Positive and negative aspects of the Bulgarian real estate market for investors

More and more capital is being directed to the global property sector, which requires investors to be redirected to more subordinate markets, according to experts.

The potential for property price growth, good returns and a stable currency linked to the euro are among the main reasons for attracting investors in commercial properties to Bulgaria and in particular to Sofia. This is what Professor Andrew Baum of the University of Oxford said during a lecture on the real estate brokerage holiday organized by the National Real Estate Association.

Good market supply, a good debt-to-value ratio, and the fact that the Sofia market is still not among the overvalued markets in Europe also attract investors, Baum commented.

The main problem on the market in Bulgaria is related to transparency, he added. Bulgaria is still among the countries with a semi-transparent real estate market according to the index of the consulting company JLL, although it is the country with the fastest pace of improvement in the world.

Another problem comes from the small size of the market. According to Andrew Baum, the best approach in this case is to present Bulgaria as part of the regional market of Southeastern Europe as an investment destination.

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More and more capital is being directed to the property sector because of the opportunities to achieve higher returns and returns, Professor Baum commented. The range of property types already attributable to business properties - including housing, student housing, hospitals, prisons, etc. - is expanding.

This necessitates the adoption of different income models than usual, as well as the development of the property management sector.

Cross-border investment is also increasing, but the global market is still not quite global, he said. It invests in a small number of countries, with 30% of the investment market concentrating in Europe, another 30% in North America and almost 30% in the Far East. The remaining share of about 10% is allocated to the Middle East, Africa, South America, Australia and the underdeveloped parts of Asia.

Baum has also set an example with CBRE's global fund, which invests in just 25 countries around the world. According to him, too many investment funds are already being concentrated in only one market, for example pan-European funds, against the backdrop of low returns in leading markets.

In this connection, he believes that economies such as Russia, Iran and Turkey should also be among the leading markets for investment in commercial property.

According to data provided by Andrew Baum, over EUR 2 billion has been raised in European Investment Fund funds in the third quarter of the year. Most of them are aimed at Germany and the UK.

At the same time, the world-wide investment property market is estimated at around 30 trillion. dollar.

Baum pointed out that the biggest investors come from countries such as Saudi Arabia, Qatar, the United Arab Emirates, the Netherlands, the Asia-Pacific region and others. To them joins the largest investor in the world in general - the Japanese state-owned pension fund, which wants to start investing in real estate. This suggests that the fund will invest in real estate immediately $ 40 billion, and then make annual investments of the order of 1-2 billion.

Such expansion of capital requires reorientation of investors to other markets, not just the leading ones, he concluded.