he GDP growth of Bulgaria surpassed the forecasts, reaching 4.2% in 2021. The positive trend was underpinned by higher-than expected increase in consumption and improving business activity. The war in Ukraine changed economic prospects for 2022, due to supply chain disruptions and energy prices uncertainty. The negative impact on private consumption, investments and exports have dampened growth expectations for 2022. The Spring forecast of the Ministry of Finance projects 2.6% GDP growth in 2022 and 2.8% in 2023. Inflation, that rose by 12.4% y-o-y in March, will continue to accelerate and is expected to exceed 10% on average.
Office Space in Sofia, Bulgaria
The office market in Sofia registered impressive growth, with 44,032 sqm lease contracts and renewals signed in the first quarter of 2022. The activity is significantly above the five-year average, reflecting the occupiers’ desire to improve or consolidate their office space. Most companies move towards higher-end office buildings and new projects. Despite the impressive leasing volume, net office absorption is modest – 8,600 sqm, since the market is driven by relocations and renewals, rather than expansions. Main road locations continue to attract the largest portion of the leasing volume, due to the concentration of large projects and available space.
Industrial Real Estate in Bulgaria
The logistics property market in Sofia registered relatively high leasing activity, with 34,204 sqm take-up in the first quarter of 2022. The main drivers were expansions of retailers, logistics and distribution companies. The only completion for the period was a new logistics center in the airport area. Most occupier requests are for mid-size logistics space in the ring road area or in the emerging industrial zones on the outskirts of Sofia. The facilities within the city boundaries are in demand for last-mile logistics.
Retail Real Estate in Bulgaria
The retail property market kept stable performance in the first quarter of 2022, with the big-box segment and retail parks in focus.
The main drivers are FMCG, drugstores and sports retailers which continue their expansion in Sofia and the regional cities.
Discount stores and budget clothing brands, that entered the market in the recent years, are also adding new stores.
On the supply side, the market is driven by retail parks, with total amount of these projects at 219,000 sqm countrywide as of the beginning of 2022. Another 153,000 sqm are under construction or in planning phase. Although still emerging, this market segment is witnessing early signs of consolidation. Some of the big players develop their own portfolios of projects, while others rely on acquisitions.