What to Expect From Investments in Commercial Real Estate in Bulgaria

Numbers

Bulgaria's real estate market has survived the pandemic without any shocks. According to the National Institute of Statistics, in 2020 realty prices increased by 5.4%, and construction did not freeze at all.

According to the Registration Agency of Bulgaria, the second quarter of 2021 has set a record for the number of transactions concluded since 2011. 105,402 transactions were registered in the country in the first half of the year. Compared to the same period in 2020, the growth was 39.4%, and plus 13.9% compared with the figures of 2019. This data includes transactions with all types of real estate.

The Market is Dominated by Local Investors

According to Colliers¹, the total investment in real estate in Bulgaria amounted to $19 million in the first half of 2021. This figure was the lowest since 2011. The decline is due to the general slowdown in the market caused by the pandemic. Due to restrictions on movement, local investors were more active than foreigners.

Changes in the volume of investment transactions in Bulgaria. Source: Collier's International

The total volume of investment transactions was distributed by market segments as follows:

• 43% – retail segment;
• 29% – residential premises;
• 17% – office facilities;
• 11% – production and storage areas.

In the first half of 2021, the volume of investments in profitable assets was significantly higher (68%) than in real estate for own use (32%).

Profitable Segments

Collier's study showed that the profitability of retail facilities in Bulgaria remained stable even during the pandemic. But the profitability of production facilities and offices has decreased.

Profitability of commercial real estate in Bulgaria. Source: Collier's International

Retail

Grocery stores and pharmacies turned out to benefit even in lockdown, as they continued to work as usual. Mini-markets and shops within walking distance showed good profitability. According to the report, even small entrepreneurs received an incentive to develop and were able to compete with chain stores in the fight for customers.

For example, in Sofia², many small food outlets have opened in recent years and their diversity has increased significantly. The share of grocery stores in the capital increased from 3% in 2016 to 7% in 2021.

Top 5 categories of stores in Sofia. Source: Collier's International

Top 5 popular retail categories on the main shopping streets of Sofia by the number of rented spaces:

• Fashionable clothes
• F&B (cafes, restaurants, fast food)
• Services
• Food products
• Accessories and jewelry²

The combination of different categories of shops on the streets of Sofia gradually changed: in 2016, clothing stores and cafes dominated here, and in the first half of 2021, the line of presented categories became more balanced.

Bulgaria's economy showed signs of recovery in the first half of 2021. According to Cushman&Wakefield³, in the second quarter of 2021, the number of retail sales grew, as did people's willingness to spend. Bulgarians made purchases by 25.9% more actively in April and by 23.9% in May 2021 compared to the period of the first lockdown of 2020.

Retail Parks are in the Spotlight

In the first half of 2021, almost no new stores were opened in shopping centers, the market volume remained at the level of 2020, that is, much lower than pre-crisis indicators. The managers of the shopping center noted that already operating brands were trying to change concepts and even expand the area, but there were few new tenants. In the shopping centers of Sofia, the vacancy rate remained stable in the range of 6-7%.

At the same time, since many brands are already represented in the capital and major cities of Bulgaria, most want to expand their networks throughout the country. Retail parks are in the focus of investors' attention, economic formats of shopping centers in small cities.

Following the demand, a proposal has appeared: about 52,000 sq.m of such areas are being built throughout the country. As of the first half of 2021, the total area of premises in retail parks in Bulgaria is 179,000 sq.m. For every thousand inhabitants, there are only 27 sq.m, which is significantly lower compared to other countries of South-Eastern Europe.

The areas in Bulgarian shopping centers in the second quarter of 2021 and their profitability

Offices. Oversupply

According to Cushman&Wakefield³, in the second quarter of 2021, leased office space in Sofia increased by 53,000 sq.m. The total area of Class A and B offices in the capital city has reached almost 2,19 million sq.m. The share of available space was 14.3% at the beginning of the year, the figure was 12.9%: the transition of employees to remote work and uneven economic recovery rates reduced the demand for office space in Sofia and other major cities in Bulgaria.

On the other hand, the absence of major new projects may lead to a decrease in supply: by the middle of the year, only 212,000 sq.m of office spaces are under construction.

Rental rates remain at the level of €15 per sq.m in the central business districts, and in buildings located along the main highways of Sofia €12-14 per sq.m.

Changes in the level of vacant office spaces and rental costs. Source: Cushman&Wakefield

According to the forecast of the company's experts, rates in office premises of classes A and B may decrease due to a large number of available space. The highest level of profitability of this segment in the second quarter of 2021 was 7.5%.

Warehouses and Industrial Areas

According to Cushman&Wakefield³, the volume of leased space in this segment almost corresponds to pre-crisis indicators. In Sofia, most of the completed facilities were built by companies for their own use. At the moment, the area of industrial and warehouse premises under construction is about 330,000 sq.m, 70% of which are built to order and will be used directly by the owners.

