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Thu, Feb 09 2012
Colliers International: Office rent levels in Bulgaria to stabilise in 2010
Research from Colliers International, or what is described as the "Top 15 survey", shows that office rental levels in Sofia will be "stabilised" in 2010, a company media statement announced on April 27 2010.
The survey shows data collected by the end of March, while the Top 15 pertains to existing, large multi-tenant office projects in Sofia, encompassing a total of 300 000 sq m of office space, or what is a third of the total office space in the capital city.
According to the report, demand was largely insubstantial in the first quarter of 2010 but price levels were not considerably affected by the lack of interest due to the lack of new supply.
New major office buildings were not flogged onto the market in the first quarter of 2010, which according to Colliers, "did not affect the Top-15 Stock".
"The Top 15 Rental Index shows that rental levels are starting to stabilise, as the first quarter in 2010 indicated a 1.1 euro sq m/month decline in asking rents following a general stabilisation of suburban rents in the second half of 2009," the report said.
"As Top 15 projects are adjusting prices and conditions, they consolidate occupancy. In reality, landlords offer rental reductions as a last resort, and prefer to entice tenants with step-rents, rent-free periods, free moving and other incentives".
Rents had decreased by 22.5 per cent by the end of 2009, as opposed to levels of summer 2008, according to Elta Consult, former partner of CB Richard Ellis.
But whereas Colliers believe rents will stabilise, there are indications that Bulgaria might not be just out of the crisis yet.
According to different studies, 2010 will see the further decline of prices of both office space and real estate.
About 70 000 sq m of office space was complete and made available in 2009, making a total of about 1.17 million sq m on the market. Additionally, about 150 000 sq m of office space were under construction and were expected to be available by the end of June 2010 alone. For the moment, only about a quarter of them, 20-25 per cent, have been rented out to tenants, while the others remain vacant.
According to MBL, about 72 000 sq m of office space were rented out in 2009 nationwide, making it the lowest rate in five years, since total completed office space amounted to 165 000 sq m. Furthermore, about 375 000 sq m of new office space is expected to be made available on the market in 2010.
Currently, office space Class A in Sofia city centre varies between 11.5 and 15.5 euro a sq m, whereas elsewhere in the capital, the average is between nine and 13 euro sq m.
Source: propertywisebulgaria.
The survey shows data collected by the end of March, while the Top 15 pertains to existing, large multi-tenant office projects in Sofia, encompassing a total of 300 000 sq m of office space, or what is a third of the total office space in the capital city.
According to the report, demand was largely insubstantial in the first quarter of 2010 but price levels were not considerably affected by the lack of interest due to the lack of new supply.
New major office buildings were not flogged onto the market in the first quarter of 2010, which according to Colliers, "did not affect the Top-15 Stock".
"The Top 15 Rental Index shows that rental levels are starting to stabilise, as the first quarter in 2010 indicated a 1.1 euro sq m/month decline in asking rents following a general stabilisation of suburban rents in the second half of 2009," the report said.
"As Top 15 projects are adjusting prices and conditions, they consolidate occupancy. In reality, landlords offer rental reductions as a last resort, and prefer to entice tenants with step-rents, rent-free periods, free moving and other incentives".
Rents had decreased by 22.5 per cent by the end of 2009, as opposed to levels of summer 2008, according to Elta Consult, former partner of CB Richard Ellis.
But whereas Colliers believe rents will stabilise, there are indications that Bulgaria might not be just out of the crisis yet.
According to different studies, 2010 will see the further decline of prices of both office space and real estate.
About 70 000 sq m of office space was complete and made available in 2009, making a total of about 1.17 million sq m on the market. Additionally, about 150 000 sq m of office space were under construction and were expected to be available by the end of June 2010 alone. For the moment, only about a quarter of them, 20-25 per cent, have been rented out to tenants, while the others remain vacant.
According to MBL, about 72 000 sq m of office space were rented out in 2009 nationwide, making it the lowest rate in five years, since total completed office space amounted to 165 000 sq m. Furthermore, about 375 000 sq m of new office space is expected to be made available on the market in 2010.
Currently, office space Class A in Sofia city centre varies between 11.5 and 15.5 euro a sq m, whereas elsewhere in the capital, the average is between nine and 13 euro sq m.
Source: propertywisebulgaria.
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Rental prices in Bulgaria's upscale shopping centres fell 25 per cent in Q3
Rents on the cities' main shopping streets were unchanged at about 55 euro a sq m in Sofia and between 30 and 40 euro in other major cities.
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While lease prices are lower than in 2008 and loan interest rates are higher, the purchase of an office through a bank loan costs as much as renting one, according to the company.
Colliers: Real estate in Sofia continues to lose ground
Property levels in certain Sofia boroughs like Lozenets, Ivan Vazov and Iztok have reportedly stabilised, or have dropped in value by three per cent since the turn of the year, or by 17 per cent on an annual basis.
Bulgaria drops five places in global office rent rankings
With annual rental costs of 205 euro a sq m, or a monthly 17.08 euro a sq m, Bulgaria was number 54 out of 63 worldwide cities by 2009 levels, dropping from 49th place in 2008.
Office rents in Sofia to stay unchanged in 2010 - study
Rents had decreased by 22.5 per cent by the end of 2009, as opposed to levels from the summer of 2008, which brought renewed interest in the market segment, according to property consultants Elta Consult.
Newly-completed office buildings to keep rents low in 2010 - study
About 375 000 sq m of new office space is going to be completed an made available on the market in 2010, which will have a dis-balancing effect on the prices due to excessive supply
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"Colliers International: Office rent levels in Bulgaria to stabilize in 2010"
Google "Colliers" and you see why they HOPE this will happen. You will see they invested in a market that will go down the drain due to overproduction.
As Corporate Real Estate manager for a US pharmacutical entering Bulgaria in 2011 we are surprised by the value that we think we'll be able to achieve. We are looking forward to getting on with our research for our new Balkan HQ to house eventually 800 staff, and will be interviewing landlords shortly!
thats why you read the Echo, because they keep telling you the other side of the story.
and yes, prices will plummet by another 20 per cent as usual. watch this space.
Colliers are talking rubbish
I wonder where people find their information, somewhere things don't seem to add up. When you regularly read Sofia echo you will see all the different people have different opinions about prices for rents and real estate. My opinion is they all try fool possible clients and make them decide too soon whether to rent now and probably get a contract at a too high price or wait some more and get a real good deal. With about one third of all office space in Bulgaria empty prices can only go one direction. You don't need to be a rocket [...]
Read the full comment scientist to understand that!