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BULGARIA
Industrial Market
Snapshot
First Quarter | 2019

Market Indicators

Prime Rents: Slightly down to €3.9 euro/sq.m for larger units

Prime Yields: Slightly decreased to 8.5% at the beginning of 2019,

projected to remain stable

Supply: Steadily increasing stock, mostly by owner-occupied

and built-to-suit space

Demand: Logistics and retail sectors are main drivers of the

leasing market

Prime Industrial Rents – March 2019

LOGISTICS LOCATION                          €                      US$   GROWTH %

                                                               SQ.M     SQ.M    SQ.FT       1YR    5YR

                                                               MTH       YR          YR          CAGR

Sofia                                                     3.90       46.8       4.91        -2.5      2.2

Prime Industrial Yields – March 2019

LOGISTICS LOCATION                   CURRENT   LAST    LAST      10 YEAR

(FIGURES ARE NET, %)                        Q               Q          Y        HIGH    LOW

Sofia                                                  8.50          8.50      8.7      13.00    8.50

 

With respect to the yield data provided, in light of the changing nature of the market and the costs implicit in

any transaction, such as financing, these are very much a guide only to indicate the approximate trend and

direction of prime initial yield levels and should not be used as a comparable for any particular property or

transaction without regard to the specifics of the property.

Overview

The industrial property market in Sofia began 2019 with limited

number of new completions but strong development activity.

The stable performance is underpinned by the continuing

growth of the retail and logistics operations. The speculative

stock also increases, although from a low base.

Occupier focus

The completion of two new projects added 11,650 sq.m to the

modern industrial stock in Sofia in the first quarter, pushing up

supply to 1,087,117 sq.m. Although the market remains

dominated by owner-occupied and built-to-suit schemes,

speculative developments are also in the rise due to the stable

occupiers’ demand. At present, the logistics and warehousing

space available for lease accounts for 33% of the industrial

pipeline in Sofia or a total of 225,600 sq.m. The largest recently

started speculative developments are Airhousing and Logistics

Park (25,000 sq.m TBA) in Ravno Pole village and DT Logistics

Park (22,900 sq.m TBA) in the state-run Economic Zone Sofia

– Bozhurishte. Together with Sofia, the second largest city

Plovdiv emerges as speculative industrial property market,

although still with sporadic leasing contracts. The lease of 1,500

sq. m of Technolink Park by DB Schenker in the first quarter

exemplifies the trend. The logistics park (11,682 sq.m TBA) is

under development in Maritsa Industrial Zone, north of the city,

and is planned for delivery by two stages by mid-2019. Back in

Sofia, the leasing market witnessed a relatively active quarter.

The entry of the airfreight company Dronamics in Landmark

Airport Center and the expansion of Unitcargo were among the

notable leases. Euro 07 renewed their lease for 4,500 sq.m in

Logistics Park Sofia Ring near Novi Han village. While the

market is relatively balanced, vacancy stays at the sustainable

level of around 3.5%. Headline rents are slightly down to 3.9

euro/sq.m for larger premises and 4-4.2 euro/sq.m for smaller

ones.

Investment focus

Sofia’s industrial property market continues to draw investors’

attention although this interest has not materialized in

acquisitions, yet. Prime yields saw modest decrease to 8.5% in

Q1. The development land market is active, underpinned by the

expansion of the automotive sector and the light industry.

Outlook

Occupiers expansion underpins strong development activity in

Sofia, rents and vacancy rate are expected to remain stable. 

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