Sofia City Report H1 2023


Investment Market

There was modest investment activity in the first half of 2023, with most deals focused on the office segment. The cautious behavior from investors can be explained by their expectation of global economic slowdown and a potential increase of NPL”s, which could provide opportunities for investments at below the market terms.

The investment volume in Bulgaria in H1 2023 reached €68.9 mil, which represents a 31% decrease y-o-y (€99.3 mil in H1 2022). There has been a lack of transactions in the industrial and hotel sectors and from the registered transactions, five were in the office sector and one was for a mixed-used property (office, retail and residential).

During H1 2023, prime yields remained at the same levels as those registered at the end of 2022, for all main segments: retail, offices and industrial. The transactions in the office segment included international investors exiting from two of their investments while the sale processes of two trophy properties in the CBD were organized by liquidators and snatched by local investors.

All transactions were recorded in Sofia with a single exception in Plovdiv. The largest office transaction was the sale-purchase of Europroperty’s Sofia Office (built-up area 24,800 m²) -  bought by Everty, and the sale-purchase of Emerald Building - bought by MVF Holding.

The sale of the Telephone Palace was organized by the liquidators of the now insolvent NG Property and bought by GPP Management, which is related to another participant in the casino market – Winbet.

As the cost of finance in Bulgaria is still on the lower end compared to other countries in Europe, a potential increase in interest rates is expected to take place in the remainder of 2023. Eventually this might lead to upward pressure on yields, however, as these processes take time, the effects will most likely be felt in the beginning of 2024.


 Office Market

After a strong beginning of the year for the office space market in Sofia, the transaction activity declined, and at the end of H1 2023 net take-up stands at 69,365 m², marking a 13% drop compared to the same period of 2022.

Tsarigradsko Shosse and Hladilnika lead the way with more than 60% of the new lease acquisitions focused on these areas. The majority of the remaining transactions are distributed rather evenly between the submarkets of the Business Park Area, CBD, Broad Center and Bulgaria Blvd.

A much steeper dive is observed in the growth of occupied office space in the city as net absorption for the first half of the year stands at merely 6,100 m².

On a more positive note, the vacancy rate in Sofia has decreased to 18.45%, a slight decrease compared to the end of last year, mostly due to the very low volume of deliveries in H1. Landlords with low availability are steadily increasing asking rents, in some properties this has led to rental levels between €15.00 and €16.00 per m2 for class A office buildings.  Average asking rental levels in the class A segment are between €11.50 and €16.00 per m2 and for class B properties they range from €7.00 to €12.00 per m2.

Approximately 7,500 m² were delivered in Sofia in H1 2023, which is the lowest volume for the past 3 years.  Another 52 ,000 m² are estimated to be delivered in 2023 as c.a. 24,000 m² were delayed for the next year. Approximately 20 % of expected deliveries for 2023 are already pre leased and another 16 % will be occupied by their owners, leaving 64% still on the market.

The current modern office stock for rent in Sofia reached 2.12 million m² at the end of H1 2023, out of which 61% are considered class A.

Highest construction activity continues to be observed in the areas of Tsarigradsko Shosse and Hladilnika, where almost half of all the construction activity is taking place.


 Retail Market

Like last year, in the first half of 2023, the trend of the rapid development of retail parks continued, with the opening (including the expansion of existing parks) of 35,000 m² throughout the country.

At the end of H1 2023, there were 46 retail parks in Bulgaria, with over 410,000 m² GLA. It is important to note that those are fairly evenly distributed across the country. The main focus of retailers is still on regional cities and smaller settlements of less than 100,000 people.

Growth in consumer demand combined with the development of commercial chains, led to a significant expansion of retail parks in small towns, with a population of 50 to 100 thousand people.

In Sofia there are 3 retail parks, with a total GLA of 80,000 m², with 99% occupancy.

The following consumer trends are emerging: more budget-oriented shopping, more frequent visits to the store in order to better distribute the family budget, greater attention to the quality and characteristics of products. In some cases, consumers give up shopping from the retailers they like because they are faced with value as the primary factor behind their decision making. For retailers, it is key to focus their proposition on price.

