The prospect of the euro keeps the property market under pressure

Silvia Veselinova, owner and manager of Idea Buildings, talks to Bulgaria ON AIR

By MARTINA MARINOVA / Photography IVAYLO PETROV

After a decade of financial incentives, the word of the year is “inflation”. How does it affect the property market in Sofia?
Inflation is a global phenomenon, but it is also felt tangibly in Sofia’s property market. The rising prices of construction materials, energy, and labour have increased the cost of new homes. However, the market remains dynamic, supported by strong demand. Properties in Sofia are establishing themselves as one of the safest instruments for storing value, especially in uncertain times. Bulgaria’s capital attracts investment and migration, which maintains stable price growth.

Structural steel prices doubled between November 2019 and November 2021. How have the prices of basic construction materials been moving lately? How much exactly has the cost of housing construction changed?
The prices of materials such as steel, concrete and wood have reached record levels in recent years. This has increased the cost of housing construction by 20-30%. Although growth in some categories has stabilized, the base levels remain high. This inevitably increases the prices of properties. At Idea Buildings, we believe that high-quality materials are not just an expense, but an investment in the future – in homes that stand the test of time and bring security and comfort for generations to come. Our mission is to create sustainable and long-lasting solutions that inspire trust.

“Properties in Sofia are establishing themselves as one of the safest instruments for storing value, especially in uncertain times”

The interrupted production and deliveries due to the lockdowns in 2020 created long-lasting shocks in the supply chain. There were shortages of steel, cement, and lumber. Do some of these problems remain to this day?
The lockdowns of 2020 have left a lasting mark on global supply chains. Although logistics channels have begun to recover, instability and increased costs for transport and raw materials continue to be part of everyday life in the construction sector. However, at Idea Buildings, we rely on sustainable partnerships with proven suppliers to minimize risk and delays.

Inflation is also seriously affecting the labour market, which was already stretched to the limit by the shortage of qualified people and the constant outflow of workers to Western Europe. How do you cope with these problems?
The labour market in construction is facing serious challenges – the outflow of personnel abroad and the shortage of qualified specialists have been a problem for many years. Additionally, inflation is putting pressure on labour costs, which further complicates the situation. We are proactive – we invest in training, offer competitive conditions and provide opportunities for the development of our employees, as well as freedom to unleash their potential.

Idea Buildings is a company with two decades of experience in the market – it started with the sale of the family apartment to finance the first construction. What does the company look like today?
2025 is special for us – the year in which Idea Buildings celebrates its 20th birthday. These are two decades of ambition, efforts and dedication that have made us what we are today – one of the leading construction and investment companies in Bulgaria. We started with a dream to create something significant, to change the ideas about modern housing and to offer not just buildings, but homes with a soul. The past twenty years are proof of our sustainability and vision. But behind every successful year stands our team – people with experience, ideas and passion who turn every concept into reality.
Today, Idea Buildings is synonymous with quality, functionality and innovative design. Our portfolio includes a number of projects that not only set standards but also inspire. Each of our buildings is a combination of detailed planning, contemporary architecture and sustainable materials. What drives us forward is the desire to create value – homes where people feel safe and comfortable. Every detail in our buildings reflects our pursuit of perfection.

In previous upswings, the Bulgarian market has always seen new entrants, inexperienced and often without particularly honourable intentions. Do you see anything similar today?
Every upward market cycle attracts new entrants, which is a natural process in itself. However, the current dynamics also reveal challenges – some of these new companies enter the market without the necessary experience, strategy or long-term vision. This can lead to unprofessionally executed projects and disappointed clients who lose not only financial resources but also trust in the entire sector.
Yet, the real estate market is evolving, and with it – the expectations of clients. Today, they are more informed and demanding, seeking transparency and attaching great importance to the reputation of the companies they work with. At Idea Buildings, we are fully dedicated to meeting and even exceeding these expectations. We maintain high standards of quality, ethics and professionalism, and our long history is proof of this approach – each project is not just a building, but an investment in the future, which brings value for generations to come.

