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Analysis of the real estate market in Sofia - H1 2024

02.09.2024

Investment Market

 

Total investment volume for H1 2024 reached €78.50 mil, marking a slight increase from €73.95 mil in H1 2023. However, the distribution of transactions shifted notably. The industrial sector dominated, accounting for €71.40 mil, driven by a significant portfolio ransaction. Meanwhile, the retail sector saw no activity, and the office segment, a leader in the past few years, sharply declined to €4.20 million. The hotel sector recorded a modest €2.90 million.

 

The largest transaction in H1 2024 was the sale of the BPD Portfolio of Logistics, totaling €71.40 million. This portfolio, which includes three key properties located in Sofia, Varna, and Ruse, was sold by BPD to the Bulgarian-African joint venture Lion’s Head. This significant deal underscores the strong and steady interest in the industrial sector, driven by logistics and warehousing needs.

 

 

Office Market Commentary

 

In the first half of 2024 is close to the average for the previous year and further solidifies the lower transaction volume trend observed since 2023 - close to 14% drop compared to 2022. The total volume of relocations and expansions from the beginning of the year stand at 77,963 m².

 

„Hladilnika“ has taken the lead in terms of transaction volume accounting for close to 26% of the newly singed leases. „Tsarigradsko Shosse“ and the „Business Park“ Area came second, each with about 14% of the transactions in the first half of the year.

 

 

Retail Market Commentary

 

In the first half of 2024, retail parks continued to develop rapidly, with 52,000 m² of new spaces unveiled across the country. There were more than 55 retail parks in stock, or over 547,800 m² of stores.

 

The situation in Sofia remains stable. Retail parks in Sofia have a total availability of 87,370 m², 4 of these parks boast a 99% occupancy rate.

 

In H1 2024, five retail parks were opened in the country: Retail Park Dobrich, Retail Park Vidin Plaza, Retail Park Velingrad, Retail Park Alati (Pleven), Retail Park Nesebar, with a total gross floor area of 52,000 m².

 

The retail park projects planned for Sofia have a total area of 222,958 m² GLA. Their delivery is expected by the end of 2024 or early 2025.

 

 

Industrial Commentary

 

The first half of 2024 ended with newly built sites totaling 58,100 m², with net take-up in Sofia totaling around 86,400 m². However, most of the newly built space is for the private use of large grocery chains as well as electronics.

 

The vacancy rate in the segment reached 2.5% of total stock.

 

The rent of newly built A-class warehouses in prime locations decreased compared to the previous quarter to €5.3 per m². This level is expected to remain stable in the near future.

 

By the end of H1 2024, the total volume of warehouse and logistics areas in Sofia exceeded 2.04 million m². 

 

 

Residential Commentary

 

The residential market recorded a decline during Q1 2024. In Sofia, mostly two-room and three-room residential units were put into operation. In Q1 2024 overall, 192 two-room dwellings were delivered, which represents 35% of all newly introduced units, followed by 142 three-room dwellings, or 26% of the total, 115 four-room dwellings (21%) and 52 five-room dwellings (9%).

 

The average price of apartments in Sofia for Q2 2024 was €2,000 / m², which is an increase of 9%. Prices are up 25% in Q2 2024 compared to Q2 2022.

  1. iO Partners Sofia City Report H1 2024.pdf

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