The average return on investment in property has decreased since the beginning of 2007. The slump is most obvious in holiday and residential units – it is set at less than 5 per cent a year.
The average return on investment in property has decreased since the beginning of 2007. The slump is most obvious in holiday and residential units – it is set at less than 5 per cent a year. The yield of business property remains considerably higher – the figure is two to three points greater than the respective one in Central and West Europe. The analysis is based on elaborate reports of international companies such as Cushman&Wakefield and Colliers.
Only two years ago, the returns of holiday apartments were expected to range between 7 and 8 per cent. The average level of real estate returns will be placed on a par with the one in Central Europe in two-three years according to current forecasts.
It is normal that the investment risk in Bulgaria sees a decrease after its accession to the EU and real estate yields are bound to experience a subsequent drop, as well, Tanya Koseva, Landmark's manager commented. The Bulgarian market still offers better opportunities for business property investment as compared to the ones in the rest of Europe.
The annual rate of returns on investment in office, retail and industrial areas in Bulgaria comes to 7 to 9 per cent , the corresponding figure in Central Europe is 5 to 6 per cent and in London it is only 4 to 5 per cent, Kosseva said.
The main problem in Eastern Europe is the lack of ready-to-use business centres as compared to the amount of capital allocated for real estate investment, Financial Times reports.
Currently, the Bulgarian market exhibits a shortage in supply of office, retail and warehouse areas on one hand and a keen demand for the latter on the other. This accounts for the 5 to 10 per cent rise of rental prices at the beginning of 2007.
The problem with holiday developments is oversupply, accompanied by a short tourist season and a lack of infrastructure which is a drawback which all Bulgarian business has to face, Minko Bordjukov, Development Manager of Bulgarian Property Development fund stated.
