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Prices For Industrial Property In Bulgaria Among Europes Fastest Growing Study
Sofia’s industrial and logistic areas posted a nine per cent mark-up year-on-year in rental prices, which places Bulgarian capital among Europe’s 10 cities with fastest price growth, a recent survey by Cushman&Wakefield (C&W) international property consultants showed.The ongoing lack of supply continues to constrain the market, although take-up levels did rise over the course of 2007. Demand from both domestic and international companies is focused on Sofia and surrounding area, which have superior transport links. However, Plovdiv, the main traditional industrial area, is also growing in popularity. Owner occupation is high due to the lack of modern stock, but developers are now beginning to build speculatively.
Currently, Bulgaria’s average annual rentals for industrial space stand at 73 euro a sq m, translating into six euro a sq m a month, which puts the country in 32nd place in the C&W global ranking, one slot down from the previous year’s standing, which could be attributed to the serious rental rise in a number of countries outside Europe.
Notwithstanding the global hike in rentals, Bulgaria fared well in 2007, against the the performance of the other Balkan countries. Croatia and Romania, by comparison, recorded a fall of seven and six per cent, respectively, while Greece ended flat. Turkey was the only Balkan country to record a growth of 60 percent.
The survey covers the rents of modern warehouse developments. A large share of the transactions, struck at higher rent levels, falls to small-volume and high-technology units with temperature and humidity control, air purification, which is neeed for the proper preservation of certain products, according to Sergei Koinov, executive director of Forton International, C&W’s partner for Bulgaria, Serbia and Macedonia.
London, with an annual rent of 211 euro a sq m for prime locations near Heathrow airport and a five per cent growth in rents year-on-year, retained its position of being the most expensive industrial destination, C&W's 2007’s rundown showed. Irish capital Dublin ranked second, closely followed by Tokyo.
Demand for industrial developments in Sofia Airport area is high due to the insufficient supply, which, in turn, contributed to the unreasonably high land prices in the district. Warehouse space gained 15 per cent in 2007, against an European average of 2.5 per cent, Koinov noted.
The 2008 listings show that 89 per cent of the locations have maintained or risen in price as compared to previous year. The average annual rental hike on 2007 worldwide is six per cent, the highest one being in South Africa – 25 per cent.
Annual rental growth in Western Europe was 1.3 per cent, whereas the corresponding figure for Central and Eastern Europe (CEE) stood at seven per cent.
CEE was flooded by manufacturing and distribution companies, seeking low prices and attracted by the opportunity to simultaneously serve Western markets and the rising demand in the region. Traditionally, such companies headed for the Czech Republic and Poland. However, the interest in Romania and Bulgaria was picking up.
The future hot destinations for business development will be Turkey and Ukraine, the report predicted. Istanbul posted a 60 per cent rise in rentals, topped only by Mumbai, which recorded a 94 per cent hike. C&W Europe forecasted rental pricess to continue rising, especially for properties in growing industrial markets, while the more developed markets would post a more moderate hike, particularly taking into consideration the global credit crunch’s impact.