Offices were the most attractive sector for investment in 2018

Offices were the most attractive sector for investment in 2018, according to Colliers’ latest investment market overview of Bulgaria. They accounted for approximately 67% of the total volume, followed by retail property transactions with a share of 29%. The remainder included deals with development land, industrial real estate and hotels (fig. 1).

The total value of completed investment transactions in the second half of 2018 was EUR 317 mn, totalling to almost EUR 668 mn for the whole year. The proportion between income generating and speculative transactions was 71% to 25%, respectively. The remainder was attributed to owner-occupied properties. International buyers, CEE investment funds predominantly, have been most active on the market with a share of 70% (fig. 2).

Prime yields have been gradually compressing since 2016. The trend continued in 2018. By the end of 2018 they reached 8% for offices, 7.25% for retail and 9.5 for industrial properties.

2019 is likely to resemble 2018 with recurring signals of a plateauing market. Transaction volumes shall not exceed their 2018 levels as a result to the investment product supply and the expectations for debt capital availability. Nevertheless, the potential for development of new projects in the next 3 to 5 years will continue to attract the active market players.