For the first half of 2021, the level of available space in this segment in Sofia was about 4% of the total supply.

Rental rates in Sofia remain stable, in the range of €4.2-4.4 per sq.m. Premises of more than 10,000 sq.m are offered at a price of €3.8-4.0 per sq.m.

Changes in the level of vacant industrial and warehouse premises and the cost of the rent. Source: Cushman&Wakefield

The profitability of production and warehouse premises decreased slightly due to the growing interest of investors in raising prices. The maximum income today is about 8%.

Forecasts

Retail: changes and reassessment

Many companies will have to restructure their business and re-evaluate the location of facilities. The priority of large chain retailers will remain the need to be present both in shopping malls and on the main shopping streets of cities.

Trade market players who adapted the new system of work, and now offer additional services like online delivery will find themselves are in a more advantageous position. Retail parks can become popular among tenants who are actively expanding their networks. This format can be considered a good opportunity to enter the market in the regions.

Office space: focus on top locations

Experts predict that low-risk investments will be preferred in the market. The main interest of investors will focus on Class A office space in top locations.

Investors who have invested in office space are now trying to diversify portfolios. They can direct assets to several market segments at once: warehouses, housing, retail space.

Warehouse and industrial areas

Profitable assets in this area remain few due to the large proportion of companies in the field of production and logistics with their own premises.

The profitability of industrial real estate may decrease due to the fact that prices for such objects are rising. Local investors are interested in this format and prefer to invest in this type of facility.

Example of commercial real estate in Bulgaria:

30 060 €

Shop in Lozenets, Bulgaria

17 sq.m

#28124872 A shop and land of 60 m2 are offered, on the ground floor of a 5-storey building, 200 m away. from the sea in the popular resort village of Lozenets, Burgas region, Bulgaria. Cost: 33 400 euro Locality: S. Lozenets Rooms: 1 Total area: 16.66 sq. m . Land area: 60 sq.m. Terrace: 0 Floor: parterre of 5 Maintenance fee: no...

OAZIS REALTY

260 000 €

Investment project in Obzor, Bulgaria

2260 sq.m

The central beach and the Obzor Embankment are 150 meters away. We bring to your attention a regulated plot located in the city of Obzor, located in a new neighborhood of the city of Obzor at a distance of 150 meters from the beach, near the main road from Burgas to Varna. The plot has an area of 2260 sq.m., has the following indicators:...

STEFANOV INVEST

99 000 €

Commercial property in Sveti Vlas, Bulgaria

448 sq.m

#29064912 We offer for sale a beautiful plot of land in UPI in Sveti Vlas in the area of Intsaraki, Burgas region, Bulgaria. Cost: 99,000 euros Locality: St. Vlas Plot size: 448 sq. m. Payment scheme: 2000 euro-deposit 100% when signing a notarial deed of ownership. Location: a regulated plot of land with an approved plan for the...

OAZIS REALTY

190 000 €

Cafe, restaurant in Nesebar, Bulgaria

187 sq.m

We offer for sale a working, revolving business! Equipped, modern, developed restaurant, just 100 meters from the entrance to the central beach in the city of Nessebar. The restaurant is located on the territory of an apartment building and faces the street that leads to Aurelia Beach. The restaurant premises are two-level, with a total...

Avrora Plyus

239 000 €

Shop in Burgas, Bulgaria

268 sq.m

The agency "Aurora plus" offers a store with an area of 268 sq.m, located on the ground floor of a residential building in the area of M. Rudnik, Burgas. The store has 2 levels and consists of: a large sales hall on the ground floor with 2 small warehouses, WC, bathroom and dressing room, as well as a warehouse in the basement. It has 2...

Avrora Plyus

2 423 792 €

Hotel in Obrochishte, Bulgaria

2564 sq.m

The PANORAMA-BULTRAK Hotel complex is offered for sale - a cozy corner at the foot of the mountains, conveniently located three km from the Black Sea coast in a rural area. This is an excellent value for money for those who want to buy a ready-made business, such as the Panorama -Bultrak Hotel. The optimal place for a quiet and safe holiday...

OAZIS REALTY

154 490 €

Commercial property in Kosharitsa, Bulgaria

3001 sq.m

# # 309278 We offer for sale a beautiful plot of land in regulation near the main road in the village of Kosharitsa, the area of Drakata Cost: 156,050 euros Locality: Kosharitsa Plot size: 3001 sq. m. Payment scheme: 2000 euro-deposit 100% when signing a notarial deed of ownership. A plot of land is offered for sale , located in...

OAZIS REALTY

37 400 €

Shop in Byala, Bulgaria

61 sq.m

Shop in the center of Byala. Own bathroom. A face on the street. The possibility of extending the contract with the tenant.

