Overseas investors in Sofia, the capital of Bulgaria, are likely to see strong property price growth during 2008, according to market analysts.

Market analyst, Property Secrets, is predicting that shortage of supply will push Sofia property prices up 25% in the coming months.

The city currently has a population of around 1.3 million but rural Bulgarians are flooding in, mainly because the average salary in Sofia is 2.5 times the national average.

In response to the influx, leading architect Petar Dikov has been commissioned to draw up a new master plan for the city.

Neil Lewis, chief executive of Property Secrets, says: 'Sofia is a favourite hot spot for property investors in Bulgaria as it potentially offers ultra-high returns, combined with excellent long-term prospects. It is just at the start of its growth curve so there is plenty of room for growth.'

The city of Sofia will be expanding into its suburban villages and there are also plans to redevelop industrial areas in the north of Sofia, although pollution and poor infrastructure are likely to continue to restrict the popularity of these areas.

At present an apartment in Sofia costs around £37,000 and a two-bed flat can be bought for £100,000.

Mr Lewis describes the city as 'about a year behind the Bucharest market' and advises: 'Now is the time to invest in Sofia, but you need to look for the high growth areas which are close to major employers and have good transport links into the city centre.'