Research & Forecast Report Bulgaria | Investment Real Estate Market H2 2015
Investment Market Overview
Fig 1. Total Sales Transactions Volume (mln EUR) 600 594
500
565
400 300
Georgi Kirov Director | Investment Services georgi.kirov@colliers.com
200
205
100
• More than half of this volume was due to deals with development land (57%), followed by retail space (23%) and the prevailing part of the remainder was taken by offices and hotels. (Fig.2) • The investment market in Bulgaria remained dominated by local investors with speculative and opportunistic intentions – a tendency since 2012. In 2015 their share went beyond 50%. (Fig.3) • In 2015 the business users of real estate (such as Praktiker, Praktis, City Clinic) recorded a higher dynamics compared to the classical type of investors in real estate. (Fig.4)
2014
2015
59
0 2008
2009
2010
2011
2012
2013
Fig 2. Total Sales Transactions Volume by Sector 57%
23%
Development land
Retail
9%
5%
6%
Offices
Hotels
Other
Fig 3. Bulgarian companies’ share (mln EUR) 600 500 400 300 200 100 0
2007
2008
2009
2010
Total sales transactions volume
2011
2012
Investment Market Overview | H2 2015 | Colliers International
2013
Bulgarian buyers
Fig 4. Investors type
35%
65%
Business users
2
210
118
2007
• Completed investment transactions value for the second half of 2015 was slightly above 115 mln Eur, totalling to 209.6 mln Eur for the whole year. (Fig.1)
234
Investors
2014
2015
• The share of income generating transactions came at only 13% in 2015. The rest of the volume was created by land dealor acquisitions of buidlings in a process of completion, use convertion or ready for lease. Speculative transactions had been top of the list during the last 3 years (average share of 80%) reflecting the weak interest towards Bulgaria, exhibited by the Western European investors since 2011 (Fig.5) • Yields were stable in the three core segments with a forecast to arrive at 8.5% for offices. Retail and industrial property investment yields kept the same levels of 9% and 11%, respectively. (Fig.6)
Fig 5. Transactions type (mln. EUR) 600 500 400 300 200 100 0
2007
2008
2009
2010
2011
Income generating transactions
2012
2013
2014
2015
Speculative transactions
Fig 6. Prime Yields 12% 11% 10% 9% 8% 7% 6%
2007
2008 Offices
2009
2010 Retail
2011
2012
2013
2014
2015
Industrial
Forecast »»
Even though transactions with large income generating assets have not materialized during the past four years, the interest persists and probability for transacting is increasing. A single investment deal could significantly impact the volume, taking into account the total of the sales transactions in the recent years and could decrease the prime yields registered in the last three years.
»»
In 2016 Western European investors will demonstrate growing interest towards Bulgaria, due to the decreasing potential of core markets, faced with severe competition and higher prices.
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The European Central Bank program for further rounds of quantitative easing, the retention of low interest rates and the restored bank lending in the country following the stress test, brighten the perspective for larger investment volumes and more foreign investors, choosing Bulgaria.
»»
The market started to move to a more balanced landlord – tenant state, compared to previous periods (valid between 2011-2013). The available class A office space in Sofia was below 6%. Increased consumption led to higher revenues for shopping centers. This positive trend is anticipated to boost property investment.
3
Investment Market Overview | H2 2015 | Colliers International
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billion in annual revenue
Georgi Kirov Director Investment Services +359 2 976 9 976 georgi.kirov@colliers.com Adriana Toncheva Senior Market Researcher +359 2 976 9 976 adriana.toncheva@colliers.com
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160
million square meters under management
16,300
professionals and staff
About Colliers International Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. The company operates in Bulgaria since 1991 and delivers a full range of services to real estate users, owners and investors worldwide. Presently Colliers represents some of the most innovative and professionally planned projects in all market segments, including office, retail, logistics, industrial and residential. As of June 2015, Colliers is an independently owned company. The common shares of Colliers International Group Inc. trade on the NASDAQ under the symbol “CIGI” and on the Toronto Stock Exchange under the symbol “CIG”. As part of the CEE Quality Awards 2015 Colliers won for the fourth time in a row the Industrial agent of the year award. The latest annual survey by the Lipsey Company ranked Colliers International as the third-most recognized commercial real estate firm in the world. colliers.com Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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