The Bulgarian commercial property market is expected to face over-saturation in the medium-term, according to projections made by Absolute Capital Management (ACM) investment fund manager Robert Provine. The fund raised 100 million euro a year ago. It planned to invest in Central and Eastern Europe with a focus on Bulgaria and Romania. Despite its intentions, it had no project in Bulgaria yet, investor.bg reported. Provine said that the company preferred to concentrate its efforts on Romania and Ukraine for now.
The large number of commercial property projects in Bulgaria made ACM managers conclude that the segment would soon reach saturation.
The same predictions were recently made by consultancy company Colliers. The Bulgarian and Romanian commercial property markets are comparable in terms of risk and transparency, but the fact that the Romanian market is larger is a reason it offers better investment opportunities, ACM representatives said.
Miranda John, manager of the independent mortgage broker Savills Private Finance, has the opposite opinion. According to her, Bulgaria has become increasingly popular with property investors. The country is now considered a medium-risk investment location, she said, as quoted by the UK’s The Daily Telegraph. The number of lenders who will finance purchases in Bulgaria is increasing, along with the number of successful developments in the country. John warned buyers to think long and hard about “other destinations further afield, where capital growth has been strong, such as Cape Verde, which are vulnerable as the number of visitors could fall drastically if a flight route disappeared or a hefty air tax were to be levied”. Property has become one of the largest ways for people to save for their retirement in the UK, where about seven million homeowners are using their houses to at least partially fund their retirements, according to research by Fool.co.uk.
As for industrial property it seems to be neither booming nor saturated. According to Colliers International real estate company, industrial property yields in Bulgaria stood at 10 per cent at the end of July and are expected to fall below this mark with further development of the sector. “Only a few investment transactions have been recorded on the market to date, involving relatively small distribution facilities. The yields for these deals are estimated at 10 per cent,” Colliers International said. Yield levels will be compressed as a result of more investment grade transactions, which are expected to take place with further development of the sector.
The total inventory of contemporary owner-occupied and speculative industrial space in Sofia and the region is estimated at 1 200 000 sq m. Rents for industrial space in Sofia remain stable and continues be between 3.5-5.5 euro a sq m a month for prime and secondary rents. In Varna, on the Black Sea, the prime rental rates have decreased slightly because of Logistics Park Varna, which forms most of the prime supply and offers warehouse space at five euro a sq m.
More than a third of the total inventory in Sofia is located in areas close to the international airport. Kazichene and Bozhurishte, located just outside the eastern and western parts of the city, respectively, are the fastest developing new industrial zones. The forecast is for new industrial developments to concentrate in the eastern part of the city (along the ring road between the Trakia and Hemus highways all the way to the town of Elin Pelin) and the western part of the city (along European Transport Corridor X).
