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Realtors: construction co's facing decline in profit margins
The increased cost of construction materials and the standstill in property prices will push down the profit margins of the Bulgarian construction companies by 6-8% in 2008, said local real estate brokerage Yavlena. At the moment, the profit margin per build is 30-35%, considerably higher than the 10-20% margin typical for mature markets, said the realtors. Yavlena is also forecasting zero growth for the price of land plots zoned for residential construction in the bigger cities, citing oversupply. A notable development on the residential segment is the momentum of the secondary market fuelled by non-resident home owners looking to get out of the market, said Yavlena manager Strahil Ivanov. The foreign property investors are cashing in in increasing numbers to take advantage of the undersupply of finished homes. Buyers are looking for finished homes in Sofia's southern neighborhoods but the offerings are very few and far in between. Faced with the lack of supply, buyers are opting for old-construction homes and even prefab apartments where they can move in immediately. The realtors expect new homes to soon come on the market in the previously unfancied northern districts of the capital at prices lower than prefab apartments. Property transactions in the first half of 2008 were flattish year-on-year, said real estate agency Foros. Their number if up just 0.24% to 56,500. Foreign direct investment in the local property market is down to 447.3 mln euro in H1 versus 480 mln euro a year ago. The average housing prices rose 12% over the review period.Source: http://news.dnevnik.bg/