Bulgaria Real Estate Report Q4 2011
Includes 3 FREE quarterly updates
In spite of the rather gradual recovery in the economy, the overall business environment for Bulgaria’s real estate sector has improved. Exports are driving the county’s growth but this has a limited effect on the commercial real estate sector, particularly in light of struggling consumer confidence and high unemployment. Property rents recovered in H210 but then sank again in the first half of 2011. It is important to note that there have been very few transactions in the industry, with the consequence that rental values can be distorted by individual transactions.
The lack of activity also means that take-up of new space has been distinctly lacking. There are a large number of newly completed facilities yet to be occupied, with some having as much as 31% vacant space.
Key opportunities in the real estate market:
In spite of the rather gradual recovery in the economy, the overall business environment for Bulgaria’s real estate sector has improved. Exports are driving the county’s growth but this has a limited effect on the commercial real estate sector, particularly in light of struggling consumer confidence and high unemployment. Property rents recovered in H210 but then sank again in the first half of 2011. It is important to note that there have been very few transactions in the industry, with the consequence that rental values can be distorted by individual transactions.
The lack of activity also means that take-up of new space has been distinctly lacking. There are a large number of newly completed facilities yet to be occupied, with some having as much as 31% vacant space.
Key opportunities in the real estate market:
- An assessment by international real estate consultant Colliers indicates that a real opportunity for developers lies in the under-served mid
- and high-end residential marketplace, where supply is being taken up faster than new projects are coming online. The company reports that no new large-scale projects were completed in 2010 in these residential pipelines and, as developments take up to three years to construct, available supply is becoming scarcer, causing prices to rise.
- This may be the time to enter the Bulgarian property market if investors have time to wait out the recovery. Prices are extremely low but the new supply pipeline has been decimated and as the recovery takes hold, there must come a time when vacancy levels will drop, opening up the market to new development opportunities.
- Bulgaria’s construction industry is suffering from the declining number of projects under development: The National Statistical Institute reported in May 2011 that the country’s construction production index declined by 16.6% compared with May 2010 (already a depressed period itself). However, that was a drop of just 0.1% from the previous month, perhaps indicating that a bottom level has been reached.
- New stock of industrial space coming online has remained entirely empty, except for one partially pre-leased building in Trade Centre Europa.
- Of the 15 shopping centre developments that Forton International lists as under development, more than half of the projects (eight) were on hold as of the end of June 2011. The real estate agent reports that in 2010, there were a record 10 new shopping centres opened in Bulgaria. No new shopping centres opened in the first half of 2011 in the face of over-supply and dropping rents.
Contents
Executive SummarySWOT Analysis
Bulgaria Real Estate And Construction SWOT
Bulgaria Economic SWOT
Bulgaria Business Environment SWOT
Real Estate Market Overview
Real Estate Market Analysis
Table: Bulgaria’s Real Estate Market – Historic Rents, 2010 and 2011 (per m2/month, EUR)
Table: Bulgaria’s Real Estate Market – Net Yield, 2011 And 2012 (%)
Table: Bulgaria’s Real Estate Market – Terms Of Rental Contract/Lease, Mid 2011
Industry Forecast Scenario
Real Estate Outlook
Table: Bulgaria’s Real Estate Market – Rents, 2011-2012 (EUR per m2/month)
Table: Bulgaria’s Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Construction And Infrastructure Outlook
Table: Bulgaria Construction And Infrastructure Industry Data, 2007-2015
Table: Bulgaria Construction And Infrastructure Industry Data, 2012-2020
Macroeconomic Outlook
Bulgaria – Economic Activity, 2008-2015
Business Environment
Bulgaria’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Emerging Europe – Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations, US$mn
Competitive Landscape
Company Profiles
Balkanstroy JSC
East Balkan Properties (formerly known as Equest Balkan Properties)
Glavbolgarstroy
Holcim (Bulgaria)
Mott MacDonald
Trace Group Hold
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
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