Банкеръ Weekly

Briefs

NO BUYERS FOR RESTAURANTS IN SOFIA

A considerable decline in the interest towards the purchase of restaurants, pubs, cafes, etc. has been observed in Sofia over the last year, brokers from the real estate agency Contact-M claim. There are two reasons for that - the high prices of that kind of establishments that are offered for sale, and the overall situation in the branch. Even the owners of chains of posh clubs, restaurants and cafes in the capital city complain that their incomes have dropped both in 2002 and 2003. A manager of an elite club in Sofia specified in front of the BANKER weekly that his turnover has declined by some 40% as compared to the first quarter of 2002. This means that it is difficult to redeem the expenses for repairs and refurbishing, whilst it is obligatory for luxury establishments to renovate them at least once in a couple of years. The problem lies in the reflux of customers and the smaller bills that clients pay. It has become a practice to bring in drinks, purchased at considerably lower prices from outside, when organizing larger parties and cocktails in such establishments. Consumption of expensive drinks has also declined at the expense of cheaper ones. These facts are already well-known. Therefore, not many people are willing to invest in that business.The traditionally high prices of these real estates are added to the problems in the branch. A review of the sale offers in several real estate agencies has established that the average price of such an establishment is in the range of USD500-850/sq. m. The cheapest are the little cafes in housing complexes, but there not many sale offers for them. The reason is that in most of the cases this is a family business on own area or in premises, rented in the housing building where those who run the cafes live. Catering establishments, such as pizzerias, restaurants, grill bars, etc. are more expensive. Brokers claim that they bring higher incomes due to the larger number of customers in such eateries. Moreover, their location does not influence substantially the price, and even those in the distant suburbs such as Lyulin and Mladost are expensive. For example, a pizzeria of 120 sq. m in Lyulin, located in a self-contained brick two-storey building, is offered at approximately EUR50,000, and an eatery of 70 sq. m downtown Sofia, near St. Nedelya square, can be had against USD55,000.Sale offers for establishments in the Gotse Delchev housing quarter have been numerous over the last month. Both self-contained buildings in the spaces beween the blocks of flats and ground floors in housing buildings are offered. The prices are higher than the average for the capital city. Obviously, this is due to the fact that there is much new construction in that housing complex and more solvent clients live there. And the proximity to the Southern Park guarantees a constant influx of people, especially in the week-end and holidays. One of the expensive establishments, put up for sale in Gotse Delchev, with an area of 146 sq. m, is offered at USD550/sq.m.The highest sale offers on the real estate market in Sofia reached USD3,000/sq. m in the last days of April. A restaurant with a garden (230 sq. m) is offered for sale in the Students' City at USD700,000. The other two most expensive offers are for establishments, located downtown Sofia. One of them is near the National Assembly (800 sq. m), fully equipped and luxurious. It is offered at USD850,000. The other one is a restaurant of 400 sq. m near Stamboliyski boulevard, offered at USD450,000.Prices in the country are much lower than in Sofia. In the smaller towns an establishment could be had at USD220-250/sq. m., at that, located in the town's centre. A sale offer of BGN100,000 was placed some days ago in Sevlievo - a fully equipped restaurant (200 sq. m), with a local heating installation and possibilities for gas supply. However, deals are rarely effected in the country. With the summer season coming near, a slight increase of the interest towards these real estates may be expected, brokers predict. But most of the deals will be for renting, not buying. Premises of 30-50 sq. m in new buildings will be mostly demanded, as they could be rendered suitable for eateries by relatively smaller investments.Offers for Sale of Establishments Restaurants in Some of the Preferred Quarters in Sofia Location Square surace Price NotesBorovo 146 sq. m USD80,000 equippedBorovo 204 sq. m USD150,000 central heatingBorovo 26 sq. m USD19,000 cafeIvan Vazov 50 sq. m USD65,000 cafeIvan Vazov 85 sq. m USD75,000 near school, with licencesIzgrev 140 sq. m USD30,000 warehouseIzgrev 100 sq. m EURSD36,000 with yard

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