In 2006 the Bulgarian construction market was worth 4.6 billion euro, according to a report entitled “Construction sector in Bulgaria 2007 - development forecasts for 2007-2009”. The report was published in June by PMR market research company. Extracts from the report were published by Poland’s CEE Commercial Real Estate News (europaproperty.com).
According to the report, this is an increase of 15.4 per cent compared to the 2005 figure. The report’s predictions are positive. “In the current year, construction and assembly output is poised to climb by about 15 per cent, and in 2008-2009 the growth rate will go up further to 17 per cent, mainly due to the expected launch of several major infrastructure projects anticipated for this period.” According to PMR, the factors instrumental to the future of the Bulgarian construction market are:
- projected sustained growth of GDP and capital expenditure;
- EU financial resources and increasing foreign direct investments;
the availability of building materials and other construction products, resulting from the presence of international manufacturers of construction materials in the Bulgarian market;
- the opening of the construction market and accession to the EU attracting foreign enterprises to the Bulgarian construction market – large scale investments and acquisitions are expected that will improve the quality of services offered and boost production capacities;
- the substantial potential of the Bulgarian commercial property market.
According to Szymon Jungiewicz, head construction market analyst at PMR and author of the report, there are still some obstacles to the growth of the construction sector in Bulgaria. In his view, the main risk factor is the insufficient supply of new manpower in the construction industry as more and more people emigrate to other EU states in search of better paid jobs. The report states that the commercial property growth is driven by international developers. From near non-existence the Bulgarian market for modern commercial space has come a long way in the last few years as Sofia has become the largest and most advanced real estate market in the country.
Currently, Bulgaria is seeing increased interest and activity among newly-entering developers. “Low saturation of the commercial property market and a large target market are the two key factors underlying the expected increases in non-residential construction,” the report says.
In particular modern commercial space, including hypermarkets and shopping malls, has the best growth prospects. Developers investing in the construction of modern warehousing facilities and logistics centres are about to experience a very successful season as well. High economic growth, inflow of foreign investments and improving road infrastructure will drive demand for warehousing space that will outstrip supply in the upcoming years. According to estimates, in the next three to five years retail space is expected to increase by 330 per cent, industrial and logistics stock is to continue to expand by 300 per cent, while the office market will grow by “only” 100 per cent.
Proof of the high interest towards the Bulgarian real-estate and construction sector are the everyday news stories in Bulgarian-language media about the future plans of investors.
On July 9, Bulgarian property developer Euroterra Bulgaria said it will invest 26 million euro in the construction of a residential building in Sofia. In a filing to the Bulgarian Stock Exchange the company said it will buy three plots in Sofia and the southern city of Plovdiv worth over three million euro. The building will have seven store and floor space of 40 000 sq m on a 1.2 hectare plot in Kambanite area in Sofia outskirts. The estimated market value of the building is 64 million euro. Euroterra plans to buy two plots of 268 sq m and 1213 sq m in Sofia’s Dragalevtsi neighbourhood. Among the plans of the company is to buy a building in central Plovdiv on a 10-year, three million euro loan from Piraeus Bank Bulgaria.
On the foreign investors’ front a big news came from Austrian real estate developer Cuubuus. On July 9 Bulgarian-language Standard said Cuubuus will invest over 200 million euroin in Sofia and in Rousse on the Danube. Standard cited Cuubuus’ representative for Bulgaria. Cuubuus plans to invest 55 million euro in an office centre, which will be located near the Sofia Airport. The 75-metre building will stand on a 15,700 sq m plot. The development, which will have a 62,000 sq m floor space, will comprise hotel rooms and offices, as well as a parking lot for 540 cars. Cuubuus will also put over 150 million euro in a logistics and retail centre in Rousse.
