Real estate in Bulgaria - Bulgarian commercial areas - Overview, Market, Investments

     After the bum in prices of properties during the last two years, 2005 is going to be the year of commercial areas. Now in Sofia demand is much higher than supply. We are talking about shops on top places - ideal center, big boulevards and housing complexes. Prognoses of brokers working for Bulgarian Property Ltd. are that in 2005 prices will increase with about 20%.
     Towards middle of 2004 commercial areas in Sofia are 120 thousand sq. m. At the moment entertainment - commercial centers are built with open built up area -150 thousand sq.m. They will be opened in the next two years. Investments in property market will be directed to construction of hyper complexes, shop chains, and separate objects. Expectations are that international chains which have strong positions, will enter the Bulgarian market. Now the interest by foreign investors towards our commercial objects is four-five times greater than it was one -two years ago.
     Until now demand of shops is concentrated in ideal center. Rent vary between 25 and 120 euro and they depend on location and type of business, room space, view of shop windows and additional works. Sell price of commercial areas with good or excellent location vary between 500 and 2600 euro /sq.m. We can say that rents of real estates in ideal center of Sofia, have reached those in Athens and Istanbul.
     But on most prestigious commercial streets Vitosha and Graf Ignatiev price levels of 11000-15000 euro are tested, but sales of shops on this streets are very rare, because their owners prefer to lend them. Prices depend on way of lending - whether you lend directly from the owner or you lend one more time (by mediator). Monthly rent of shop on Vitosha street of 50-60 sq. m. is 4000 euro if you lend it directly from the owner of the object and it doubles if you lend one more time. Lending of shops by world-famous trade marks like Benetton, Max Mara, Esie Lauder is question of prestige, traders explain.
     The demand in prestigious section Lozenets also increases, where prices in the previous year have increased with about 20%. Buildings that are now constructed in Lozenets possess typical characteristics, they are projected with vast modern rooms designed for expensive shops or commercial branch offices.
     Two tendencies develop in Sofia - construction of wholly commercial objects satisfying needs of inhabitants of particular sections and building of entertainment centers satisfying increased demand of luxurious areas by foreign companies.

     The future is of so called "Malls" - these are commercial complexes corresponding to the principle "in the time when wife do the shopping, husband have fun and children play". In these complexes everything which is needed can be found - from supermarket to cosmetics, perfumery, centers providing services, and we go further to entertainments - cinema, casino poker machines. Now two objects of this type are in process of building.
     The other tendency on the market is building of complexes serving people that live in particular section. Differing from malls these objects are situated on smaller surface. They do not offer entertainments and serve only as shopping places. That make them different from familiar to capital citizens Metro, Billa, Hit, Praktiker and other big chains, is the fact that investor builds the object and after that sells some of commercial areas and other lend.

     Perspective zones

     In next years in Sofia will form whole zones as in most European cities from the type called shopping city. First zone which is forming is around Business park where Spanish group "Detea" plans construction of enormous shopping center on surface 180 decares and open built up area -70 sq.m. in it different shops will be formed - big chains for foods, white and black technique, "make it on your own"furnishing and clothes. Plans are first object of this type to be opened in 2006.
     The next shopping zone will be situated near airport. Biggest chain for retail sales in Slovenia Merkator announced that plans to start construction of new commercial center near Sofian airport in 2005. The terrains around the airport are not built up and their price is about 50 euro/sq.m.
     Other perspective shopping zone is forming along round-road of Sofia. With the construction of motorway from Sofia to Kalotina district after Liulin also becomes very attractive. In some of biggest housing complexes large commercial chains are already settled - Metro, Billa, MR Briculage, Hit, Technopolis.
     In next twelve months prices of real estates will keep their permanent growth of 5-10 % annually-average for the country. In some regions and cities with lower prices, prices will increase with 20-30% annually. Increase in prices of different types of properties will vary. Expectations are for increase of prices of apartments, shops, houses, storehouses and with leading role of business properties.
     Factors which influence market development in our country in the last two years are ensured sources of financing, European expectations and external influences. In addition to accumulated free assets in firms and private citizens, which are kept in safes and banks, the other important source of assets which influence and intensify market is the expansion of bank crediting. The beginning of increase of bank crediting is in 1997 year when for the whole country 3700 mortgage loans are granted. The number of these mortgage loans in 2003 is 29000 and expectations are that in the current year they will reach 32400. If interest rates on mortgage loans in developed counties are not higher than 5-6 % in our country they are 8-12 % which shows that they have hidden potential for consequent decrease as a result of our future membership in European structures.
     The reinvestment of money of Bulgarians living and working abroad will have more and more important role on Bulgarian property market in the next year. The expectations for financing by Bulgarian for the year 2004 are to the amount of 800000 euro. The factor "European expectations" has strong influence on the motivation of people to take decision.
     Second external factor is influence of property prices in other countries over prices in our country. It is normal when in Bulgaria we have growing economy and stability and prices of real estates are many times lower than in other countries, the prices in our country to increase. We are already not isolated by the European environment.
     According to analyses of experts of Bulgarian Property Ltd. investment in housing property is reasonable, although registered increase in this type of properties. According to analysts of Bulgarian Property Ltd. investment of vacation type of housing property in near future is also good one.
     In near future, investment in terrains in regulation and out of regulation will be very profitable, as well as for business -shops, places of entertainment storehouses, and producing rooms. These properties were undervalued on the market in the last two years and can still be acquitted on acceptable price. Prognoses are that until the end of the year interest towards business properties will intensify and this due to their increased profitability.