Industrial property rental growth among Europe's highest
18 March 2008
The ongoing lack of supply of industrial property rentals in Bulgaria continues to constrain the market, however, take up levels did rise over the course of 2007, global real estate consultants Cushman&Wakefield said in a report entitled “Industrial Space Across the World 2008”.
Demand arises from both domestic and international occupiers and is focused on Sofia and surrounding areas which have superior transport links. However, Plovdiv, the main traditional industrial area, is also growing in popularity, said the report.
”Owner occupation is high due to the lack of modern stock but developers are now beginning to build speculatively.” Rental growth in Sofia is reported at 9% for 2007 versus an average gain of 2.5% for Europe as a whole. Logistics properties in Sofia command rent rates of 73 euro/sq m on average per year and EUR 6 per sqm per month, showed the report.
The Bulgarian industrial property market has been slow to gather momentum with demand significantly outpacing supply, said different sources from the local realty market. High land prices and the slow recoupment of the investment are among the factors for the developers' tepid interest towards the segment. The imbalance on the segment, however, is expected to further deteriorate as the robust business of local corporations increases demand for logistics space.
The Cushman&Wakefield report showed that Bulgarian annual rent rates are higher than the global average of EUR 64 per sqm.
In 2008, Bulgaria will remain a more expensive rental destination than some markets in Western Europe like Austria, Portugal, Belgium and Hungary.