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Bulgarian property market to see gusher of cash in 2006
Bulgaria's real estate market is primed to absorb hundreds of millions of euro in 2006 as investors continue to pour cash
in the construction of retail, logistic and industrial properties.
More real estate companies listed their shares for trading in the UK during 2005 than in the previous seven years combined as they
raised almost 2 bln pounds to take advantage of investor appetite for property, shows an analysis of news agency Bloomberg. At least
7 of the 20 new funds will invest in Bulgaria's real estate market where property prices are on the boil ahead of the country's
expected EU accession in 2007, said the news agency.
With the cash resource of closed funds thrown in, the estimates for the likely investment in property developments in Bulgaria next
year are running between 300 and 500 mln euro.
There is ample supply of residential and holiday properties but offerings on the retail and industrial segments are sparse, said
Dobromir Ganev, manager of real estate agency Foros.
Roger Hornett from Development Capital Management, the company managing the Black Sea Property Fund, said the vehicle is yet to
commit some 40% of its 50 mln euro cash resource. Although Black Sea Property Fund is primarily involved in the construction of
residential and vacation in resort areas, Hornett anticipates that, going forward, the investment funds will be looking for retail,
office and industrial buildings with long-term tenancy contracts that could yield a steady return. At the moment, the foreign investors
are aiming for a return of 7-9%, said Hornett.
Think-tank Industry Watch estimates that the capital of native special purpose vehicles incorporated for property investment exceeds
80 mln levs but most of it is still idle.
A property market report prepared by the Wall Street Journal, forecasts that the assets likely to attract investor interest are
shopping centers in emerging markets, including Bulgaria, as well as offices in smaller cities across Europe, because yields are
typically better in these locations. Industrial and warehouse properties are also becoming popular, especially in Central and
Eastern Europe, where prime yields can be as high as 11%, compared with 7% in London.
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