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BULGARIA
Industrial Market
Snapshot
Second Quarter | 2019

Market Indicators

Prime Rents: Slightly down to 3.8 euro/sq.m for larger units, stable

at 4.2-4.4 euro/sqm for mid-size properties

Prime Yields: Stable at 8.5% after the slight decrease at the

beginning of 2019

Supply: Modern stock of 1,159,600 sqm as of mid-2019,

steady increase

Demand: Logistics and retail sectors are the 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                                                     3.80       45.6       5.12        -5.0     1.7

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      8.75      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 second quarter of 2019 was historically one of the strongest

for the industrial property market in Sofia in terms of leasing and

development activity. The improving performance is

underpinned by the stable growth of the retail, ecommerce and

logistics. An investment market is taking shape following the

gradual increase of the modern logistics and production stock.

Occupier focus

The first phase of the logistics center of Denmark’s furniture

chain JYSK was the biggest completion in Sofia in the first half

of 2019. The new facility is located in the state-run Industrial

Zone Bozhurishte and will comprise 90,000 sqm TBA at the final

stage. It should serve more than 270 stores in the SEE region.

The extension of the production facility of Behr-Hella

Thermocontrol in Bozhurishte, and data centers of Equinix and

DSK Bank were among the notable completions in the period.

Overall, the second quarter registered about 72,500 sqm new

deliveries in Sofia and another 202,000 sqm under construction.

This stock increase is unprecedent for the last five years and is

comparable only to the previous market peak. The impressive

share of speculative projects in the pipeline is also worth to be

mentioned. The space available for rent accounts for 45% of the

total volume. That includes both subsequent phases of large

well performing schemes, as well as entirely new logistics and

industrial parks.

Development coupled with increasing corporate investments

resulted in higher occupier activity with 45,300 sqm leased

space in the first half of 2019. The market is dominated by

expansions and preleases, since the majority of the new

facilities are contracted during the construction phase.

Investment focus

Increasing supply of modern logistics space coupled with stable

rents and low vacancy rate draw investors’ attention to Sofia

industrial property market. Prime yields stood at 8.5% in Q2,

projected to remain unchanged in a short term.

Outlook

After several years of shortage of modern space, the increasing

supply is expected to rebalance the industrial property market

in Sofia. Rents and vacancy keep healthy levels.

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