Malls In Sofia To Triple In Space By 2010
After the success of the first four malls in Bulgaria, this sector emerged as one of the most attractive investments last year, Pavlina Nikova, project manager in Forton International consultancy, said, quoted by Pari daily.
This trend triggered the announcement of more than 10 mall projects in Sofia, five in Plovdiv, five in Varna and at least three in Bourgas. At the same time, investor interest has shifted to smaller cities in recent months.
The first three malls in Sofia, which opened doors in 2006 – Mall of Sofia, City Center Sofia and Sky City – attracted large international brands, thus growing into the main competitor of high retail streets.
Their success brought about the start of more than 10 shopping compounds in the capital. Most were announced in 2007 and are currently at different development phases – from the drawing-board stage to more advanced works.
However, demand for modern retail space still considerably outstrips supply. The aggregate leasable area of the three operating malls is 51 900 sq m. Currently, there are vacant units only in Sky City in Geo Milev borough. Forton analysts expect that this trend will sustain itself throughout the whole year, because none of the malls currently under construction in Sofia will be finished before the end of 2009.
The next two years, however, will mark the turning point for the retail space market, according to Forton consultancy. The pipeline volume in Sofia is significant, but they are unlikely to come to fruition as planned. The market could develop in two ways. The first scenario envisages the realisation of projects, developed by international investors, who will manage to secure occupancy by large tenants. The second will abide by the principle: “First come first rented.” If the second alternative is applied, a number of projects will change their original concept, so that the market does not experience over-saturation.
Currently, active work is only in progress on 20 per cent of announced projects. Little prospect exists of over-supply, Forton specialists said, quoted by Pari. The capital can absorb about 10 large malls. Construction on the first four is expected to finish by the turn of 2010 and this will be the so-called break-even point, when supply will catch up with demand. It will happen after the delivery of Serdika Centre, Carrefour Centre, Mega mall and Bulgaria mall.
The gross leasable retail and entertainment areas of these projects will total 162 000 sq m, which will be added to the market in 2009-2010, Pari reported. The second turning point in Sofia's market will occur at the end of 2011, when another six malls are scheduled for completion: Riofisa’s CIVIS CENTER, Europa park, Tsarigradski mall, Sofia Acropolis, Danaos shopping centre and Forum Sofia.
According to preliminary calculations, the aggregate lettable retail area in these six compounds will approach 400 000 sq m. The delivery of such a large amount of commercial space to the market will boost its competitiveness, Forton advisory said.
The global credit crunch affected primarily small investors who encountered problems in receiving finance and were wiped out of the market. This alerted tenants to the fact that they had to wait for the completion of the serious investors’ projects and book space there. Competition between retailers has also intensified. A year ago only a couple of companies could rent a unit of 1000 sq m. Now they have risen in number.
· Large cities
Two shopping centres opened for business in Varna last year - Pfohe Mall and Central Plaza, which can hardly be classified as malls, due to the small leasable areas.
The first real mall in Varna will open at the end of April this year - Mall Varna, and another three are under construction – Grand Mall, Varna Towers and Cherno more (Black Sea) Park.
Bourgas does not boast an operating mall at present. Tria, at troikata squate, is the only large shopping complex. The announced projects are still at an incipient stage and will be finished at the close of 2009 at the earliest. The biggest ones include: Izgrev-Carrefour retail centre, Galeria Bourgas and Grand Gallery.
Plovdiv does not yet have any malls. This accounts for the high demand of retail space in the city centre. Four mall establishment are expected to spring up over the next two years - Mall of Plovdiv, Markovo Tepe Mall, Galeria Plovdiv and Retail Park Landmark. Their completion will boost rental retail market by about 95 000 sq m. Spanish Riofisa announced its project for the CIVIS complex in Plovdiv, which will house a mall with a leasable area of 54 200 sq m.