Bulgaria, Retail Market Overview

Transcription

1 Bulgaria, Retail Market Overview

2 Bulgaria, Economic Overview During the first 9 months of Bulgaria registers economic growth of 7%, compared to the same period of GDP amounts to million leva. During the period January-October export of goods and services is million leva and has risen by 18.9%, compared to the same period of Import amounts to million leva and has gone up by 22.7% compared to the same period of During the first 9 months of the share of services continues to dominate in the economy 60.4% of GDP with a growth of 6.8%. Industrial sector ranks second 31.2% of GDP, however recording a decrease by An increase in households' incomes the average income per person of the population has risen from leva in October 2007 to leva in the same month of, the increase being to the extent of 11.90%. Basic interest rate in the country towards November is 5,72% which is 1,46 per cent points more than November Meanwhile, effective annual per cent on the new credits on mortgage of households is 10,48% which is on annual base 2.49 per cent points more, whereas on credits in Euro 8.91% or 1.56 per cent points more. Annual per cent of costs for credits on mortgage service towards November has risen on 2%.Agricultural sector has 8.4% of GDP, its increase annual base by 2.4 per cent points up to 11.13% for credits being the most significant 24%. in leva and by 1.53 per cent points up to 9.54% for credits Inflation level towards November is 8% on in euro. annual base. The same indicator towards November 2007 is 11.3%. Unemployment is on the decrease 5.85% towards November, compared to 6.62% towards November The decrease on annual base is 0.77%. Foreign investment activity is on the decrease. Direct foreign investments in the country during the first 9 months of amount to million leva, compared to million leva for the same period of 2007 which represents a decrease by 1.97%. At the end of November the share of bad credits in relation to credits on mortgage for households is 2.19% while in November 2007 it is 2.14%. During the period January-November the new credits on mortgage granted are million leva which is by 0.75% less than the same period of 2007 when credits to the amount of leva are granted. In November the amount of credits on mortgage granted is by 30.41% smaller than October and by 53.66% smaller than November Real Estate Market Overview During sale-trades of real estates were made in Bulgaria, which is by 4.79% lower than 2007 when deals were made. Direct foreign investments in real estates during the first 9 months of amount to million Euro which represents a decrease by %, compared to the same period of 2007, while direct foreign investments in building have fallen by % and are million euro. Average growth of sale prices of retail space in Bulgaria in is 20.73%. Average increase of retail space rent prices for the country is 10.01%. In on the territory of the country two big malls (Mall Varna and Park Mall Stara Zagora) were opened and many smaller shopping centers. Profitability of properties in the segment continues to be within 7-7.5%. After the opening of the last shopping centers at the end of, the indicator retail space per 1000 people of the population in Bulgaria grew up to 25 sq.m., compared to 12 sq.m. at the end of A considerable part of retail centers which opened in in smaller cities, had a low initial occupation under 50%. As a result of the world financial crisis and due to the influence of other factors, some mall projects in the country, including such in the process of building, were suspended by the investors for uncertain period of time. At the end of vacancy of retail space on main commercial streets, the so called High streets in bigger cities, was observed for the first time for the last few years.

3 Bulgaria, Supply In, retail area market in Bulgaria continues its active development which started several years ago. During that period two big shopping centers were completed in the country Mall Varna (the biggest shopping mall in Bulgaria so far) and Park Mall Stara Zagora with net rental area of and sq.m respectively. Several smaller trade centers of regional importance were also completed in different parts of the country. Thus, total area of working shopping centers in Bulgaria becomes sq.m and the indicator retail space in malls per 1000 people of the population 25 sq.m. The same indicator at the end of 2007 is 12 sq.m. At present there are a number of other malls and smaller shopping centers on the territory of the country that are in the process of building. Even larger is the number of similar centers at project stage. Having in mind the large amount of retail space expected to be put into operation during the next 2 years, as well as the negative consequences of the world financial crisis, bad market situation and other factors, these projects are very unlikely to start. Some particular projects, including such at early building stage are already known to have been suspended. Existing shopping malls in Bulgaria until Shopping Mall Location GLA /sq.m/ Mall of Sofia Sofia City Center Sofia Sofia Sky City Center Sofia Central Mall Veliko Tarnovo Pfohe Mall Varna Mall Samokov Samokov Varna Mall Varna Mall Sandanski Sandanski Park Mall Stara Zagora Stara Zagora Kavarna City Center Kavarna City Center Lovech Lovech Mall Vidin Vidin Trade Center Maxi Pleven Central Mall Pleven Pleven Mania Tower City Center Pleven Danube Trade Center Russe Year of completion Retail space in shopping centers per 1000 population, sq. m Sofia Plovdiv 2007 Varna Burgas Ruse Stara Zagora Pleven Pazardzhik Varna Gabrovo Note: The designated values for and are prognosticated and they are based on preliminary data for both existing shopping centers and shopping centers under construction. In Sofia such projects are: Europe Center part of the large-scale project Europe Park; Fort Nox project on Tzarigradsko shosse blvd. next to Metro Cash and Carry; Acropolis Sofia and Sivis Center projects of the Spanish company Riofissa. The shopping mall project of Litosibuild company which started in June in Pazardzhik was suspended for one-year period. The construction of Plaza Center in Shumen with initial term of accomplishment -, was also stopped for the time being. The location and professionally designed conception of a shopping center are still significant factors which determine its success. It is important key renters to be known prior to building process. However, so far it has been important with regard to successful location of the mall and area rentals, whereas at present it concerns site financing as well, because it is already a main bank requirements for such projects 25% of renters to be provided in order to be granted a bank credit. A large number of smaller shopping centers which opened in started working with occupation under 50% due to that lack of preliminary market research and designed conception. During the last year many new shopping mall projects were announced in different cities, including Sliven, Vratza, Haskovo, Dobrich, etc. Only few of them, however, have started. Apart form shopping malls, different projects for other types of trade centers were announced in. Retail parks projects are most numerous with the first center of this kind being opened during the year Retail Park Plovdiv of Landmark Rpoperty Bulgaria with total built-up area of sq.m.

