The Balkan real estate expo, BalPEx, held in Sofia’s Inter Expo Centre on April 18 to 20, outlined trends which suggest that Bulgaria’s real estate and construction sectors might have reached a stage of maturity, just five years after the boom started.
Until now, residential holiday complexes had been the most-advertised items on international real estate websites; BalPEx, which is one of the largest of its kind in South Eastern Europe, demonstrated this shift in investor interest.
About 150 companies exhibited projects worth more than two billion euro, with most of the projects featuring office, logistics and retail centres or industrial-commercial parks, instead of residential and holiday complexes. The former are mixed-use developments with office buildings, warehouses, stores and exhibition spaces.
Among the exhibitors were quite a number of banks adding to the feeling that this year, entrepreneurs and investors in Bulgaria’s real estate sector were after the big money involving business, rather than residential projects.
This was most visible in the shopping mall segment where, two years after the opening of the first shopping mall in Sofia, investors were still very attracted by it.
Although most of the big cities already have shopping malls, or are in the process of getting one, a large number of the projects presented at BalPEx were about shopping malls.
One of the new trends was that foreign companies have now shown interest in building shopping malls in Bulgaria, as opposed to previous years when entrepreneurs were mainly Bulgarian companies.
The other considerable change is that the bulk of projects displayed at the expo did not involve the capital Sofia but Plovdiv, Varna and Stara Zagora, all having the year 2009 as a deadline, which will make 2009 a decisive year in this segment.
BalPEx saw the project Universe shopping centre of the Israeli Ginio Group, which features the construction of a large commercial park in Bulgaria’s second-largest city of Plovdiv. It will be the first project of Ginion Group in Bulgaria and according to Stanimira Baronova from the consultancy company Entek BG, it was almost ready at the design stage. “Construction works were soon to start,” she said, quoted by Bulgarian-language Dnevnik daily.
“The Universe shopping centre is to have 50 shops and a total of 17 000 sq m commercial area out of a total 60 000 sq m,” she said. “The deadline for completing the project is set for 2009.”
Ginion Group had plans for building a similar commercial centre in nearby Stara Zagora, but the work on it has not yet started, she said.
The Polish GTC – Global Trade Centre, displayed three projects at the expo, all about shopping malls under the name of Galleries. The three malls will be built in Stara Zagora, Varna and Bourgas and all of them will have to be ready by the middle of 2009. The mall in Varna will be the largest of the three with 160 shops and 38 000 sq m of commercial space. The one in Bourgas will have 130 shops and 37 000 sq m of commercial area, while the Stara Zagora mall will have 130 shops but only 27 000 sq m of commercial area.
Bulgarian companies, such as Evromarket and Plovdiv-based Victoria Group, have also shown plans for building and developing the segment of shopping malls. The first displayed projects worth 160 million euro. The company plans to invest in the construction of eight industrial-commercial parks that would be built over the next two years.
Work on the first project of a built-up area of 50 000 sq m in Plovdiv will start this summer and will cost 20 million euro.
Evromarket plans to build parks with a built-up area of between 30 000 and 100 000 sq m.
“It’s a new concept for the Bulgarian market. The idea is for every customer to have an office, a show-room and a warehouse, all in one place,” the company said, as quoted by Dnevnik daily. The concept targets industrial manufacturers that sell their output themselves.
After Plovdiv, Evromarket will develop similar projects in Sofia (which will be the largest one), Varna, Bourgas, Rousse, Stara Zagora, Pleven and Blagoevgrad. It has secured land plots for most of the projects.
Victoria Group, owned by Plovdiv businessman Vetko Arabadjiev, announced plans for investing in projects related to tourism. Currently, Victoria Group owns seven five- and four-star hotels and at BalPEx it showed an interest in developing the congress tourism segment. Again the projects will be developed in Plovdiv and not Sofia.
Victoria Group will invest in the construction of a conference centre called Maritsa, which will be next to the premises of Plovdiv Fair complex. The multifunctional complex will have a built-up area of 45 000 sq m and will feature underground parking, a shopping centre on an area of seven thousand sq m, a sport and hotel centre, as well as 150 offices and congress halls. Construction works are supposed to start this May and the project is expected to be finished by 2009.
The second project of Victoria Group, Victoria Gardens, is a mixed complex of residential and commercial areas featuring shops, offices, an Olympic size swimming pool and an indoor cycling track. The residential part of the complex will have four residential apartment buildings with a total of 270 apartments, 43 shops and 180 offices. The whole complex will have a built-up area of 44 000 sq m.
Shopping malls were also on the agenda of major consultancy companies operating in Bulgaria. Colliers, Foros and Forton presented projects for eight other malls at the expo. Again, most of the shopping malls will be built outside Sofia in the towns of Plovdiv, Varna, Stara Zagora and Rousse on the Danube, and the deadline for completion is set for 2009.
The ambitious plans of the companies come three days after Emanuil Santev, head of real estate department at Hypo Alpe Adria Leasing, said that the shopping malls market segment could face a crisis in 2010. Santev took part at the second regional conference Balkan Real Estate Conference (BalREc) held in Sofia on April 15 and 16. According to Santev, in terms of shopping malls, a crisis was approaching because of the oversupply of malls in the country.
If Santev is right than companies will have just one year to get a return on their investments as the bulk of the projects announced at BalPEx have the year 2009 as a deadline.
