Bulgarian Retail Market – 2009 Q2

 

  • Q2 of 2009 is characterized by a decrease in gains of all retailers. A 30% drop in gains was announced by the Bulgarian Retail Association of its members. Most of its members are working in the Retail Park and shopping centers areas. The global economic crisis has caused a decrease in consumer spending. Due to this decrease, many retails fell behind and were not able to pay their monthly rent. Both in Sofia and in other secondary towns in Bulgaria one can notice a drop in prime rents.

 

  • In Sofia, prime high street rents are about 80€ per sqm per month. Along the secondary streets in Sofia, rents have dropped due to the rising vacancy levels and are now much lower than the rents in the prime street, Vitosha blvd. The rent in secondary streets vary between 30€-70€ per sqm per month depending on the exact location and other characteristics of the rent agreement and shop.

 

  • In Plovdiv, Varna and Burgas prime high street rents have dropped since the beginning of this year. In the most demandable locations in Plovdiv and Burgas the rent is about 60€ per sqm per month, where in Varna the rent is a bit higher, at about 70€ per sqm per month.

 

  • Gains have increased from 6.75% at the end of 2008 to 8.00% at Q2 of 2009. Due to the decrease in retail activity and the rise in vacancy levels, capital values and worth of properties have dropped. As stated above, many retailers are having some problems paying the high rents they have negotiated and agreed on in 2005-2008.

 

  • Rents for non-anchor renters in shopping centers are about 40€ per sqm per month. One can find rents as high as 60€-80€ per sqm per month, but retailers are having problems paying them. In some shopping centers a temporary rent review for 2009 was considered. In Secondary towns, rent varies between 15€-45€ per sqm per month.

 

  • In Q2 of 2009 there were no investments in shopping centers. Most investors are looking for income generating assets. While having a drop in the rent values in shopping centers and many retails that struggle to pay rent, only fully occupied centers with a blend of retailers would be able to attract investors. These renters can offer comfortable pricing and goods to attract customers.

 

    • Revised Data: Burgas Plaza is included in Q2 of 2009 delivery data. Though the Carrefour hypermarket was opened at the end of Q1, the center was actually fully opened in April, 2009.

     

  • In April 2009 the Burgas Plaza was opened. It was the first big, modern center in Burgas. The center is 17,800 sqm of retails space. Furthermore, the first Carrefour discount hypermarket in Bulgaria is in an area of 13,000sqm.

 

  • As of Q2 of 2009, the total rentable area in Bulgaria in shopping malls and retail parks is about 236,570sqm. The National Statistical Institute (a.k.a. NSI) said that the overall population at the end of 2008 stands at 7.6 million people. Based on these 2 facts, in Bulgaria there are about 30.6sqm of rentable area per 1,000 people. Due to the fact that these numbers are based on the gross area of the retail centers, these numbers may seem a bit higher. Nevertheless, we expect that this number will further increase in 2010, when several big malls are due to be completed.

 

  • A new project called Retail Park Capital had emerged in Sofia. The area of the park is planned at 42,000sqm, and its location is northern to the Sofia Central Railway station. The park is planning on hosting about 10 big0box retailers and hypermarkets. The first hypermarket that had declared on entering this park is a branch of the food hypermarket chain Tempo. Tempo is owned by the Delta Max Group and Technopolis, a technological market. The park is scheduled to be fully completed in 2012.

 

  • A construction permit was provided to the first open-air mail in Bulgaria. ZBS, an investment company, will develop the plans in Burgas for the mall. The plan is to begin construction in Q3 of 2009. The major advantages of this mall are the low development cost and time table compared to other mall projects in Burgas.

 

  • Due to the current global financial crisis, the opening of the new Galeria Plovdiv is pushed off to the end of 2009. European Convergence Development Company (a.k.a. ECDC), the main investor of this project, had announced that they believe that more funds are needed for this project’s completion. Another ECDC project, a retail park in Burgas, was also pushed off to the end of 2010.

 

  • In three new markets Technomarket is due to enter. The markets are in Burgas, Varna and Stara Zagora. These three markets are currently under construction and are developed by GTC, an international mall operator. The overall retail rented area by Technomarket in these three projects is 3,700sqm.

 

  • Daichman and DM had opened several outlets in the Burgas Plaza shopping center. In the next several years DM is expected to be the most active drug retailer brand in the Bulgarian market. DM had announced that they plan to open drug stores in all cities bigger then 100,000 population.

 

  • The new entry to the food retailers market is Penny Market. The first hypermarket of this new chain is planned to be opened in Svilengrad. Following this one, several other hypermarkets will are planned to open in Lovech, Vratsa, Berkovitsa, and Svishtov. Penny Market is part of the REWE group, which also owns Billa.

 

  • By the end of June opened Billa, a food retailer, a second hypermarket in Stara Zagora having a total of 44 hypermarkets in Bulgaria.

 

  • Mercator, a Slovenian food hypermarket chain, had confirmed their plans to enter the Bulgarian retail market. Their first hypermarkets is planned to open in Varna Towers shopping center. Penny Market is a direct competitor of Mercator.