The property markets in EU newcomers Bulgaria and Romania and in neighboring Serbia have enjoyed rapid growth over the past couple of years despite the region's poor infrastructure profile, it emerged at the BalREc real estate conference underway in Sofia.

Sofia chief architect Petar Dikov pointed out that Sofia, Bucharest and Belgrade are probably the only European capitals interconnected with second-grade roads instead of expressways.

Sofia will focus on the development of the citywide infrastructure over the next 4 years, an effort that would require 1.2 bln euro in funding, said Dikov. The resource could be raised from central and local government budgets, EU funds and public-private partnerships.

A gradual increase in the building permit fees should contribute funds for the much-needed infrastructure upgrade. Dikov said the fees charged in Sofia average out at around 7 euro/sq m versus 250-400 euro/sq m in Belgrade.

Bucharest is currently the region's top destination for real estate investment, said Marius Turcanu, assistant manager Pricewaterhouse Coopers Romania, during his presentation at the conference

The supply of industrial properties in Bucharest should triple to 1 mln sq m over the next 5 years. Said Turcanu.

Home prices have increased from 1,000 euro/sq m to 2,500-3,000 euro/sq m for prime locations with the average price at around 1,500 euro/sq m.

Slobodanka Prekajski from consulting agency Beoland said residential supply in Belgrade falls in the same price range.

Sofia continues to have the cheapest residential market among the three regional capitals.