2012 Global Market report - NAI Global

Sofia, Bulgaria
Prague, Czech Republic
Contact
NAI atrium
+359 2 9704 803
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
42,811
3.6%
$45.59
$6,084.71
2.9%
7.6%
0.2%
7.493
After an interesting year of economic stagnation and
uncertain development, Bulgaria returned in 2011 to a path
of economic growth. An overall 3.6% GDP increase is
expected by the government. The latest published inflation
rate for 2011 is 4.5 % and the unemployment rate has
reached a record high 11.2 %.
The Sofia office market has recorded a number of significant
transactions including the take-up of 2,500 SM by the
Belgium KBC Bank and 5,000 SM by Hewlett Packard
during the first half of 2011. A trend to better quality office
space may soon lead to a reduction in the vacancy rate for
Class A office buildings, even though the supply seems to
still be a problem in this segment. The overall vacancy rate
for office space (Class A and Class B) in Sofia is expected
to rise to 30% by the end of 2011 with the completion of
several new buildings; Sofia Airport Center, Vertigo Building,
Sopharma & Litex Towers. Rental rates in the first half of the
year were slightly reduced with prime rents at EUR 12 for
Class A offices and EUR 8 for Class B. Rents will continue
to remain under pressure since the supply was increased
by at least 135,000 SM in 2011 and demand remained at
a stable but low level.
A new trend in the Bulgarian market was caused by the
instability of the Greek economy. An influx of Greek companies
and capital into the Bulgarian economy will positively affect
the real estate market and eventually narrow the supply/
demand gap. Some of the most significant projects/
companies are the IKEA (opened in September 2011),
Sofia Ring Mall (under construction), Hellenic Petroleum and
Coca-Cola Hellenic Bottling Company.
Although no new shopping malls opened in Sofia in 2011,
the vacancy levels in the shopping centers and High Street
locations are increasing. This is due to a decline in consumer
spending by more than 30% and the large expansion of
retail facilities in 2010. Nonetheless, there are several large
scale retail projects in the pipeline. More than 120,000 SM
is under construction and will be added to the market in
2012 - 2013. This negative environment has led to a strong
reduction of retail rents and a higher vacancy in High Street
and shopping center properties.
Contact
NAI MIPA
+420 224 818 677
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
30,450
2.2%
$213.85
$20,500.62
2.0%
8.0%
0.8%
10.431
The Czech economy has weathered the 2008 financial crisis
better than most former Central or Eastern European Countries
but remains very much tied to the overall European economy,
notably Germany. Foreign based investment continues to grow
and will outstrip 2010 performance four fold. Office and
ndustrial take-up remains stable year-on-year but supply has
dropped.
Total office stock in Prague stands at 2.77 million SM of which
72% is in new buildings. 105,750 SM of new supply is forecast
to be completed in 2011. Gross take-up for 2011 is likely to
exceed 220,000 SM. Office vacancy rates will remain at 10%.
Space is set to become less readily available and landlord’s
incentives are set to be reduced. Prague 4 continues to
dominate the market as the district of choice with 27% of the
total stock; Prague 1 has 16% and Prague 5 has15%. Prague
8 is beginning to establish itself as a recognized business area
and there is good development land still available there in close
proximity to the city center.
Czech industrial stock now stands at 3.9 million SM. 420 000
SM of space was transacted in H1 2011, and by the end of
this year we should see 1 million SM transacted across the
country, with 55% in Prague alone. Vacancy now stands at
8.9%. Three developers continue to dominate the market,
Prologis (34% share), CTP (25% share) and Point Park
Properties (9%).
Retail in the Czech Republic has seen little activity over the last
two years, due mainly to the reluctance by the banks to finance
anything considered risky, so pre-lets and equity are required.
Many cities, including Prague, are reaching saturation so the
scope for new large shopping centers is limited. The one
exception was the opening of GTC’s Galeria Harfa project in
Prague 9. Next year will see the opening of Rodamco/Unibail’s
extension of Cerny Most and Multi Developments Nova
Karolina in Ostrava, with both developments bringing 30,000
SM plus to the market.
