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Bulgarian Property & Real Estate News

Bulgarian commerical property sector starts to recover

There are signs that Bulgaria’s commercial and retail property markets are starting to recover. Several new entrants into the local property market have shuck things up and revitalized interest.

In Sofia the arrival of the Ikea furniture store has certainly increased competition in the furniture segment. As a result of Ikea arrival several other furniture retailers are modifying their offers and in some cased relocating their retail premises in order to compete better. Some existing shop simply cannot compete with the new entrants and will most like close down their operations.

The main new commercial property projects that are planned for Sofia in the next 12 months are Bulgaria Mall, Sofia Ring Mall and Paradise Center. Together these developments will bring almost 200,000 m2 of new commercial and retail property onto the Sofia property market.

Demand in the central Sofia are is mainly from food retailers who are interested only in streets with heavy footfall and traffic.

In terms of new brands arriving in Bulgaria in 2012 the biggest news is the announcement that H&M will open shops in Sofia, Burgas and Varna. This is a good sign that fashion houses still consider Bulgaria to be an important market for their products.

Rental rates for Bulgaria retail properties have not changed much during 2011. While rental rates vary significantly based on location and the type of retail experience, in the main shopping malls in Sofia the rates are just over 30 euro per m2 while in the smaller cities like Varna and Plovdiv rents are typically around 20 euro per m2 per month.

Despite the increased supply which has come on the market in recent year vacancy rate are holding up relative well. The average vacancy for all shopping centers in Sofia was approx. 6% at the end of 2011 with top locations such as Serdika Center, Mall of Sofia and The Mall achieving even lower rates around 3%.

While shopping centers are coping well in the current environment, this is not the case for high street locations where rental rates have dropped by almost 30% over the last 12 month. The decrease is a result of a drift of customers towards the larger shopping centers and also a number of key shopping streets in the center of Sofia have had ongoing repairs and building works which affects the quality of trading and footfall.

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