

More on this will follow in my next blog...

Cheers
Neil