Bulgaria’s property market: waiting on new malls, office space aplenty
Bulgaria’s retail property market was “awaiting the third wave of shopping malls”, while the supply of newly-completed office space continued to decline, real estate consultants Forton International said on October 28.
In its quarterly report on retail real estate, Forton said that five shopping centres, currently under construction, were set to be completed by the end of 2013. Among these, Bulgaria Mall in Sofia was expected to open in November, followed next spring by Paradise Center, the largest mall in Bulgaria at 80 000 square metres. The other three are South Ring Mall and Mega Mall in Sofia, and the Strand in Bourgas.
“The projected pipeline of new shopping mall space will increase total stock to 833 910 sq m in 2013. The new supply will put downward pressure on rental levels but customers will benefit from greater variety of brands and different retail concepts,” Forton said.
Several other shopping centre projects in Bulgaria were on hold – Evropa Center in Sofia, Markovo Tepe Mall and Trimontium Center in Plovdiv, Galleria Varna, as well as Grand Plaza and Danube Mall in Rousse.
“The Bulgarian retail market is set to become much more mature by the end of 2013 with the completion of the five shopping malls currently under construction. Thus, the market will have sufficient stock of prime retail space and at the same time there will be limited retail pipeline.
“As a result the market predictability will increase significantly as it will be evident which schemes are performing well and they will not be threatened by new competition. That is why an increasing number of international investors with lower risk tolerance will be attracted by the more mature Bulgarian investment market,” the consultancy said.
In a separate report on office real estate, Forton said that the amount of new office space rented was about equal to the amount of new office space completed during the third quarter of 2012. Overall, still more than 1.57 million square metres of office space was vacant.
“Prime quality office developments at good locations enjoy high interest by potential tenants and as a result their occupancy levels have gradually increased,” to the detriment of lower-ranked office space and developments in less-than-ideal places, Forton said.
“Where office stock distribution by location remains unchanged, more and more companies focus on locations with good access by public transport. In this regard the extension of Sofia subway Line 1 and the commissioning of the new Line 2 has influenced demand,” the report said.
In terms of investment value, Forton said that investors were “conservative” towards Bulgaria’s office market “due to the lack of strong market fundament to fuel demand for new office space and support sustainable rental growth.”
(Photo of Grand Mall Varna by blondinrikard/flickr.com)
