TRANSFORMING REAL ESTATE INTO REAL ADVANTAGE
RETAIL SPACE MARKET OVERVIEW BULGARIA | Q4 2019 RETAIL SPACE BULGARIA | Q4 2019
MARKET HIGHLIGHTS TOTAL STOCK vacancy rate Provision Rate
341 m2 285 m2 208 m2 817,200 m2 9.3% per 1,000 people
STOCK
This year was marked by the RETAIL SPACE PROVISION RATE BY CITY opening of a new shopping center in Varna which increased the retail stock in the city to Varna 123,000 sq. m., making Varna the city with the highest retail space Sofia provision rate in the country. There were no other deliveries Stara Zagora of shopping centers in 2019 and none are planned for 2020. Burgas Currently, in Bulgaria there is only one shopping center in the Ruse pipeline – Promenada Plovdiv. Plovdiv The construction works are believed to start in 2020. Veliko Turnovo In Q4 2019, the stock of retail space in modern shopping centers Pleven in Bulgaria is 817,200 sq. m., of which 411,400 sq. m. are in Sofia. Bulgaria
050 100 150 200 250 300 350 sq. m sq. m sq. m sq. m sq. m sq. m sq. m sq. m VACANCY
TOTAL STOCK AND VACANCY RATE IN SHOPPING CENTERS In Q4 2019, the overall vacancy fell to 9.3% from 9.7% in the previous quarter. The vacancy 500 000 16,00% rate in Sofia fell from 9.1% to 450 000 8.4%, while the vacancy outside 14,00% of Sofia – from 10.3% to 10.1%. 400 000 12,00% This decrease in the vacancy 350 000 rate is due to new tenants such 10,00% as PEPCO, JYSK, CCC and Billa 300 000 opening large-sized stores 250 000 8,00% in certain shopping malls in 200 000 Sofia. In other cities the small 6,00% decrease in the vacancy rate 150 000 was due to expanding local 4,00% retailers. 100 000 2,00% 50 000
0 0,00% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2018 2018 2018 2019 2019 2019 2019
Sofia Total Stock in sq. m. Bulgaria (excl. Sofia) Total Stock in sq. m. Vacant space in Sofia in % Vacant space in Bulgaria (excl. Sofia) in % RETAIL SPACE BULGARIA | Q4 2019
RETAIL CHAINS
The expansion of the food retailers their 100th unit in January 2020. to further expand mainly in Sofia. In continued throughout 2019. In In Q4, PEPCO continued their 2020, the German discount retailer Q4, the most notable openings expansion. In this quarter they KIK plans to open new stores in were from T-Market which added have opened 12 new units and have the country and the polish PEPCO 8 new units this quarter. That was finished the year with 32 units in the will continue with their nationwide mainly due to their acquisition of country. In Sofia, new retail areas expansion. Triumph – a former big box retailer in shopping malls were rented by In 2018, two new retail parks have in Plovdiv with 6 stores in the city. Billa, CCC, JYSK and PEPCO. In been opened in Plovdiv. Both are They also opened new units in December, IKEA announced that located in the south region of the Sofia and Vidin. Billa opened two they will open a new store in Delta city and are fully occupied. We new units this quarter – in Mall Planet Varna in 2020 with a size believe that in Bulgarian cities Galleria Stara Zagora and in Varna. of 8,000 sq. m. For next year big excluding Sofia retail parks will Lidl have finished the year with 98 box retailers such as Billa, Lidl and continue to be a viable option for units and are expecting to open Fantastico have strong intentions tenants looking for new retail areas.
TOP 5 FOOD RETAILERS ON THE MARKETS /NUMBER OF STORES/
140 130 120
100 98 82 80
60 59 42 40
20
0 Billa LidlKT-MarketFaufland antastiko HIGH STREET
For many years Vitosha Boulevard the High Street area is still the most high-end fashion brand. The highest and Sveta Nedelya Square have been preferred by tenants looking for space rental rates in the capital remain known as the main shopping area outside shopping malls. In Q4, there on the pedestrian zone of Vitosha of the capital. However, in recent were two transactions for retail space Boulevard and Sveta Nedelya Square years the zone is dominated by in the area. One is on Vitosha blvd. and are about €70 per sq. m. Rents cafes, restaurants and snack bars as and will accommodate a steakhouse on alternative locations such as Graff many retailers prefer to open units while the other is on Sveta Nedelya Ignatiev and Vitosha around NDK are in shopping malls. Nevertheless, Square and will accommodate a around €50 per sq. m.
RETAIL SENTIMENT
The volume of retail sales in Q4 is last couple of years. However, the business situation over the next higher than the one registered in confidence indicator expressed 6 months are lower than the one Q3 and thus is the highest for the by retailers and their expected recorded in Q3. RETAIL MARKET OVERVIEW
40.00
35.00
30.00
25.00
20.00
15.00
10.00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 Volume of sales over the last 3 months Expected business situaon over the next 6 months Confidence indicator in retail trade The business survey in retail trade, conducted by the National Statistical Institute, gathers information about the entrepreneurs’ opinions about the situation and development of their business. The replies to the questions included in the questionnaires are presented in a three-option ordinal scale. The results are in the form of balances which are the difference between the positive and negative answering options. Source: NSI RETAIL SPACE BULGARIA | Q4 2019
ECONOMIC HIGHLIGHTS
As of November, the inflation rate based on the FDI are growing at a moderate pace, reaching €953 Consumer Price Index (CPI) increased with 3.0% million as of October, exceeding the level of 2018, on a Y-o-Y basis, slightly up from the summer however, remaining much lower than in 2017 (€1.6 months when it ranged between 2.3-2.9%. billion).
In Q3 2019, the GDP growth slowed down to The average unemployment rate stood at 5.8% as 3.1% on an annual basis. The Bulgarian Economy of November, up from 5.3% in Q3. realized a GDP growth of 0.8% on a quarterly basis.
Source: Bulgarian National Bank and NSI
INVESTMENT ACTIVITY
Total volume for commercial real estate for almost half of all deals, while the other markets due to limited liquidity transactions in 2019 slightly exceeded hotel segment turns out to be a good and unfavorable loan amortization in €220M and is the lowest in the past 3 alternative to experienced domestic Bulgaria, while local buyers are also years. The office segment maintains a buyers. International investors still restrained by the 50 to 100 bps bid-ask reasonable risk-return profile accounting claim they have a preference for gap for investment grade products.
CONTACT INFORMATION:
MBL Georgi Dimitrov MRICS Georgi Djibov 1 Kuzman Shapkarev Str. Director Head Sofia 1000, Bulgaria Advisory Services and Land and Industrial Space T: +359 2 9888 650 Capital Markets T: +359 2 9888 650 T: +359 2 9888 651 T: +359 2 9888 650 T: +359 2 9888 651 E: [email protected] T: +359 2 9888 651 M: +359 888 664 395 www.mbl.bg M: +359 886 292 081 E: [email protected] E: [email protected]
This research report has been prepared for general information only. The data herein was obtained from various sources; we do not guarantee its accuracy or completeness.
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