Bulgarian real estate market hit by global crisis
04 February 2009
Bulgarian real estate market is seen slowing down on the effects of the global financial crisis, as local projects are being delayed or postponed indefinitely, said Colliers International in its report.
The report pointed out that many schemes will be annulled, remain unfinished or lower their budget, as the credit squeeze has its biggest toll on the retail property segment and noted that only two new shopping malls are going to be completed in Bulgaria in 2009.
‘Malls in locations other than the capital find it hard to attract tenants, and even if they do, they fail to achieve expected return,’ said Krasimir Dimitrov, managing partner at SOURCE Real Estate Advisers Ltd.
Atanas Garov, the executive director of Colliers Bulgaria, stated that ‘the business property market in Bulgaria is moving forward only by inertia because all projects currently under construction have started in 2006 or 2007,’ adding that ‘there is nearly no new construction since the middle of 2008.’
Furthermore, ‘banks are turning the tap even on projects that have already been started if investors refuse to renegotiate loan terms,’ noted David Davidkov, business space director at Colliers’ local office. Lenders are demanding higher interest rates, a bigger share of co-funding and higher threshold for preleased space, said the report.
Moreover, the report comes to controversy with experts’ earlier estimates of an oversupply of retail and office space that would have continued through 2009. However, companies are currently sharing offices to streamline costs and reduce staff, added Garov.
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