4 Bulgaria, There are projects for retail parks in most Bulgarian towns, smaller ones included. The main projects for the so called power centers are owned by Melina company in Vratza, Vidin, Plovdiv, Russe, Dobritch etc. and G Center in Plovdiv, and Sofia. The first open air mall project in Bulgaria was announced in The Strand. The project belongs to ZBC and will include sq.m rental retail area. What is typical of this type of centers is that retail sites are situated in open air which creates opportunities for spacious outlets formation. Other special features are green space availability, lower building costs, cheaper maintenance and lower rent levels respectively. The investor company has projects for other cities in the country, as well, Pazardzhik and Haskovo, for example. The development of outlet center market is less intensive. After the opening of Princess Outlet Center in Sofia in 2007, there is no other project completed. Unlike previous years, at the end of vacancy of retail space, situated on high streets, is observed in most big cities of the country. The reasons are the negative economic process, going on nationally and worldwide. This area, however, is left by merchants without strong positions and is comparatively small in size which means supply of big outlets with top location is still missing. It is a good idea, owners of free areas to think of their mergence into larger retail sites to provide their better realization. Shopping malls under construction in Bulgaria until Shopping mall Location Investor Шопинг молове в строеж през H1 GLA (sq. m) Completion (year) Carrefour Tzarigradsko Mall Sofia Assos Capital/Carrefour Serdika Center Sofia ECE/Immorent Mega Mall Sofia Sofia Magnum Bulgaria Gama Bulgaria Mall Sofia London Sofia Property/Salamanca Capital Grand Mall Sofia Varna Orchid Developments Group GalleriaVarna Mall Varna GTC/Galleria Varna Varna Towers Mall Varna Varna Towers Galeria Plovdiv Mall Plovdiv European Convergence Development Company Mall Plovdiv Plovdiv GE Real Estate and Quinlan Private Markovo Tepe Mall Plovdiv Melina Galleria Stara Zagora Mall Stara Zagora GTC Carrefour Mall Stara Zagora Carrefour Stara Zagora Mall Stara Zagora Real Estate Services Bulgaria Burgas Plaza Burgas Carrefour/Gort Holdings/Bridgecorp Sun City Center Burgas Sun City Invest Grand Plaza Russe Russe Mall Rousse Invest Mall Russe Russe Real Estate Services Bulgaria/Iris Danube Mall Russe Marmeg Mega Mall Russe Russe Charlemagne Capital/Megachim Galleria Russe Russe GTC Terra Center Mall Gabrovo Terrachim 97 Mall Gabrovo Gabrovo Mall Gabrovo Mall City Center Kazanlak Kazanlak Trakia Trade Forum Pazardzhik Pazardzhik Sienit Holding Mall Pleven Pleven Aladin City Center Gotze Delchev Gotze Delchev Megastroy

