Sofia City Report H1 2016 City Reports
Gross Salary Q1 Economy / Investment market GDP growth Q1 y-o-y 2.9% 650 Inflation May y-o-y - 2.0% Unemployment Rate Q1 8.6% Source: National Statistical Institute of Republic of Bulgaria Trade with EU Q1 +3.5% Export Imports +3.6% Retail trade April y-o-y 5.4% Economy During the first quarter of 2016, GDP growth amounted to 2.9% on an annual level, supported by robust consumption growth and a fall in trade deficit. Consumers are benefiting from rising real wages, with real personal disposable income in the last quarter of 2015, up by 10% on a year before. Export is expected to grow slowly in 2016 to 3.5% as global headwinds hit Bulgaria s trading partners. Growth is highly dependent on exports which account for over 60% of GDP. The government is broadening export markets, having made several trade deals with China. Construction indices April y-o-y -10.4% Industrial production April y-o-y 2.5% Prime yields Key transactions Investors continued to seek acquisition opportunities in various cities in the country. This has reflected in several transactions in the capital and other cities. Asset type Property City Seller Buyer Office / Logistics Sofia Airport Centre Sofia Tishman International companies Revetas Capital Retail 8.25% Retail Mall Plovdiv Plovdiv GE Capital Real Estate Retail Retail Park Plovdiv Avestus Capital Partners Plovdiv Europa Capital HomeMax
Office market Supply Office stock From the beginning of the year, Sofia s office market has noted lower activity. There were no large scale office completions and market activity relied upon the delivery of mixed-use and smaller schemes. 1.7mn sq m Property Location Size (sq m) Description San Stefano Plaza San Stefano street 3,000 Mixed use scheme including residential, office and commercial centre Class A Class B Vacancy rate New Completion (sq m) Demand 2013 24% Increasing pre-lease requirements 2014 2015 H1 2016 Best performing buildings 22% 20% 15% <5% 10,000 Expected delivery in H2 2016 Major sectors IT and BPO/SSC Market drivers relocation and renewals Future projects Rental levels (sq m / month) In the first half of the year, foundation stones were laid for various schemes, mainly scheduled for delivery in 2017. 13.5 9-11 5 Project Location Size (sq m) Sofia One phase 2 Nikola Tesla street 17,000 Polygraphia Office centre phase 2 Tsarigradsko Shose 10,000 Millenium Centre Corner of Vitosha Blvd/ Bulgaria Blvd 25,000 City Tower Macedonia square 34,500 CBD Broader center Periphery Long Tower Bulgaria Blvd 18,500
Retail market Supply Market activity has slowed since the beginning of 2015 Delivery of a new multifunctional complex San Stefano Plaza More activity was noted in secondary cities Sofia shopping center density 322 sq m per 1,000 inhabitants Continuous shifts in the big box segment Property Location Size (sq m) Description San Stefano Plaza Sofia 12,000 Multifunctional complex Sofia shopping center stock in 000 sq m Demand 2014 2015 2016 Forever21 entered the market Inditex announces start of online sales Stable demand in Vitosha Boulevard 412 412 424 Kaufland, Lidl and Billa continue market expansion Maxima Bulgaria taking over Penny market stores Existing stock New supply Rental levels (sq m / month) Future supply 21 40-50 Future supply remains focused on medium sized schemes that were previously put on hold. Property Location Size (sq m) Developer Plaza West Sofia 25,500 Stirling Properties / Marinopoulos Group Markovo Tepe Plovdiv 21,000 G.P Group Shopping Centre High street
Andrew Peirson Managing Director +381 11 785 0579 andrew.peirson@eu.jll.com Jana Golubović Senior Research Analyst +381 11 785 0589 jana.golubovic@eu.jll.com Featured Research: SEE the difference Sofia Office Pulse report Sofia Retail Pulse report www.jll.rs COPYRIGHT JONES LANG LASALLE IP, INC. 2016. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.