The increase in property prices, especially in Sofia, continues. Some experts even speak of a bubble, citing the price-to-rent ratio – a classic indicator. However, is it applicable in Bulgaria – one of the countries with the highest share of home ownership?
The ratio between property prices and rents is a classic indicator of a bubble, but in the Bulgarian context, this model is not fully applicable. The high share of owner-occupied housing in the country, together with the cultural and economic tradition of investing in real estate, make the market more specific.
In Sofia, active demand continues to be a driving force – both from young families and from investors who see property as a method of dealing with inflation and economic uncertainty. At the same time, the price increase reflects both increased construction costs and the limited supply of quality new properties. It is also important to note that in Sofia, demand is also supported by internal migration: the city remains an attractive centre for education, work and business. Rather than a classic bubble, the current situation shows a market that is adapting to new economic realities while maintaining its resilience.

Energy prices have risen in the last years at a rate that has shocked many consumers. How is this affecting the demand for housing and construction? Is there a growing interest in energy-saving solutions and alternative heating sources, for example?
Record energy prices have changed customers’ priorities. Sustainability and efficiency are now leading factors when choosing a home. The demand for homes with quality insulation, energy-saving technologies and alternative technology such as heat pumps or solar systems has increased significantly.
At Idea Buildings, we follow this trend by integrating highly efficient solutions into each of our projects. We strongly believe that homes that minimize energy costs and provide comfort are not only a practical choice but also the key to a better quality of life. These innovations do not just meet the needs of today but also create sustainable value for the future.

The Green Deal proposed by the European Commission provides for much higher environmental requirements for buildings. What effect will they have on the market in Bulgaria?
The Green Deal is a challenge, but also an opportunity for Bulgaria. Higher environmental standards for buildings will lead to higher quality and sustainable projects, although there will be an increase in initial costs. At Idea Buildings, we are ready for these changes – they are in line with our philosophy of sustainable construction. The Green Deal motivates us to further build on what we are already doing – from the implementation of energy-saving technologies and the use of ecological materials to the creation of spaces that are both functional and responsible for nature. We believe that we are part of the change that will take the construction sector in Bulgaria to a new level.

Three years ago, you told us that in your opinion, the tension in the market is partly due to the expectations for Bulgaria’s eventual accession to the eurozone. How does this factor affect it now that the adoption of the euro is already tied to specific dates? How achievable they are is a completely different question…
Expectations for Bulgaria’s accession to the eurozone continue to play an important role in the real estate market. The announced date has created additional interest in real estate investments, as many people see them as a way to protect against possible inflationary risks in the transition to the euro.
This prospect has stimulated demand, especially in the high-quality property segment, where investors expect stable value. Regardless of whether the announced date for membership is met, the market will remain under pressure, as expectations have already formed trends.

“Expectations for Bulgaria’s accession to the eurozone continue to play an important role in the real estate market”

Is the ratio between purchases with own financing and bank loans changing?
Yes, we are seeing a gradual change. The share of transactions with own capital is increasing, especially in the premium segment of the market. This reflects both the economic uncertainty that is making people look for stable investments and the fact that buyers are increasingly appreciating the security of direct financing.
At the same time, bank lending remains the main tool for many, as banks offer relatively good conditions, despite rising interest rates. At Idea Buildings, we work both with customers who use personal funds and those who rely on loans, and our goal is always to offer flexible solutions that meet their needs.

Previous construction “booms” left Sofia with entire neighbourhoods with a staggering architectural eclecticism. For which we must certainly blame the absent control by the chief architects of the municipalities and the capital. Has there been progress in this regard in recent years? Can the aesthetic damage from the past ever be erased?
The architectural eclecticism inherited from past construction booms is the result of a lack of coordination, control and a clear vision for the development of the urban environment. These architectural compromises have caused long-lasting aesthetic and functional damage to the appearance of Sofia.
However, progress has been noticeable in recent years. Institutions are starting to pay more attention to control and quality, and public expectations for new projects are higher than ever. At Idea Buildings, we actively participate in this process by creating buildings with a harmonious design that contributes to the urban environment, rather than burdening it.