Office property boom in Bulgaria has not called a halt yet

propertywisebulgaria.com, 2007-11-25

     The upsurge of office real estate market has definitely not ceased, said Atanas Garov, Managing Director of Colliers Bulgaria, at the 10th CEI (Central European Initiative) Summit Economic Forum, held in media partnership with Investor.bg.
     Bulgarian market has not reached the break-even point yet. There is still a keen demand, low vacancy rates, limited supply and a great number of projects up in the pipeline. All these suggest that office areas market is far from saturation, according to Garov.
     Credit crunch, apparently, has not affected Bulgarian business environment. Moreover, it is not going to lay any impact on it because national market has robust foundations, Colliers' executive explained.
     Limited supply of office space in Bulgaria, as compared to West Europe, is the key factor for the experienced growth in real estate sector. Office space per capita is less than 1 sq m for Bulgaria and the other South East European countries, against an average of 3.5 sq m a person for West Europe, Colliers officials quoted.
     They went on to list a several very indicative figures:

• currently, office areas stock in Bulgaria is estimated at 606 000 sq m
• some 120 000 sq m of the available office space is expected to be absorbed in 2007, whereas the respective number for 2006 was 100 000 sq m
• presently, the vacancy rate amounts to 5.1 per cent
• office rentals vary between 12 and 26 euro a sq m

     Retail areas, though, enjoy a 0 per cent vacancy level and supply is considerably lower than in other countries from the region, Colliers data show. New retail patterns, such as the box-type establishments, are penetrating the local market, Garov noted. As far as the country's logistic stock, Colliers gave the following quotes.- Sofia has 1.2 million sq m available industrial space, Varna has 300 000 sq m and Plovdiv - 450 000.
     - The vacancy rate is 8.5 per cent.
     High land prices cannot function as a deterrent to large-scale projects, they could only siphon off the serious investors, Atanas Garov commented. New construction of business properties will not offset the brisk demand, which in turn, could prompt office rentals up, Garov prognosticated. Industrial areas, though, might see a drop of rent prices due to the increased supply, he added.
     Construction of the upscale project Sky Buildings in Plovdiv is expected to start next year, Miroslav Yazov, financial director of the developer company Yazov Ltd., announced at the same workshop, devoted to Bulgarian real estate market trends. If the project receives all necessary building permits in March, as expected, it will take no more than 42 months to complete it, Yazov added.

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