For almost a full decade Bulgaria has experienced a constant growth in its real estate sector – in particular the real property boom in its housing sector. This embraces single family homes, secondary homes and vocational homes, as well as retail centres and mega shopping malls. The same cannot be said for the industrial property sector, however. As far as industrial estates are concerned, it seems that the trend has omitted them completely.

The industrial property sector remains underdeveloped and lags behind other branches in the industry, possibly, or in spite of, low investment interest.

The current supply on offer in the market of modern industrial buildings is considered to be insufficient in quantity although statistics show that the situation is slowly improving following Bulgaria's accession to the European Union, according to claims made by international consultants, as reported by Stroitelstvo Gradut weekly.

The report's forecast was fairly predictable, notably that this year will see a substantial downturn of economic activity in Bulgaria followed by a cumbersome recovery for the sector with estimates suggesting that business demand for industrial and logistics real estate will not recover before 2011, as also confirmed by analysis from a King Sturge report.

Meanwhile, the registered increase of eight per cent in rent levels of industrial space in 2008 made Sofia one of the leaders in terms of growth of rents' cost in Europe.

Because in the last decade the industrial and logistics sector did not register the same growth as other sectors in the real estate business, logistics and industrial estates are lagging far behind economic realities. Hence, clients are presented with some of the highest rents in the central and eastern European region.

And this is behind the Bulgarian paradox: in spite of the fact that business has not developed as well as other segments in the real estate economy, in terms of rents, Bulgaria ranks amongst the first 20 in Europe, having climbed no less than 12 positions in the pecking order in the last few years, according to a report published by Cushman & Wakefield. Currently, industrial parcels are offered at  79 euro per sq m, while average rent levels in the region are 66 euro.

The main obstacles hindering the sector's development are the sluggish reforms in legislature and red tape and the lack of transparency in the market that prevents investors from coming on the local market.

Furthermore, according to the index of the World Bank for logistics effectiveness, published by the Logistics Performance Index, (LPI), which is involved in making an in-depth evaluation of logistics and restrictions in any given market, Bulgaria ranks along the last in Europe, ahead only of Croatia, Russia and Serbia.

The index is formed on the basis of several criteria, border crossing services, trade infrastructure, the quality of the ports and docks and the processing of freight as well as logistic services, internal transit and information systems.