New Market Report: Bulgaria Real Estate Report Q1 2015

The commercial real estate market has witnessed a slowdown in 2014 as a sluggish economy and escalating banking crisis has translated into falling confidence and weakening demand. The market's fundamentals remain relatively strong, however, which should see international investors start to return to the market as conditions improve.

Bulgaria's commercial real estate sector has come under increasing pressure during 2014 with an escalating banking crisis slowing the economy and restricting access to lending while also tarnishing the country's reputation among the international investment community. With the crisis lingering into the final weeks of the year, the impact on foreign direct investment (FDI) levels appears to have been significant with Figures from the Bulgarian National Bank (BNB) showing real estate FDI to have contracted by 30.1% during the nine months to September 2014.

A weakening in investment inflows reflects the wider stagnancy in the market as rental rates have largely plateaued across the commercial real estate landscape during the past few quarters of our review period. Uncertainty stemming from the banking crisis has combined with a wider slowdown in the Bulgarian economy over the year to dampen demand for commercial space. GDP is estimated to have expanded by a relatively moderate 1.2% in 2014, reflecting the country's exposure to a stuttering eurozone economy with its two largest export markets, Italy and Germany, both suffering a slowdown of their own in H214.

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Slowing demand for commercial space has been mirrored by a lack of development activity across much of the market with a narrow pipeline helping to limit supply and help prevent any contraction in rental rates over the period. The exception within this scenario has been the retail segment which has witnessed significant expansion over the past few years. Organised retail is increasingly important in Bulgaria and as household incomes and spending rise, we see significant...

The Bulgaria Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's Bulgaria Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Bulgaria.

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