IBG Property

168 756 €

Commercial property in Burgas, Bulgaria

1285 sq.m

#31121796 Available for sale a plot of land regulated in G.K.. Copper mine, Fr. Burgas . Price: 172 200 euro Location: GR. Burgas, Bulgaria K.. Plot area: 1285 sq. M. Payment: 2000 Euro-deposit 100% when signing a property deed. A plot of land is offered for sale, an excellent investment for the construction of a residential...

OAZIS REALTY

71 000 €

Commercial property in Sveti Vlas, Bulgaria

500 sq.m

# 31078286 We offer for sale a beautiful plot of land in regulation in Sveti Vlas,the area of Intsaraki Cost: 71 000 euros Locality: Sveti Vlas Plot size: 500 sq. m. Payment scheme: 2000 euro-deposit 100% when signing a notarial deed of ownership. A plot of land located in a land settlement for construction is offered for sale ....

OAZIS REALTY

71 478 €

Commercial property in Sveti Vlas, Bulgaria

530 sq.m

# 31152468 We offer for sale a beautiful plot of land in regulation in Sveti Vlas,the area of Intsaraki Cost: 72,200 euros Locality: Sveti Vlas Plot size: 530 sq. m. Payment scheme: 2000 euro-deposit 100% when signing a notarial deed of ownership. A plot of land located in a land settlement for construction is offered for sale ....

OAZIS REALTY

375 000 €

Commercial property in Balchik, Bulgaria

1130 sq.m

New Estate

30 000 €

Office at Sunny Beach, Bulgaria

39 sq.m

We offer A spacious office in a gated complex, Sunny Beach is for sale to your attention.The office is located on the ground floor and has an area of 39 sq.m., the office has a sanitary unit and a warehouse.The office is ideal for any type of activity: shop, salon, etc. A great investment. Within walking distance are: city...

alternativa imoti ood

74 800 €

Office in Nesebar, Bulgaria

84 sq.m

We offer To your attention, for sale an office in a residential building of sq. Black Sea-1, gr. Nessebar.The office is located on the ground floor, with panoramic windows and has an area of 84 sq.m, in the office there is a sanitary unit. The office is ideal for any type of activity: shop, salon, etc. A great investment. Within...

alternativa imoti ood

249 000 €

Hotel in Burgas, Bulgaria

400 sq.m

The hotel is located in a very strategic location on a main road with good visibility and only 200 m from the beach. The property is a great investment for people looking for a small family business. Total living area: 400 sq. m Capacity: 10 rooms; 25 guests. On the ground floor there is the possibility for a bistro or coffee. The hotel...

BulgarianESTates Ltd.

75 000 €

Office in Varna, Bulgaria

70 sq.m

Sale of equipped business premises in Vladislavovo district! EXCLUSIVE! PARKING SPACE! WITH FURNITURE! Stefanov Invest offers for sale a functional business premises, located in Vladislavovo district, near hypermarkets: Kaufland, Jumbo; City hall - Vladislav Varnenchik district and "Peyo Yavorov" school. The property is located on the...

STEFANOV INVEST

675 000 €

Hotel in Chernomorets, Bulgaria

660 sq.m

ID 31985772 Total built-up area: 660 sq. m. Total yard area: 735 sq. m Cost: 675,000 euro + 3% commission from the buyer Number of floors: 5 Construction stage - Act-16 Payment scheme: Deposit by agreement 100% when signing a notarial deed of ownership Sale of a five-storey guest house in the seaside town of Chernomorets - a...

OAZIS REALTY

3 000 000 €

Commercial property in Ahtopol, Bulgaria

76370 sq.m

ID 32172738 We offer for sale: Plot in Ahtopol Price: 3000000 euro without VAT Location: Ahtopol Total area: 76370 Payment scheme: 90000 euro deposit 100% upon signing the contract The plot is located in an extremely communicative place 600 meters from the entrance to the town, on the main road Ahtopol - Sinemorets. Its close...

OAZIS REALTY

775 000 €

Hotel in Rogachevo, Bulgaria

2457 sq.m

Locality: Rogachevo settlement, Balchik. Total land area: 2,457 sq.m Buildings: 8 two-storey houses of 182-184 sq.m . The area of the entire complex: 1,500 sq.m . Price: 775,000 euros the complex is on the balance sheet of the EOOD company. Construction stage - Act 16 5000 evro Payment scheme: Deposit by agreement 100% when...

OAZIS REALTY

90 500 €

Commercial property in Byala, Bulgaria

814 sq.m

#33120814 A beautiful UPI land plot with a construction project in Byala, center is offered for sale Cost: 90.500 euros Locality: Byala Land area: 814 sq. m. Payment scheme: 2000 euros-deposit 100% when signing a notarial deed of ownership. A plot of land with a building height of up to 10 m is offered for sale, water and light are...

OAZIS REALTY

See more 167 similar properties

Source: 1) Colliers International – Investment Market Overview; 2)  Colliers International – Shopping Streets In Sofia; 3) Cushman & Wakefield – Bulgaria Real Estate Market Data

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