Bulgarian real estate market will keep on developing in an international environment favouring investment and new projects. So far, the higher costs of financing will not influence it seriously as the institutional and private investors around the world remain optimistic despite their expectations that commercial real estate across Europe will level off this year after the spectacular boom for ten years now. The European economy is also on the rise influencing positively investments and rental levels on most markets.
At national level representatives of international advisers, developers and investors see god prospects before the country despite ongoing strong growth. The market climbs onto a new level with an increasing number and importance of major projects with investment volumes of about a few hundreds millions of euro each. All market segments will develop with the strongest activity in the retail, industrial and office sectors.
Countries like Bulgaria and the neighboring Romania that joined the European Union from 1 Jan. have focused on themselves the attention of big developers as well as that of institutional investors for some years. For the first type they are markets with a significant growth potential as the local economies expand by 2-2,5 times the European average growth rate. On their part the investors try to take the advantage from the relatively better profit margins compared to Western Europe.
The new construction will develop against the background of the ongoing rise of the market for the so-called investment real estate. IT includes usually buildings with business uses – office, shopping and industrial centers, and hotels, generating revenues from rents.
For the last year alone transactions for about EUR 619m have been concluded in Bulgaria. What is more, analysts comment, “Investment volumes continue to surpass all conservative expectations in the region but the growth story will end in 2006. Although CEE investment hit well over the EUR 10 billion barrier, this looks to climb further in 2007.”
Yields in Bulgaria remain at relatively higher levels than in Central and Eastern Europe regardless the dramatic decrease for the last year – from 9-10 per cent to 7,5-8 per cent n the acquisition of office and shopping centers.