Despite everything that has been said about the Bulgarian property market bubble either having burst or being just about to, the cost of renting industrial and logistics plots in the capital Sofia is among the highest in a list including the Baltic countries, Romania and Ukraine, according to Estonian real estate consultancy company Arco Vara’s latest report on the property market.
Sofia ranked second after the Ukrainian capital Kiev, with rents in the Bulgarian capital of four to 10 euro a sq m. In Kiev, rents varied between 7.4 and 11.5 euro a sq m. The highest rents in the other countries did not exceed six euro a sq m, according to the report.
Sofia was maintaining high prices because the field was poorly developed and demand exceeded supply, Dnevnik daily said. The phenomenon was the same throughout the country. As a result, loans in this sector in Bulgaria were higher even than those in the countries of Central and Western Europe.
The report showed that, currently, Sofia had 1.2 million sq m of industrial plots, Plovdiv had 450 000 and Varna, 300 000 sq m. This meant that the return on investment was about nine to 10 per cent.
As to retail properties, prices in Bulgaria were similar to those in the Baltic countries and significantly lower than those in Ukraine and Romania, Dnevnik said. Monthly rents in malls in Sofia were from 15 to 60 euro a sq m and on major trading streets, they varied from 40 to 100 euro a sq m. In Ukraine, the rents for a sq m in trade streets reached 300 euro, while in Romania, rents reached 150 euro.
The report by the Estonian consultancy emerged at the same time as a report by peer company MBL. According to MBL, demand for modern industrial space in Bulgaria was remaining high amid a scarcity of free industrial capacity.
As a result, construction for personal needs, which constitutes the bulk of the industrial property market, continued to be the preferred alternative for many companies.
Nevertheless, the share of speculative property is expected to gradually increase because of the many projects currently underway or at an advanced stage of development in Bulgaria’s key cities Sofia, Varna and Plovdiv.
According to MBL, the price of land will be subject to downward pressure because of growing supply, the smaller volume of capital attracted, and poor infrastructure.
MBL said that the market was the most developed in Sofia, where the space taken up by new and renovated buildings totalled 1.3 million sq m as of the end of the first quarter of 2008. Storage space accounted for half of the total industrial property, followed by “flexible” (or fit-to-user) space (30 per cent) and production facilities (20 per cent). About 0.2 million sq m of the total is lettable space.
Another property consultancy, Emerging Real Estate, pointed to Sofia as an attractive destination for residential property investors.
Company director Deborah Fox was quoted on various property specialist websites as saying that the neighbourhoods responding to the “quality area” definition were Sofia’s Lozenets, Iztok and Doctors’ Garden.
“Sofia is a very buoyant market; there is still a lot of demand and not enough supply at the moment ? especially in the really nice areas,” Fox said.
Meanwhile, Europolis real estate agency said that return on residential and office space investments in Bulgaria’s second largest city Plovdiv was hovering at about 10.5 per cent.
At the BalPex property expo held in Sofia in April, it was re-affirmed that the industrial space market was set for a leap. At the expo, details were given of what is to be the largest industrial park not only in Bulgaria but also on the Balkans. Industrial Park Sofia, to be built in nearby Bozhourishte, will comprise spaces ranging from 13 000 to 200 000 sq m.