5 Bulgaria, Demand The trend of strong interest towards retail space, located on main streets of big cities, remains steady. Demand is concentrated mostly in the center and also in busy places in city quarters (boulevards and stations). The most attractive areas in Sofia are Graf Ignatiev Street, Vitosha Blvd., Alabin Str., the trade part of Solunska Str., Patriarh Evtimii Blvd., Vasil Levski Blvd. and Stamboliiski Blvd. There is also a strong interest for renting shops, located in the square around Sheraton Council of Ministers Lege Str. In Varna Kniaz Boris and Vladislav Varnenchik blvd. are the most attractive. The trend of decreased interest towards small quarter shops is still valid except for transport junctions with big stream of people and vehicles. Due to the increased supply of retail space in the shopping centers, tenants are more cautious and demand is orientated mainly to the malls, offering a good, market orientated conception which usually provides for more entertainment and variety of services. The image of management company is also very important. The shopping centers which were opened in offer a good opportunity to many foreign brands to enter the country for the first time. More companies from fashion or catering field are expected to do so after the opening of the other malls during the next 2 years. Vacant shops on main streets also create good opportunities for famous brands invasions as the expansive policy of some companies involves only locations on high streets. Their demand, however, is directed towards large-sized outlets, for which still there is no supply. Regarding retail space for purchase, demand is also orientated to the central locations with a big stream of people. The main target for purchase is investment. The period, however, is characterized by fewer deals for large projects. Because of the unstable economic situation, big investors and funds temporarily withdraw from the market. Large chains for fast-circulating goods also change or expand their conceptions and look for smaller area of around sq.m in different residential city areas. Apart from them, banks, insurance companies, food chains, etc. look for smaller premises in the quarters in order to be closer to their clients. Prices In sale prices of retail space remain stable and have a positive growth. The average increase for the country on annul base is 20.73%. In Sofia the increase is 24.32%, in Varna 13.47%, in Plovdiv 10.00%, in Burgas 16.67%. Unlike sale values, rent ones develop dynamically. Just as properties in the other segments of the market, during the first half of the year, they register an increase, but during the second, go down in certain cities. In in the country on average retail area rents have risen by 10.01%. In Sofia the increase is by 22.06%, in Varna 1.84%. In Plovdiv and Burgas, however, there is a negative growth by % and % respectively. In spite of the great supply, rents in shopping centers do not register a considerable change and are within 10 and 45 euro per sq.m, depending on the shopping center, its area, internal disposition, its purpose and other characteristics. In Sofia average rent levels on Vitosha blvd. are euro per sq.m, on Graf Ignatiev str euro per sq.m, on Bulgaria blvd., Patriarh Evtimii blvd, Stamboliiski blvd. and trade part of Rakovska street euro per sq.m. Average retail space rents in Varna's most attractive locations Knyaz Boris and Vladislav Varnenchik blvd. are and euro per sq.m. respectively. Pental prices of retail space in major Bulgarian towns towards the end of December Средни Sofia наемни цени Plovdivна търговските Varna площи Burgas към Russe (Euro/кв.м) Veliko Tarnovo Stara Zagora Blagoevgrad Dobrich Rental price on high streets Rental price in shopping centers

6 Bulgaria, Forecasts The stock of retail space in the country will continue to grow and another sq.m are expected to be completed in shopping malls by the end of the year. As a result, there will be nearly 42 sq.m. retail space in malls per 1000 people of Bulgarian population. A smaller number of shopping centres projects will be announced in comparison with the period -. Some of the projects, planned to start in will be put off. The completion of some trade centers under construction will be postponed, as well. Tenants in trade centers will require a decrease and preservation of rent levels while investors will tend to make compromises in order to provide higher occupation of their sites. Investors will have a clear sight about their shopping centers characteristics which will lead to realistic determination of rent levels. Many big retailers, planning to enter the market through their shopping centers but without a signed contract for rent, will put off their expansion till market situation improves. HEAD SALES OFFICE Varna 9000, 31A Maria Louiza Blvd. Tel/Fax: varna@foros.bg SALES OFFICE VARNA Varna 9000, 3-5 Dr. Jelezkova Str. Tel: , Fax: varna2@foros.bg RENTALS OFFICE - NORTHERN SEASIDE Varna 9000, 59B Slivnitza Blvd. Tel: ; Tel/Fax: rentals@foros.bg SALES AND RENTALS OFFICE SOFIA Sofia 1000, 38 Patriarh Evtimii Blvd. Tel: , sofia@foros.bg SALES AND RENTALS OFFICE SUNNY BEACH Sunny Beach 8240, Joy Complex Tel: , 581; Tel/Fax: sunnybeach@foros.bg SALES AND RENTALS OFFICE PLOVDIV Plovdiv 4000, 6 Slivnitsa Str., 4th floor, office 5 Tel: Tel/Fax: plovdiv@foros.bg SALES AND RENTALS OFFICE BOURGAS Bourgas 8000, 40 Hristo Botev Str. Tel: ; Tel/Fax: burgas@foros.bg SALES AND RENTALS OFFICE VELIKO TARNOVO Veliko Tarnovo 5000, 50A Stefan Stambolov Blvd. Tel: , vtarnovo@foros.bg SALES AND RENTALS OFFICE ROUSSE Rousse 7000, 3 Svoboda Sq. Tel: , Tel/Fax: ruse@foros.bg SALES AND RENTALS OFFICE DOBRICH Dobrich 9300, 8 Svoboda Sq. Bulgaria - hotel, foyer Tel: dobrich@foros.bg SALES AND RENTALS OFFICE BANSKO Bansko 2770, 6 Pirin Str. Tel/Fax: : bansko@foros.bg STARA ZAGORA SALES AND RENTALS OFFICE Stara Zagora Tzar Simeon Veliki, 3rd floor, office 5 Mobile: starazagora@foros.bg SALES AND RENTALS OFFICE BLAGOEVGRAD Blagoevgrad 2700, 52 Alexander Stamboliiski Blvd. Tel./Fax: blagoevgrad@foros.bg SALES AND RENTALS OFFICE BALCHIK Balchik 9600, 4 Primorska Str. Tel/Fax: balchik@foros.bg SALES AND RENTALS OFFICE KARDZHALI Kardzhali 6600, 92 Bulgaria Blvd., building 42 Tel/Fax: kardzhali@foros.bg All the information containing in this report is a private property of FOROS - National Real Estate Company and it could not be used or published without the explicit permission of FOROS