Банкеръ Weekly



A true battle for tenants is likely to take place between the shopping malls to be built not only in large towns. The party is over - Petar Dudolenski, chief executive officer of Real Estate Services Bulgaria, sums up the situation. Real Estate Services Bulgaria is one of the large investment companies in the sector. The bulk of the announced projects for future large shopping malls will simply not be launched, and as for the survivors - they will undergo an arduous selection from the banks, he adds.
Unprecedented interest in the building of such retail units has been shown over the last two years. Attracted by the good returns, many investors took up the business rather optimistically. The interest was provoked by the traders' hunger for new premises in a moment when the area of such centres per 1000 inhabitants in Bulgaria was ten times lower than the EU average. Tenants were literally fighting for place there, and contracts had been signed even before the construction of the centre was launched. The tendency is to be reversed by the end of 2008. The rough calculations now show that Bulgaria has around 130,000 sq m of commercial area in such centres but this number is set to triple in two-years' time. According to research carried out by Colliers International, some 545,000 sq m are under construction.
The standard per 1,000 citizens is around 15 sq m of commercial space, Kristian Novotni from REMAX says. However, this proportion is influenced by the purchase power of the population. If the launched projects get actually finished, this standard value will be exceeded in Bulgaria. The concentration of commercial space in the three largest cities: Sofia, Varna dn Plovdiv is already nearing this threshold.
At certain places we have overextended ourselves, experts admit, giving an example with Ruse where five shopping malls are being built. If all of them get ready by 2011, the town on the river Danube will have a total commercial space in shopping malls of 123,000 sq m, which makes around 700 sq m per 1,000 inhabitants. The Grand Plaza, Danube Mall, Mall of Ruse and Mega Mall are under construction now. For 2008 alone some three shopping complexes will be opened in Bulgaria: Park Mall in Stara Zagora, Burgas Plaza in Burgas and Mania Tower in Pleven.
In Austria, there is a big concentration of malls and at certain point the commercial space per thousand citizens reached 20 sq m - Novotni explained - and as a result many of them left half-empty. Having in mind the present financial crisis, Bulgaria is also threatened by over-saturation of the market and the foreign companies that are the main clients of the big commercial centres may decide to wait a bit before taking the decision to open shops there.
The attracting of tenants becomes increasingly difficult - Pavlina Nikova, expert in letting commercial space from Forton International, says. While three years ago 90% of the tenants came from Bulgaria, at present the local brands dropped to 10% of the clients. There are only 400 active companies on the market, 20% of which are direct tenants, while 70% are franchises of companies with branches in Bulgaria. The bulk of them are Greek branches representing foreign brands. In spite of the high demand, the price of the premises is hardly likely to fall, because the construction costs have risen significantly.
The country has not entered into the next stage of commercial space offering, which focuses on the so called commercial parks. They usually consist of several buildings out of town that have their own infrastructure, bars, and look like entirely separate commercial villages, much to the liking of consumers in the USA.

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