A consistent pipeline for retail parks
The total modern retail stock in Bulgaria amounts to over 1,17 million sqm, out of which 542,800 sqm operating in Sofia.
With 815,000 sqm stock countrywide, the shopping centre segment didn’t see any new completions over the last few years and this trend will continue in 2023.
By the end of 2022, retail parks in Bulgaria have reached an area of 355,500 sqm. Moreover, a total of almost 187,000 sqm are pending delivery. The retail park projects planned for the end of 2024 or beginning of 2025 in Sofia have a total area of 130,000 sqm GLA.
In the last months of 2022, the retail vacancy rate in Sofia rose to 6.6%.
Significant leasing activity on the industrial property market in Sofia
The total volume of leased space and completed owner-occupied premises in Sofia was around 104,000 sqm in Q4, which is an unprecedent quarterly result, and almost 140,000 sqm for the second half of the year.
The total modern industrial stock in Bulgaria at the end of H2 2022 reached 1,730,000 sqm.
As of the end of 2022, construction pipeline amounted to 320,000 sqm. However, more than 60% of this supply is for owner-occupation.
Rents kept increasing during the second half of 2022, same as in H1. Thus, prime logistics rents in Sofia reached € 5,0 / sqm for mid-size units and € 4,75 / sqm for premises over 10,000 sqm.
Prime yields also posted a slight increase, reaching 7,5 %, which is 25 bps more than in the previous quarter.
The vacancy rate in Sofia reached 0.50% for the last quarter.
The residential market showed resilience and price growth for newly built homes
Residential demand was still very strong in 2022, approximately 70% of buyers opting for cash purchases.
Overall, a total of 31,100 units were sold in Sofia in 2022, a decrease of 15.5% compared to 2021.
In terms of newly delivered gross area, Q3 2022, the latest quarter with available data, registered a significant 60% increase compared to Q3 2021. The total number of sqm delivered in Sofia in Q3 2022 reached 150,200 sqm, while in Q3 2021 there was a total of only 94,100 sqm delivered on the residential market.
In the short and medium term, we foresee that demand for new homes will be impacted by the continuous increase of the key interest rate, combined with high inflation rates.
The average sale price per sqm in Q4 2022 increased to approximately €1,800 / sqm from 1,660 / sqm in Q1 2022, representing an 8.4% yearly increase.