BULGARIA RETAIL MARKET OVERVIEW H2 | 2019 2 | Bulgaria RUSE DOBRICH H2 2019 PLEVEN SHUMEN VARNA MONTANA VELIKO TARNOVO Retail Market Overview | Colliers International | Colliers Overview Market Retail KOSTINBROD SOFIA PLOVDIV BURGAS STARA ZAGORA BLAGOEVGRAD HASKOVO Existing shopping centre Shopping center under construction Existing retail park Retail park under construction FIG. 1: RETAIL SPACE IN 366 355 SHOPPING CENTRES PER 322 1,000 INHABITANTS IN 315 Western Europe average THE BIGGER CITIES 261 252 CEE average 252 238 192 114 Soa Plovdiv Varna Stara Veliko Burgas Gabrovo Ruse Pleven Bulgaria Zagora Tarnovo 2016 2017 2018 2019 Source: Colliers International 3 Retail Market Overview | Colliers International | Colliers Overview Market Retail H2 2019 BULGARIA | Bulgaria • The total supply of modern • Main high streets in the four biggest retail space* in Bulgaria was cities in Bulgaria preserved stable 796,000 sqm at the end of 2019, occupancy levels on an annual registering 3% growth, due to the basis. opening of Delta Planet in Varna. • Pepco is the retailer with the • Retail space in shopping centers highest number of store openings per 1,000 capita for Varna in the second half of 2019 with increased from 247 sqm to 23 stores. 366 sqm, and for Bulgaria - • Some of the new brands for to 114 sqm. (Fig. 1) the Bulgarian market during • Development and modernization the reported period are: Miniso, of existing retail parks*** in the Nespresso, Madame Coco, Tezenis, country continued; construction of Avva, Bottega del Sarto, Brums, new projects began in cities with Spa Ceylon and Lapin House. less than 80,000 inhabitants, such as Shumen and Blagoevgrad. 4 OBELYA NADEZHDA | Bulgaria Retail H2 2019 Park Sredets VASIL LEVSKI Jumbo LYULIN Plaza Mega Mall Retail Market Overview | Colliers International | Colliers Overview Market Retail Mall of CENTER Sofia Serdika OVCHA KUPEL Center Park Center LOZENETZ DRUZHBA Bulgaria Mall Paradise The Mall Center BOYANA MLADOST Sofia DRAGALEVTSI Outlet Grand Center Kanyon SIMEONOVO Sofia Ring Existing shopping centre Mall Shopping center under construction Existing retail park Retail park under construction FIG. 2: PRIME RENTAL RATES** IN SOFIA (EURO/ 55 55 49 SQM / MONTH) 45 42 39 39 39 34 35 2015 2016 2017 2018 2019 Shopping centre High street Souce: Colliers International 5 Retail Market Overview | Colliers International | Colliers Overview Market Retail H2 2019 SOFIA | Bulgaria • Modern shopping centre stock* • There was a slight increase in in Sofia retained its levels from tenants’ movement on Sofia high the first half of the year, namely streets from 3% to 6%. Vacancy 390,660 sqm. rates maintained stable levels of 8%. • The absorption of the reconstructed vacant hypermarket areas • The main high street in Sofia - continued in the second half of the Vitosha blvd. continued to register year and resulted in 12,880 sqm high level of occupancy, more leased space, while for the whole than 99% for the past six months. 2019 this indicator was 34,760 sqm Tenants’ movement recorded an (an increase of 130%, compared to increase of 4% and reached 5%. 2018). (Fig. 3) • Prime rents** remained unchanged • Four main categories defined the - 39 euro per sqm for shopping demand in shopping centres in centres and 55 euro per sqm on the second half of 2019: Fashion Vitosha blvd. (Fig. 2) (40%), Shoes and bags (12%), Café, restaurants and fast food (10%) and Sportswear (9%). FIG. 3: RETAIL SPACE ABSORPTION IN SOFIA (SQM) 34,600 34,760 29,500 26,160 15,100 2015 2016 2017 2018 2019 Souce: Colliers International 6 | Bulgaria G Center Plovdiv H2 2019 EAST CENTER Grand Retail Market Overview | Colliers International | Colliers Overview Market Retail Trade Center Mall Plovdiv Plovdiv Plaza Mall Markovo Tepe Retail WEST Park Yug Retail Park Plovdiv Retail Park Raikov SOUTH Existing shopping centre Shopping center under construction Existing retail park Retail park under construction FIG. 4: PRIME RENTAL RATES** IN PLOVDIV 26 (EURO/ SQM / MONTH) 25 25 25 25 23 23 22 20 20 2015 2016 2017 2018 2019 Shopping centre High street Souce: Colliers International 7 Retail Market Overview | Colliers International | Colliers Overview Market Retail H2 2019 PLOVDIV | Bulgaria • The supply of modern retail space* • Tenants’ movement on high streets in Plovdiv in the second half of registered a slight decrease from 2019 remained 87,500 sqm. 8% to 5% year-on-year. • The average occupancy rate in the • Prime rents** held levels of 25 three shopping centers exceeded euro per sqm for shopping centres 85%. The absorbed space for the and 23 euro per sqm for high whole year was 2,800 sqm. (Fig. 5) street. (Fig. 4) • Demand in shopping centers was • New stores opened in Retail determined by the categories Park Yug in 2019: Pepco, Lilly, Fashion (39%) and Café, SoPharmacy, Booktrading and restaurants and fast food (33%). PizzAmerigo. FIG. 5: RETAIL SPACE ABSORPTION IN 23,200 PLOVDIV (SQM) 2,800 1,160 2017 2018 2019 Souce: Colliers International 8 | Bulgaria VAZRAZHDANE H2 2019 Delta Planet POBEDA Retail Palah Park Center LEVSKI Retail Market Overview | Colliers International | Colliers Overview Market Retail Varna Varna Mall Grand Mall WEST SV. IVAN RILSKI HRISTO BOTEV Existing shopping centre Shopping center under construction PRISTANISTEN Existing retail park KOMPLEKS Retail park under construction FIG. 6: PRIME RENTAL RATES** IN VARNA 27 26 26 (EURO/ SQM / MONTH) 25 24 21 20 20 19 18 2015 2016 2017 2018 2019 Shopping centre High street Souce: Colliers International 9 Retail Market Overview | Colliers International | Colliers Overview Market Retail H2 2019 VARNA | Bulgaria • Modern shopping centre supply* in • Tenants’ movement on high streets Varna expanded with the opening registered a slight decrease of 2%; of Delta Planet and reached the share of vacant space doubled 123,000 sqm. from 6% to 12%. • The average occupancy rate for the • Prime rents** in shopping centers three shopping centers in the city and on high street recorded a slight surpassed 85%. The inauguration reduction and stood at 24 euro of Delta Planet contributed to the per sqm and 20 euro per sqm, high levels of absorbed retail space respectively. (Fig. 6) - 33,400 sqm. (Fig. 7) • Demand in shopping centres was mainly defined by the categories Fashion (42%) and Entertainment (17%). FIG. 7: RETAIL SPACE ABSORPTION IN VARNA (SQM) 33,400 4,320 2,550 2017 2018 2019 Souce: Colliers International 10 Burgas | Bulgaria Plaza PETKO R. SLAVEIKOV H2 2019 ZORNITZA BLACK SEA Retail Market Overview | Colliers International | Colliers Overview Market Retail Galleria Burgas LAZUR CENTRE Existing shopping centre VAZRAZHDANE Shopping center under construction Existing retail park Retail park under construction FIG. 8: PRIME RENTAL RATES** IN BURGAS (EURO/ SQM / MONTH) 25 25 25 24 22 22 21 21 19 19 2015 2016 2017 2018 2019 Shopping centre High street Souce: Colliers International 11 Retail Market Overview | Colliers International | Colliers Overview Market Retail H2 2019 BURGAS | Bulgaria • The supply of modern retail space* • Tenants’ movement on high streets in Burgas remained stable - registered an increase from 8% 65,000 sqm. to 13%, together with the available space from 8% to 10%. • The average level of occupancy in shopping malls was more than • Prime rents** in shopping centers 75%. Absorbed retail space for and high street maintained at 2019 was 3,340 sqm. (Fig. 9) 25 euro per sqm and 22 euro per sqm, respectively. (Fig. 8) • Demand in both shopping centers was driven by the categories Fashion (37%) and Café, restaurants and fast food (11%). FIG. 9: RETAIL SPACE ABSORPTION IN BURGAS (SQM) 3,340 2,680 2,120 2017 2018 2019 Souce: Colliers International 12 | Bulgaria MODERN SHOPPING CENTERS IN H2 2019 SOFIA SENTIMENT SURVEY In the autumn of 2019, Colliers • In 2019, consumers spent the most International and GfK, conducted the on Fashion, Electronics and Home third study of attitudes towards modern accessories. Retail Market Overview | Colliers International | Colliers Overview Market Retail shopping centers in Sofia. Owners of • In terms of current shopping shopping centers, retailers and visitors trends, almost 80% of the survey shared their points of view. The study participants ordered monthly showed reasons for choosing one purchases online, and about half shopping center over another, favorite of them preferred to receive their brands by product category, how much items in physical stores. and what consumers spend on, how they spend their free time, attitude • Respondents also adopted some towards online shopping, attitude “green” shopping practices. The towards “sustainability activities”, the most commonly used ones are most preferred events and promotions. stopping to use plastic bags and returning clothes for recycling. The key findings of the study were: • Food replaced Fashion from the top position and became the category with the highest weight defining tenant mix in shopping centre in 2019. (Fig. 10) FIG. 10: MOST OFTEN Food 86 % PURCHASED Fashion 85 % CATEGORIES IN Gifts SHOPPING CENTRE 82 % Books 73 % Services / Banks 73 % Sports equipment and accessories 71 % Shoes, bags, suitcases 67 % Cinema ticket 63 % Electronics 63 % Children fashion and toys 61 % Perfumes and cosmetics 56 % Optics 54 % Souce: Colliers International 13 Retail Market Overview | Colliers International | Colliers Overview Market Retail H2 2019 FORECAST | Bulgaria • The market will maintain the In the first half of 2020 these momentum gained in recent years projects will diversify their tenant as a result of sustainable economic mix with new brands in the growth and stable consumption. categories Fashion, Sportswear • Most of the market participants and Food, thus increasing their will keep up the moderate pace of attractiveness. development, opening more stores • The first stores of the German in the country; new retailers are discount chain KIK will open by expected to expand to Bulgaria. mid-2020. • Demand will increasingly explore • The main challenges for retailers locations in cities with population of throughout the year will be the 70,000-100,000, where retail parks shortage of qualified personnel and are expected to be built.