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The commercial real estate market in Sofia offers the highest profitability within the EU

The rents of offices in the central areas of Sofia remained stable in the second quarter of the year compared to the first at the level of 15 EUR / sq.m. On an annual basis, however, this represents an increase of just over 7 percent.

Cushman & Wakefield's consulting firm Forton provides data from the company.

The profitability of the offices in the center of Sofia reached 7.5% for the period April-June, which is a decrease of 25 basis points compared to the previous quarter, as well as on an annual basis. The prospect is that the profitability will remain stable, the company also points out.

As for the rental levels of the leading shopping street in Sofia - Vitosha Blvd., in the second quarter they increased by 3.8% compared to the first quarter and by 8% annually to 54 EUR / sq.m. Yields are down 25 basis points for the quarter and 75 basis points annually to 7.5% with the prospect of remaining stable.

Sofia is one of the two observed markets with rental growth in this segment of the market. The other is Vienna, with a 1.3% for the year by the end of June.

The rents of first-class logistics areas in Sofia decreased by 2.6% in the quarter and by 5% annually to 3.8% with a yield of 8.5%, which remains stable.

The data show that the Bulgarian market for first-class offices is a leader in profitability within the EU. Higher values ​​were reported only in Moscow and Istanbul - 9.25% and 7.75% respectively.

In the retail segment, our market is competing for profitability with Bratislava and Bucharest within the EU. Moscow is again the leader with 11.5%.

A similar trend is observed in industrial properties.

Business real estate market in Europe

The European logistics sector continues to thrive with strong rental growth against the backdrop of increased investor demand, the report said. This reduces yields by 2 basis points against the backdrop of stable yields from first-class offices and retail space along the leading streets.

The strongest growth in the rents of logistics areas is reported in Central and Eastern Europe - 4.4% in Budapest and 2.7% in Warsaw. In Hamburg, the increase is 3.7% against the backdrop of space shortages and strong demand driven by the rationalization of distribution networks.

The profitability of the first-class offices in the central regions of the markets monitored by the company remains stable at 4.35% - the lowest level since 2002, since such statistics are kept.

Office rents increased by an average of 1.1% for the quarter and by 3.3% annually in the second quarter of the year, the fastest rate of increase since 2012.

Germany is a leading driver in the office market with an average rental growth of 2.4% for the quarter. In Berlin, the increase is almost 6% and in Frankfurt it is just over 3%, supported by strong demand and low supply of Class A buildings.

A total of fourteen markets show a decrease in profitability. It is strongest in Amsterdam - 35 basis points up to 3.5%. Antwerp, Bratislava, Bucharest and The Hague are down 25 basis points.

With the decline in retail volume in the euro area and the change in consumer habits, shopping streets in Europe are beginning to feel cool. Rents fell by an average of 0.6% quarter-on-quarter and 0.9% year-on-year, the biggest annual decline since 2009.

The average yield on areas along the leading shopping streets has stabilized at 4.22%, with most of the markets observed by the company not reporting a change. The overall outlook for the retail industry is weakened, so the company expects rents to fall by the end of the year.