The average vacancy rate in existing retail parks is just under 5%. The total modern stock in the country, including shopping centres, retail parks and outlet centres, has increased by 42,400 m² during the first half of 2023. Currently it amounts to over 1,21 million m², out of which 548,800 m² operating in Sofia.

With 823,400 m² stock countrywide, the shopping centre segment didn’t see any new completions over the last few years, and it will remain so for this year.

However, in the first half of 2023, not a single retail park was opened in Sofia as well.

In the first half of 2023, two retail park were opened in Bulgaria: Holiday Park Pernik and Retail Park Sandanski, with a total gross floor area of 28,000 m².

The retail park projects planned for Sofia have a total area of 227,400 m² GLA. Delivery is expected in late 2024 or early 2025.



The first half of 2023 saw weak leasing activity in the industrial property market, but also low vacancy rates. The volume of delivered projects during the period reached 114,600 m². However, most of them are owneroccupied. Gross take-up during the period reached 81,000 m². Out of this, net take-up accounted for 60,800 m², almost twice as much compared to H1 2022.

Despite the relatively large number of newly delivered industrial units, the vacancy rate continued to decrease through the first half of 2023, reaching 1.5%. This shows that demand is strong, and the sector is in good shape.

In the first half of 2023, the Eastern areas of Sofia had the least available areas for storage, with vacant areas below 1%.

Approximately 190,000 m² of industrial spaces are currently under construction in Sofia and are expected to be completed next year. Another 100,000 m² are under construction in other regions of Bulgaria. Most of this supply is for owner occupation. Active development locations in Sofia are the state industrial zone to the West and the Sofia ring road area to the East. Projects within the city’s ring road are in great demand for e-commerce operations.

Rents kept increasing during the first half of 2023. Prime logistics rents in Sofia reached €5.2 / m² /mth. for premises over 10,000 m². Rents for small to mid-size schemes edged are € 5.6 / m² / mth.. Price growth is pushed by rising operating costs and is expected to increase further.

Many occupiers count on built-to-suit projects that are planned and implemented to meet their specific requirements.

The preferred area for industrial and logistics is Sofia Airport, where vacancies are very low and rents are higher, reaching up to €6 per m². The new development of Sofia Airport Center, which is not operational yet, is already leased out. Newly built modern warehouses are offered on the outskirts of Sofia at slightly lower rental levels.



Q1 2023 saw a 2% increase in new dwellings delivered over Q1 2022, with 1,430 newly commissioned units. In Q1 2022 there  were 1,403 newly commissioned dwellings.

Sofia recorded in Q1 2023 a 12.4% increase in the newly delivered useful residential area compared to Q1 2022, reaching 166,244 m². This follows a 19% decrease in Q1 2022 compared to Q1 2021.

In H1 2023 Sofia has seen a decline in real estate transactions of 12% compared to H1 2022, reaching approximately 15,000, according to data from the National Registry Agency.

In Q2 2023, the average sale price for residential units in Sofia (old and new) increased to approximately €1,830 / usable m², including VAT, from €1,800 / m² in Q4 2022, representing an approximately 1.7% increase.

According to the House Price Index (HPI) published by the National Statistics Institute (NSI), average house prices in Bulgaria showed a decline from 2008 to 2010 and in the years up to 2016 they experienced slight fluctuations before starting a period of sustained growth, up until 2023.

Q1 2023 saw a HPI increase from 175.14 units in Q4 2022 to 177.93 units, which is approximately 2% increase, with new homes slightly down from 161.98 units to 160.41 units, which is approximately 1% decrease and existing homes up from 183.36 units in Q4 2022 to 189.17, which is approximately 3% increase.

The report can be downloaded here


  1. iO Sofia City Report H1 2023.pdf

Sofia City Report H2 2023


  Investment Market The cautious behavior seen in investors in H1 2023 continued through H2 as well. The main reason for that seems to be the high cost of financing as interest rates for investors have reached 6.5 – 7.5% which basically melts down the potential return almost entirely. ...

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Sofia City Report H1 2023


Investment Market There was modest investment activity in the first half of 2023, with most deals focused on the office segment. The cautious behavior from investors can be explained by their expectation of global economic slowdown and a potential increase of NPL”s, which could provide opport...

Read more

Sofia City Report H2 2022


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 tre...

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