 Rental prices up 4-6% in Q1 2008 – Industry Watch
15:09 Fri 21 Mar 2008
The actual yield in holiday real estate segment will fall below six per cent at the end of 2008 and British and Irish investors’ withdrawal from Bulgarian resorts will be partially off-set by Russian and Scandinavian buyers, Alexandrov Group specialists forecast.The rental prices of a regular two-room apartment in Sofia rose by an average of four per cent in the first quarter of 2008, while three-room flats in prime locations posted a 6.7 per cent mark-up in the same period, according to a recent report of the local think-tank Industry Watch.
Despite the recorded growth in residential rents, their rise still lags behind the growth in sale prices and the flat’s repayment period (sale price/rent price ratio) has been extended from 188 to 234 months on average, according to the survey.
Industry Watch analysts have observed a certain decline in the interest in residential and holiday real estate. Business space – offices and warehouses, on the other hand, are gaining ground.
All in all, the property market will preserve its upswing trend, recording a 13-14 per cent rise in the forthcoming years. Industry Watch’s forecast is based on the expected increase in household income and lending expansion. Although growth in residential loans in Bulgaria as of the end of January 2008 slowed down, it remained high – 62 per cent year-on-year.
By comparison, the volume of mortgage loans in the countries from the European area increases by 7.1 per cent on average annually.
The last quarter of 2007 saw a meltdown in the pace of increase of new residential building permits and their share in the total number of construction permits shrank to about 54 per cent.
The global credit squeeze will reduce the volume of foreign investment in Bulgaria and will retain the prices of Bulgarian public companies, according to Industry Watch expectations.
Equity investments will report losses due to the continued slow down in global stock markets and, consequently, this will impact other investment, including investment in real estate, commodities and services.
The property market will be affected directly, primarily in two segments – big projects, financed by large investment funds and banks, and vacation developments. The prediction has already proved true – British and Irish customers’ flow to Bulgarian resorts has ebbed away.
Luxury dwellings in Sofia, Varna and other large cities will post no less than 25 per cent hike on annual basis in 2008. Given last year's performance of Rousse, when its residential growth exceeded 40 per cent, the Danube town will probably see a higher mark-up, Industry Watch report noted.
With view to the current under-estimation of Vidin and Kyustendil residential units, the two towns are likely to experience a soonest rapid growth in apartment prices, Alexandrov Group real estate agency said. Returns on vacation properties over the upcoming months will slide from two-digit to one-digit figures.
The actual yield in holiday real estate segment will fall below six per cent at the end of 2008 and British and Irish investors’ withdrawal from Bulgarian resorts will be partially off-set by Russian and Scandinavian buyers, Alexandrov Group specialists forecast.
Yields of vacation real estate, however, have already fallen below three per cent in some regions, according to a number of realtors.
Another Israeli multi-purpose project to tower over Sofia’s western districts
14:29 Fri 21 Mar 2008
Roslin Park will be a semi-gated compound, offering 24-hour security services and video monitoring, a fitness hall, sauna, kindergarten, beauty parlour, supermarket and a number of shops. A large chunk of the space has been allocated for green areas.Roslin Park, the first residential project of Israeli-based Pritzker Group in Bulgaria, will be located in Sofia’s Lyulin neighbourhood, at the junction of Petar Dertliev Blvd and Pancho Vladigerov Str, consisting of 28 eight-storey apartment buildings with a total built-up area of 65 000 sq m, which will spread on a land plot of 30 000 sq m.
The plot was acquired between 2004 and 2006, the company told The Sofia Echo.
The project will total 550 apartments with sizes varying from 60 to 220 sq m and prices hovering in the 735-880 euro a sq m price range.
Roslin Park will be a semi-gated compound, offering 24-hour security services and video monitoring, a fitness hall, sauna, kindergarten, beauty parlour, supermarket and a number of shops. A large chunk of the space has been allocated for green areas.
The first phase of the project, which comprises eight residential buildings with a total of 150 apartments, is scheduled for completion in May 2009. About 85-90 of these units have already been sold to residents from Lyulin and the nearby neighbourhoods.
Itzhak Pritzker represents the investor in the project, IP Bulgaria 2005 Ltd. The construction company is AT Engineering 2000, architectural design was done by Atanas Panov, and financing has been secured through a loan from United Bulgarian Bank (UBB).
The Pritzker group of companies is an international company that started in the construction of residential apartments in 1961. Over the years, the company has strengthened its position as one of the biggest and most respected developers in Israel, having erected thousands of housing units, some of the expensive and luxurious shopping centres, office buildings and residential compounds in Tel Aviv, Jerusalem and Haifa.
It has expanded its activity, going beyond the boundaries of Israel and, since 1985, has invested in property in locations like New York, Connecticut, Hungary, Croatia and Latvia. It has recently started large-scale investment in Russia and Romania and it landed on the Bulgarian real estate market through the Roslin Park complex.
Currently the company is owned and managed by Itzhak Pritzker, a second generation member of the family.
This is not the first residential investment aimed at middle and lower-middle consumers by an Israeli company in a residential development in Sofia’s western neighbourhoods.
Tivon Properties, a subsidiary of leading Israeli developer Stern, is the investor in City Park Residence, a complex to be located in the southwestern part of Sofia at the corner of Tzar Simeon Str. and Zografski Manastir Str., comprising class A residential, office and retail space, due to open at the end of 2009.
The architectural plan was elaborated by Atelier Serafimov Architects Ltd, with Glavbolgarstroy Jsc as the contractor. UBB will once again finance the project and Orvitex Ltd. is the manager and exclusive agent of City Park Residence.
Investment should come to 25 million euro, including the purchase of the 0.5 ha land plot, and the total built-up area will be 30 000 sq m - 6 000 of which will be allocated to office space and 3 500 sq m to retail units. Residential units will sell at 1100-1200 euro a sq m, office areas will trade at 1500-1600 euro, and retail outlet prices will be negotiable, fluctuating between 2 000 and 3 000 euro a sq m.
And given that Israeli investors are traditionally known for their shrewd and savvy investments, and banks consider them as very reliable borrowers, it might be assumed that such multifunctional developments in this region, commanding reasonable prices, will prove profitable.
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