Average annual increase of 5% in RE prices in Sofia and the first reported decline in certain districts
Reduces the number of purchases and sales on the secondary market, but new construction deals still offset the total volume
· For the first time on the Bulgarian market an automated system is introduced, which will reduce the subjective factor in the preparation of market assessments
· COVID-affected businesses, including hotels and transport companies, seek appraisals as they need refinancing
A similar number of appraisals of homes in Sofia compared to the previous year and a moderate increase in average property prices by about 5% in 2020 on an annual basis. This shows the annual report of Advance Expert Assessments, a leading company in the sector. The growth in the capital is due to the active market of newly built homes in the growing neighborhoods and the insufficient supply of quality properties in the established elite areas.
"Our work is completely objective, based on established criteria and characteristics of the properties, but also depends on the general economic processes. In 2020, we were also extremely careful about whether and how the Covid-19 crisis would affect the value of housing. But the search for buyers continued, sellers did not panic, on the contrary, many of them even withdrew their offers in anticipation of better times. So supply and demand turned out to be in an imbalance, which would lead to an increase in risk, "commented Tsenka Bozhilova, managing partner at Advance Expert Assessments.
At the same time, housing estimates in some neighborhoods, including Ovcha Kupel and Holy Trinity, are declining. It is the result of exhaustion of growth potential, dictated by external factors such as the development of the subway and the lack of supply of attractive new plots there. The neighborhoods with the largest number of prepared assessments in Sofia and respectively higher activity on the housing market are Vitosha, Druzhba, Center, Manastirski Livadi and Mladost. These are also the areas with a more diverse supply of new construction.
Average prices of real estates in Sofia EUR/m2
Increase of prices
Покачване на цените
Old reknown districts
Източник: Адванс Експертни оценки
In many other sectors, the crisis has accelerated the process of digitization and automation of appraisal services. In the real estate sector, this plays a key role as it increases market accessibility and transparency.
"In recent years, it is clear how the focus of investors is permanently shifting to technology companies. Investments in software development in businesses with different areas of activity always bring not only a return on funds, but also added value in the quality of services. Software solutions free up resources for people to be able to use their expertise more effectively, in which digital products cannot replace them, "said Svetoslav Dimitrov, co-founder of the Bulgarian Fintech Association.
Advance introduces the first for the Bulgarian market automated model for preparation of assessments. The software solution stores and processes a huge database, which makes the work of expert evaluators much faster and more accurate and successfully controls the subjective factor. The product shortens the time for technical implementation of the report, while freeing up the evaluator's resource for better and more in-depth justification of the results.
"In the future, each of our evaluators will certify the report with their signature, which means that the expertise, skills and experience of the evaluators remain decisive. The software and artificial intelligence serve the experts - they are designed to perform all automatic activities and perhaps most importantly - the processes are performed much faster with minimal risk of errors, "said Tsenka Bozhilova.
"The project has no analogue in Europe and allows for better standardization in the preparation of assessments, using our many years of experience and knowledge of Advance. With the accumulation of information in the system, it improves itself in finding more suitable analogues for the preparation of assessments, "said Julian Calderon, project manager, BG Service.
"It is the market analogues used in the preparation of the assessment that are important for the security of banks, as the main users," added Tihomir Toshev, Executive Director of Credit Center and a longtime client of Advance. "It is very important for us that the report provides comprehensive unified information about the value and specifics of the site."
Nearly 50% of the appraisal reports prepared by Advance in the past year are for the purposes of lending - granting new or renegotiating old loans. Another part is ordered by the parties in transactions for purchase and sale of both real estate and a wide range of various assets and businesses.
“Owners of hotels and other tourist sites, as well as the transport business affected by COVID, are commissioning up-to-date valuations of their assets to seek refinancing. We expect this type of valuation to become more frequent with the expiration of the moratorium on loans, especially from companies that have taken advantage of the credit vacation, but have not yet revalued their assets, "added Tsenka Bozhilova.
The company expects the dynamics of the housing market and real estate appraisals to be stable in 2021, investment projects to be successfully completed, thus maintaining sustainable price levels of residential properties.