Industrial properties are the absolute leader on Bulgaria's property market, according to a research of Forton International.

The research shows that serious competition is still lacking in the warehouse and logistic segment, leading to the success of all new projects.

The biggest interest is towards facilities with over 6 000 square meters, which offers the possibility of concluding serious, for the local market, deals. The rent remains at EUR 5-6 per square meter but the profitability of industrial properties continues to grow and reaches 13%.

The office facilities market maintains a relative, more limited activity. New trends among renters of offices are renegotiation of the rent amount, subleasing or relocation to buildings with lower rents.

The biggest supply of office space in the capital Sofia continues to be located on the main thoroughfares and around the beltway near Business Park Sofia.

19 315 square meters of office space have been created in Sofia during the first quarter of 2009.

The biggest deal in the segment, despite the reduced activity, is the renting of 23 000 square meters of office space by the Bulgarian telecom BTK.

The commercial space market also continues to develop, but with lower rates. Big international discounters are entering the market while the other merchants are looking to reorganize their activity and/or renegotiate their contracts' terms.

Forton representatives further say that the deals that are being currently finalized date from 2008 and are the result of older negotiations, adding quick and incidental deals are impossible due to the big supply and cautious landlords.

The crisis has its effects not only on shopping malls but on Sofia's main shopping streets such as the boulevards "Alexander Stamboliiski", "Hristo Botev", and "Maria Luisa". "Vitosha" is currently the only shopping location where all store spaces are rented. The others have many empty store spaces.

According to the Forton research, 5 shopping mall projects are currently in construction stage in the capital, with a total area of 193 000 square meters.

Investment deals have been strongly limited during the first 2009 quarter. Despite the big supply and the revised sellers' expectations, buyers remain limited in numbers. They are seeking distressed assets, and would not make a purchase until those properties with significantly lowered prices appear on the market.

The Forton experts warn Bulgarian sellers that potential foreign investors are comparing local properties with similar ones in Western Europe, which has the advantage of more long-term rents with fixed prices and better justice systems.

Right now investors can purchase an industrial property in Manchester with an annual profit of 9,5% or an office in downtown London with a profit of 8,8%, making an investment at the same level in Sofia unreasonable. To be competitive Bulgaria's market must offer annual profits between 12% and 15%.