Outlook for Sofia Office Space Market Good

Despite the effects of the credit crunch and forecasts for an overall slowdown in economic growth, Bulgarian gross domestic product defied the expectations of economists by recording seven per cent growth in the first quarter of 2008, real estate consultants CB Richard Ellis said in a Sofia office market overview for the first half of 2008. Bulgaria remains attractive to international companies that outsource and offshore parts of their activities to the country, driven by the availability of well-educated and experienced specialists at lower salaries as compared to Central and Eastern Europe, Western Europe and the US, as well as the low corporate and personal income taxes (both 10 per cent), among others. Therefore, according to the report, Sofia’s office market will continue to develop actively at least in the next two to three years. Office space completion in the first half of 2008 set a record, with completions coming in at levels of over 87 per cent of all completions in 2006 and 58 per cent of all completions in 2007, CB Richard Ellis said. As a result of this large amount of completions, Sofia now has modern office stock of approximately 808,000 sq m, according to the company. This number will continue to increase, in view of more than 250,000 sq m scheduled for completion by the end of the year. That said, the consultancy doubts that all announced office projects will actually enter the market by the end of the year. CB Richard Ellis expect that no more than 150,000 sq m will actually enter the market by the end of the year. Another 500,000 sq m are expected by the end of 2010, to make the total pipeline approximately 750,000 sq m.

Credit costs tame Bulgarian housing market

After the banner 2007 when transactions involving residential property rose 4-5% and prices jumped by about 30%, the Bulgarian market in 2008 is calmer and more balanced as the cost of borrowing increases, said Teodora Dimitrova, managing partner at the Era real estate agency. The softening of the market is also evident from the growth forecasts for 2008. Housing prices are expected to continue on the up, adding 15%, a pace twice as slower than last year's. 'Demand and supply on the residential market have reached a parity over the last two months,' said Dimitrova. Data of the Era network of real estate agencies indicates that the busiest residential markets are those in Sofia, Burgas and Varna where construction is also most intensive. Sofia homes start from 670 euro/sq m

Brokers: Market To Start Picking Up Slowly

As usual Profit.bg asked on Monday three market experts to share their expectations about the trade on the Bulgarian Stock Exchange (BSE) this week. Here is what they had to say: Vesselin Morov, broker, Naba Investments The optimism that swept through the market in the beginning of May is indicative of the lack of a clear trend – in the search of new lows for the indexes and the establishment of a short-term intensive positive trend. I expect the trend to continue this week, while the market sentiment will be influenced mainly by the positive data from the consolidated first quarter reports of the holding companies. Nevertheless, we have to bear in mind that the market is still far away from a change in the medium-term sentiments of the market participants. We are witnessing a rather speculative trade in thin volumes. Nikolay Vitleemov, broker, Varchev Finance After seeing the first weekly gains of the stock indexes ranging between 5 and 5.5% and an increase in the average daily trading volumes last week we could expect the first attempts for bigger growth. The optimism on most positions is growing. As a result the total market capitalization of the companies listed on BSE reached 23.71 bln leva at the end of last week. Infrastructure companies may once again get in the spotlight this week. Positive news on the construction of the Trakia motorway may spark new stock price hikes, after the companies in the sector gained 20% last week. Chimimport will also be closely watched by investors after advancing by 4.54% last week. Ognyan Dechev, executive director, Populiarna Kasa - 95 The market will most likely continue to pick up slowly this week. The current stock price levels are similar to those of year and half, two years ago and are very favorable for buyers. The infrastructure projects and the positive financial results of many companies will support the rise of the capital market, but all this will happen slowly and with periods of consolidation. I am optimistic about the development of the market in the medium term and the long term. Furthermore, there are signs of recovery on the global capital markets after the turmoil. The article is not a recommendation for buying or selling stock.

UniCredit Group: Bulgarian property market past peak

The Bulgarian property market scaled its peak in 2007 and is transitioning towards a more sustainable growth pattern in terms of both prices and number of transactions, UniCredit Group said in its latest overview of Bulgaria and the region. According to the banking group, some 15% of Bulgarian intend to buy a real estate property over the next decade. Demand is highest among the younger demographic and is driven by mortgage availability and expert Bulgarians. At the same time, the number of Bulgarians that can afford a new home remains limited. The acquisition costs per 1 sq m of housing space had doubled to 2.6 average monthly pays by the end of 2007. In an UniCredit Group poll, most of the potential home buyers said they will take out a mortgage loan. Intense competition between mortgage lenders has loosened the screening standards with the repayment period stretching out to 35 years. Some mortgage products on the market cover 100% of the market value of the transacted property. Mortgage loans added up to 2.9 bln euro by the end of 2007, accounting for 40% of household debt and 10% of the nation's GDP, said UniCredit Group. The Bulgarian property market remains stable on the backdrop of the global financial crisis, said the analysis of the banking group. There are indications for a softening on the holiday apartments segment where foreign buyers have been pulling back and the cost of borrowing has been on the rise. The stagnation of the segment was further compounded by planning mistakes in the development of some coastal areas. UniCredit Group forecasts that the demand/supply dynamics suggest a gradual moderation in property price growth over the next couple of years. However, credit growth and the leveling-off of real income will continue to point housing prices upwards. The number of housing units in Bulgaria stood at 3.729 mln in 2006 with 99% privately-owned. Over 80 of homes are old and of poor built. Some 40% of all homes have two rooms.

The Property Market Turnover Topped 11 Billion Leva Last Year

Last year construction activity in Bulgaria was up by 15% which makes it one of the fastest developing sectors in the country, according to a CED analysis. The hike was prompted by the demand for modern residential buildings, commercial and administrative properties, warehouses and logistics centers. During Bulgaria's first year as a EU member country the prices of construction materials and services rose by an average of 12.6%. This year the price hike is expected to be a little lower – at 11.8%. The appreciation is a result of the growing prices globally and of the more expensive services on the local market. The active construction sector stimulates all activities related to real estate. The record turnover of 11.36 bln euros made the sector the absolute leader in Bulgaria last year. According to a Global Property Guide survey dated January 2008 Bulgaria was number one in the world in terms of annual appreciation of properties (30%) last year. Some are talking about a market bubble, but analysts say that even though the price growth is expected to slow down, there are no indications that they will be declining any time soon. Most Bulgarians finance their home purchases with credits. December 2007 was a record month for the crediting sector in the country in terms of both size and number. The reason for that tendency are the high prices. Most banks have raised the amount of financing from 70% to 90% of the home price. The average size of credits reached 51,148 euros at the end of the year, passing the psychological 100,000 BGN. The market of commercial properties continues its dynamic development, the CED analysis also states. Demand for properties near newly opened commercial centers is soaring. Demand for office space is expected to stay stable. The Law on floor property management was not passed in 2007 and because of its three-year long delay Bulgaria will not receive funds via the Residential Policy framework within the EU's Regional Development program by 2010. After several attempts to pass the law, the Government gave a green light to the project that concerns some 4.5 mln people in Bulgaria who live in the apartment buildings. This year Bulgaria has to introduce the Eurocode 8 in construction projects, which concerns the development of seismic maps. All EU countries must introduce the code by 2011.