By Marianne Schulze
February 2007

... and thus many opportunities. This is how the Bulgarian participants of EXPO REAL summed up the situation of the real estate market.

Photo: The housing market in Bulgaria is booming. Accordingly, international developers are increasingly investing in this segment. For example, the Raiffeisen Evolution from Austria is developing the “sofia_sky” housing complex with 24 townhouses, five villas and three single-family homes in Sofia on the cliffs of the Vitosha Mountains.

Bulgaria’s accession into the European Union on January 1, 2007 will give the country’s real estate market an additional boost. Yields are still higher than in the established European markets, but EU accession lowers the potential risks even further. On top of that, the conditions are promising. The economy of the country is continually growing by more than five percent. The country is stable politically and socially. Corporate tax is 15 percent and is expected to decrease to ten percent in 2007. The unemployment rate and inflation rate are shrinking, and incomes are rising.

Retail real estate is booming
With such conditions, it is understandable why international retailers are increasingly attracted to this market. There is a high demand for retail space, and the supply in the shopping mile in Sofia — the Boulevards Vitosha, Graf Ignatiev and Vasil Levski — and in other larger cities is near to none. On the other hand, modern shopping centres and shopping malls are sprouting up like mushrooms from the ground.

Three large shopping centres were built in Sofia just last year: the Mall of Sofia with 35,000 square metres of retail and entertainment space, the City Center Sofia with roughly 20,000 square metres of rental space, and the Sky City Center with roughly 26,000 square metres of gross floor space. The trend is continuing in other cities of the country. In Veliko Tarnovo, the first 33,000 square-metre modern shopping centre, Central Mall, outside of the capital was opened in September 2006. According to the European Shopping Centre Development Report by Cushman & Wakefield, some 98,000 additional square metres of shopping centre space will enter the market in 2007.

The interest of international investors in this market segment is large. For example, Aviv Construction, project developer of the Mall of Sofia, sold a 50-percent share to a consortium under the management of the American GE Commercial Finance. For roughly 95 million Euros, the City Center Sofia was purchased by Equest Balkan Properties, a British investment company focused primarily on the Southern European region.