Top Brands, New Formats Stir Bulgaria's Retail Market
A few major retail openings and flexibility in formats have signaled the first signs of recovery on Bulgaria's retail market, according to a survey by Colliers International.
The opening of furniture giant IKEA, which took place in September 2011, has stimulated the competition in this segment, being a major determining factor for the price and product policy of many operators on the market, the report says.
New supply is dominated by three schemes under construction - Sofia Ring Mall, Paradise Center and Bulgaria Mall. Cumulatively, those three projects will deliver to the market in Sofia in 2012/2013 approximately 180,000 sq. m.
Colliers experts comment that each of the new projects is trying to add new features and points of attraction that will add "flavor" to the traditional retail functions of a shopping mall, such as variety of leisure amenities, amusement parks, synergies with retail giants (e.g. Sofia Ring Mall and IKEA store).
There is a considerable demand for retail space in central and residential areas on streets with high pedestrian and/or vehicle traffic. This demand comes mostly from the food retailers, which continue their expansion mainly through convenience formats.
The fashion segment was stirred by the expected opening of H&M, stores in Bulgaria in the first half of 2012.
"The entry of one of the long-awaited brands in Bulgaria is a proof, that the international fashion brands see a good prospect for development on the market," Colliers report comments.
The retailer has already secured locations in prime shopping malls in Sofia, Varna and Burgas and is expected to grow the number of stores in some of the main cities.
During 2011 several international retailers entered the market – the British brand Peacocks, Patrizia Pepe, Pimkie, Calvin Klein, Quiz – all of them through local or regional franchisees.
The average vacancy level during the second half of 2011 in the shopping malls in Sofia is around 6%. This represents a slight increase from the first half of 2011, when the average vacancy level was around 4%. The Mall, Serdika Center and Mall of Sofia enjoyed stability with a vacancy level in the range of 2-3%, while the rest of the operational malls faced higher vacancy in some cases reaching a double digit rate (Sky City Centre).
Rental levels in shopping centers and malls remained relatively stable during the second half of 2011. They vary depending on the type of retail facility and location. In large shopping centers in Sofia the rents are approximately EUR 32 /sqm/, while in the shopping centers in secondary cities the rents are between EUR 20-22/ sqm/ month.
Regarding the High Street Rents, the most considerable decrease is in Sofia, with approximately 27%. The downward trend has been partially a result of the retail concentration within malls, which have taken the role of new urban shopping, and leisure centers over the last couple of years.
Additionally, the rental levels were directly affected by the ongoing construction works of the metro line under Vitosha boulevard and even more so - the lack of clear strategic vision of its renovation, effective planning and successful scheduling.
- » Sofia is Among the 20 Cities with the Fastest Increase in Prices of Housing in the World
- » Housing Strategy Sets the Overall Policy for the Sector in Bulgaria by 2030
- » The Villages Around the Resorts in Bulgaria Attract with Cheap Properties
- » 42,000 Buildings in Bulgaria Need Renovation
- » The Price of Agricultural Land in Bulgaria has Risen by 5%
- » The Luxury Property Market in Bulgaria