An Architects Perspective on the Sofia Property Market
A large part of an Architects job is working up front with developers to help them structure their business case before land deals are executed and projects become live. We get a preview of trends across the board where the major decisions are being made that will affect the market over the coming months. Aside from a few exceptions, Architecture is not about creating the next iconic monument for a city, as much as we would all love to, it is a practical endeavor to create attractive environments and buildings by responding to both financial and physical constraints. Essentially, alongside the client and the management teams, we design physical businesses that will significantly influence the bottom line for our customers for years to come.
The Property Market: Over the last 13 years, we have seen the same trends as everyone else, from the chaotic pre-crisis bubble through the financial crisis to land where we are now. We have been involved in large scale projects in Bulgaria through all these periods and have seen the changes in how companies and individuals procure and deliver projects over that time. Although the period pre-recession invites criticism, there were some examples of best practice starting to emerge, the advent of the independent project manager, the appointment of professional cost management, sustainable design and assessment are just a few services that were beginning to become established alongside foreign investment. These appointments seem to have only partially returned. We and others would certainly welcome a more unified and common practice approach to building procurement. Despite that, 2017 is a very active period producing some great projects, the quality of the delivery across all the professions in the construction industry is on a significantly higher level than ever before, the marketplace is healthily competitive and bad projects and bad practices are becoming unsustainable, retail clients demand more which means you have to be at least proficient to be prosperous.
Masterplanning and Large Scale Projects: Good masterplanning creates the place and generates the value. The majority of our workload locally and internationally is on mixed-use masterplans incorporating environments, workplace facilities and residential communities. It is a sector where SGI has a long history allowing us to bring to bear a significant amount of expertise. Garitage Park is probably the most prominent in Bulgaria right now and is a good example of how conflicting uses can be organized in such a way that they complement each other’s function and create a valuable and desirable property product. When we started Garitage Park the client was exceptional in their vision and willingness to look at best practice and invest upfront in their design and sustainability aspirations. They understood the benefits of this in the market place and are currently reaping the rewards for a commitment to delivering above and beyond what was typical for the market at the time of inception. A large part of bringing this vision to bare was committing to International standards for sustainability methodology, in this case BREEAM Communities, an internationally recognised route to improving, measuring and certifying the sustainability of large-scale development plans and a great tool for giving a practical framework to a sector that is still in its infancy.
The Residential Sector appears to be motoring along nicely and although there is a lot of development, there is still a strong, domestically driven demand. Wages are increasing year on year, people are genuinely looking for a better standard of living, especially over time as generations’ trade places and old building stock does not meet the expectations of modern living. Competition is keeping the prices low all leading to what we see as a competitive, but stable situation. How can we create a better product? More sustainable design and more focus on energy efficiency certainly. Generally post-recession there has been more attention given to the quality of floor planning design and quality living spaces that work efficiently. In the city the technical quality of apartment buildings is refining all the time. There are still some poorly executed examples being delivered and it has been a disappointment to see some projects going up in some areas which deserve much better. I think moving forward competition should help drive out some of the more flagrant examples of shoddy design and construction. Not all bad buildings are because of the Architects it has to be said, often developers who throw up poor quality projects are making design decisions and cost efficiencies midway through the construction phase which can have very negative consequences. On the flip side there is some fantastic design and some very mature Architecture coming out of a number of local practices at the moment especially in apartment and single house design. The majority of the professional developers have improved their spending of investment capital through the application of better technical solutions and a better understanding of where and how to spend it. I think it is safe to say that the residential property situation in Sofia is distinctive and governed by its own rules, it can take some time to fully understand the idiosyncrasies that make up the local psyche when it comes to choosing a home and developers can sometimes get fixated on these market pointers to the detriment of the projects themselves. The gated community phenomenon that is currently so prevalent is often regarded by city planners as a reflection of society’s ills, accused of creating physical barriers within the social structure of a city and exasperating class divisions, it would certainly be nice to see more government attention to security in some areas, a more open, connected and socially outward looking approach to residential sites would enable better planning solutions for the city. Generally the sector is looking stable, there may be some adjustment in the output of projects over the next couple of years as absorption rates settle.
The Office Sector: Construction budgets are still constrained by rental returns and earnings are still fairly low and efficiency in design is the name of the game, obviously a very active sector over the last year or so with a significant amount coming to market at the back end of 2018, also again some very good examples of workplace design from some of the larger Architects with some good additions to the city planned over the next five years. The challenge for the market place is what will happen to the buildings that are left behind as leases end and companies pack up and move to shiny new facilities. In our practice we have been seeing for some time a reticence in developers to engage in new office development, preferring to change use where possible. We expect that by the end of 2019 the market will need to catch its breath and will probably pause for a period as demand catches up with supply.
Summary: Broadly speaking the property sector in Sofia and Bulgaria has the potential for several years of solid growth, on the other hand it is hard to fully understand the pace and intensity of that development, much will depend on government policy and the level of foreign investment in IT, manufacturing and relocation. Sofia and other cities in Bulgaria offer a great platform, but are often overlooked by International surveys for investment and play second fiddle to Bucharest, there are small things that government could do to make Bulgaria more attractive and with Brexit and the other issues regionally this would be a great time to take a closer look.
Stephen George International
Business Center Bellissimo, Block A, 10th floor
102 Bulgaria Blvd., Sofia 1618, Bulgaria