The residential market suffered over the last two years and
has witnessed a drop of up to 25 % in prices since 2007. Few
speculative developments have taken place recently and
finance remains hard to obtain. Government tax intervention
has further hampered the market. On the investment side, CPI,
together with Teplice, purchased the Mlada Boreslav Futurum
property from CA Immo.
Sofia At A Glance
conversion 0.72 eur = 1 us$ RENT/M 2 /MO US$ RENT/SF/YR
low High low High Vacancy
cItY center offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
EUR 10.00
EUR 8.00
EUR 5.00
EUR 8.00
EUR 7.00
EUR 5.00
EUR 2.00
N/A
N/A
EUR 14.00
EUR 12.00
EUR 8.00
EUR 12.00
EUR 11.00
EUR 7.00
EUR 4.00
N/A
N/A
$
$
$
$
$
$
$
15.48
12.39
7.74
12.39
10.84
7.74
3.10
N/A
N/A
$
$
$
$
$
$
$
21.68
18.58
12.39
18.58
17.03
10.84
6.19
N/A
N/A
30.00%
10.00%
15.00%
40.00%
15.00%
10.00%
8.00%
N/A
N/A
City Center (High Street Shop) EUR 25.00 EUR 75.00 $ 38.71 $ 116.13 N/A
Neighborhood Service Centers
Community Power Center (Big Box)
Regional Shopping Centers/Mall
Solus Food Stores
EUR 10.00
N/A
EUR 10.00
N/A
EUR 20.00
N/A
EUR 30.00
N/A
$
$
15.48
N/A
15.48
N/A
$
$
30.97
N/A
46.45
N/A
N/A
N/A
N/A
N/A
deVeloPment land low/m 2 High/m 2 low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
EUR 300.00 EUR 800.00 $ 1,686,192.78 $ 4,496,514.08
N/A N/A N/A N/A
N/A N/A N/A N/A
EUR 50.00 EUR 80.00 $ 281,032.13 $ 449,651.41
EUR 300.00 EUR 800.00 $ 1,686,192.78 $ 4,496,514.08
EUR 100.00 EUR 500.00 $ 562,064.26 $ 2,810,321.30
Prague At A Glance
conversion 0.72 eur = 1 us$ RENT/M 2 /MO US$ RENT/SF/YR
low High low High Vacancy
cItY center offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
EUR 21.00
EUR 15.00
EUR 12.00
EUR 14.50
EUR 14.00
EUR 10.00
EUR 22.00
EUR 18.00
EUR 13.00
EUR 15.50
EUR 15.00
EUR 12.00
$ 32.52
$ 23.23
$ 18.58
$ 22.45
$ 21.68
$ 15.48
$ 34.06
$ 27.87
$ 20.13
$ 24.00
$ 23.23
$ 18.58
N/A
N/A
N/A
N/A
N/A
N/A
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
EUR
EUR
EUR
3.00
3.00
3.75
EUR
EUR
EUR
3.75
3.50
4.50
$
$
$
4.65
4.65
5.81
$
$
$
5.81
5.42
6.97
N/A
N/A
N/A
City Center
Neighborhood Service Centers
EUR 140.00
EUR 40.00
EUR 160.00
EUR 45.00
$ 216.77
$ 61.93
$ 247.74
$ 69.68
N/A
N/A
Community Power Center (Big Box) EUR 8.00 EUR 10.00 $ 12.39 $ 15.48 N/A
Regional Shopping Centers/Malls EUR 43.00 EUR 55.00 $ 66.58 $ 85.16 N/A
Solus Food Stores
EUR 8.00 EUR 10.50 $ 12.39 $ 16.26 N/A
deVeloPment land low/m 2 High/m 2 low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
EUR 320.00 EUR 500.00 $ 1,798,605.63 $ 2,810,321.30
EUR 120.00 EUR 150.00 $ 674,477.11 $ 843,096.39
EUR 35.00 EUR 50.00 $ 196,722.49 $ 281,032.13
EUR 20.00 EUR 25.00 $ 112,412.85 $ 140,516.06
EUR 50.00 EUR 75.00 $ 281,032.13 $ 421,548.19
EUR 50.00 EUR 100.00 $ 281,032.13 $ 562,064.26
2012 Global Market Report n www.naiglobal.com 51