The retail property market in Varna could move into an oversupply within the next two years in case of 100% delivery of the current pipeline of shopping malls, data of real estate consultancy Colliers International showed on Wednesday.

In terms of shopping mall inventory per 1,000 population, Varna could catch up to West European levels by 2010. However, at the moment Bulgaria is relatively undersupplied in terms of nationwide retail space, said Colliers.

The Colliers reading of 15 sq m/1,000 population matches the figures coming out of other international property consultants like Jones Land LaSalle. The ratio in Western Europe is 170-180 sq m of retail space per 1,000 population. Colliers estimates that the supply of retail space in Varna could reach 345 sq m/1,000 over the next two years.

Some 500,000 sq m of shopping mall inventory is scheduled for delivery nationwide in 2008-2010. They will be added to the 100,000 sq m at shopping malls already open for business.

There will be no shopping mall launches in Sofia this year with most of the new stock being placed on the market in second-tier cities, said Colliers.

The agency said 15 shopping malls are currently in development across the country.

In the second half of 2007 the size of the office supply in Sofia continued its upward trend from the past few years and registered 16% growth compared to the middle of the year, adding about 98,000 sq m of office space, according to the latest Colliers research.

Currently, the total inventory of multi-tenant and speculative Class A and B office space in the capital stands at 704,600 sq m.

The existing office inventory is almost fully occupied and the new supply seems insufficient to meet the current market needs. Vacant space declined during the past six months, accounting to less than 4% (or 26,000 m2) of the total office supply, said Colliers.

Net absorption was 161,000 sq m in 2007, exceeding expectations and up from 101,500 sq m in 2006 – 58% growth. Rent levels continued to grow in the second half of 2007. The increase was most notable for Class A properties for which asking rents went up in all submarkets, reaching an average level of over 15 euro/sq m/month.

By the end of 2007 the total inventory of contemporary logistics and industrial large-size projects in Sofia and the region accounted for about 1,200,000 sq m with only 165,000 sq m of speculative space.

Stock remained basically unchanged in the second half of 2007, and a total of approximately 70,000 sq m is currently under construction (of which only 22,500 sq m is speculative) to be delivered in the first half of 2008

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