BALREC 2017: Record Number of Deals for Retail Space, Dynamic and Stable Market for Office Buildings
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BalRec conference gathered investors and experts from the real estate sector for the 15th consecutive time to discuss and analyze the investment environment in Sofia and the country and the development and trends of the residential, hotel, retail and office space market. BalRec 2017 was opened by the Mayor of Sofia Yordanka Fandakova and was organized in 4 discussion panels with representatives of consultancy, investment and construction companies and investors. According to the main conclusions of the conference, the market is currently active and has stable prices, and this steady growth is expected to continue in 2018.
Investment deals for a total record amount of EUR 850 million have been signed since the beginning of 2017. A major contribution has been made by the sale of several large malls. It is expected that the interest of funds from South Africa, the UK and the USA will continue, not only for commercial but also for office buildings, hotels, multi-functional complexes, etc. The investors believe that Bulgaria is attractive due to low taxes, EU membership, state support for large projects, affordable prices of construction sites and labor force.
During the discussion on the hotel sector it was noted that more and more international hotel chains are entering Bulgaria, which has an overall positive impact on the level of service in the sector and the image of the country as a tourist destination. Investments are mainly concentrated on the Black Sea coast and in Sofia. Furthermore, the employment and average price per night in the capital are expected to increase due to the record tourism boom in business or holiday trips, the upcoming presidency of the Council of the EU and the entry of new international hotel brands.
The residential market is mostly active in the capital and the big cities. Sofia records 10% growth of housing deals, registering a major interest in two and three-bedroom apartments. Half of the deals have been funded with credits at historically low interest rates of 3.3 to 3.8%. Most of the deals have been concluded at prices between EUR 800 and 1 200 per square meter and significant changes are not seen in 2018, according to experts. It is also believed that the increased interest for closed multi-functional complexes will continue, which puts forward the construction of good transport infrastructure in the peripheral residential districts of Sofia, where such sites are mainly built.
Retails space market is also stable, which is evident from the huge volume of deals in 2017 in large cities across Bulgaria. The most aggressive on the market are fast-moving consumer goods chains as rental rates have slightly increased – to 8% for Sofia and twice less for Plovdiv, Varna and Burgas.
The office market is also developing dynamically. In Sofia, most of the new buildings are bought or rented even before completion of the site. The most active clients are IT and BPO companies, and the deals are mostly triggered by the need for a larger office due to expansion of the business or consolidation of several separate offices into a single one. Most deals range from 7 000 to 12 000 square meters. In Sofia, new 500 000 sq.m. of office space is expected in the next few years. Plovdiv, Burgas and Varna also appear to be good destinations for investors in the construction of office buildings.
We are ready to support every business that works for its city and has an attitude to the people who live and work there, Yordanka Fandakova, mayor of Sofia said during her welcoming speech to the conference participants. The event was also attended by Vladimir Danailov, CEO of Sofia Municipal Privatization and Investment Agency (SMPIA). He discussed with industry experts the interactive online map of the industrial, office and production areas in Sofia, initiated by the Investment Analysis Department at SMPIA, which was made accessible several days before the conference. Currently, the beta version http://investsofia.com/en/office-and-industrial-map-sofia/ contains over 100 sites and will be constantly updated with new sites in the capital. The visualized information is useful for investors entering Sofia, consulting companies in the due diligence process as well as for growing existing businesses that need information about hot business areas in Sofia and new office spaces when searching for a larger workspace, infrastructure, etc.
The website is open to users who want to add an existing or under construction site in Sofia. It is necessary to fill out some basic details about the site prior to marking the building on the four types of maps on the website. The form is available here – http://investsofia.com/en/office-and-industrial-map-sofia/#soapi_form
