Business properties in Sofia offer investors the highest yield in the EU

In Europe, rents for first class offices have accelerated growth, logistical areas are on the rise, but declines are reported in shopping streets.

Business properties in Sofia - offices, commercial areas on the leading shopping street (Vitosha Blvd) and logistics properties offer investors the highest yield within the European Union (EU) in the third quarter. This shows data from the consulting company Cushman & Wakefield.

Office rents in the central areas of Sofia, for example, reach an average of 13.5 euros per sq m, the company said, referring to data gathered by its partner Forton for Bulgaria. There is no change in rental rates for the quarter, but on an annual basis there is a growth of almost 4%.

Yield remained stable at 8%, which did not change for either the quarter or 12 months. Expectations, however, are by the end of the year to have some decline.

Within the EU, Bucharest in Romania ranks second with a yield of 7.25% for first-class offices.

Higher yield is reported only for Moscow's central business district - 10.5%. In Istanbul, its level is as high as in Bucharest - 7.25%.

In the EU as a whole, excluding Sofia and Bucharest, the return on investment in first-class office space fluctuates between 3% as in Munich and 6% as in The Hague, and the trend is also a gradual decline, according to company data.

Regarding commercial areas along the main shopping streets, the rents on Vitosha Blvd in Sofia remain at EUR 46 per sq m and in the third quarter of the year. Yield reaches 8.5% and no change is expected.

Within the EU, Bucharest is second with 7.5% yield from similar retail space.

For Europe as a whole, Moscow is again a leader with 12.5%. In leading markets like Paris, Vienna, Rome, Milan, profitability is even below 3%.

In logistics areas in Sofia, rents remained stable at an average level of 4 euros per sq m in the third quarter, which is slightly more than 5% more on an annual basis and the trend is for growth due to increased demand and insufficient supply. Yield declined by 25 basis points annually to 9.25% and is expected to remain stable.

Second is Bucharest with 8.75% yield, and third is Budapest with 8%.

On average, Europe's office space rents rose 2.7% in the third quarter on an annual basis, up from 2.1% in the second quarter, according to Cushman & Wakefield data.

Logistics rents finally go up - with an average of 0.9% in the July-September period after four consecutive quarters of decline, but an average decline of 0.4% is expected for the year, experts estimate.

In commercial areas of Europe's leading commercial streets, the rental trend remains negative. Decrease in rental rates was recorded in 43 of the 45 observed markets, with the average decrease reaching 0.4% in the third quarter on an annual basis.