Foreign investors drive Bulgarian property market in H1

Sofia: International investors were the main driver of Bulgaria’s property market in the first half of 2024, accounting for 77% of the total investment volume of 92.6 million euro ($102 million), property consultancy Colliers Bulgaria said on Thursday.

Income–generating transactions contributed over 81% of the volume, with speculative properties accounting for the rest, Colliers Bulgaria, part of US-based professional services and investment management company Colliers International, said in a report.

Industrial and logistics space deals dominated the market in January-June, representing 74% of the overall investment volume. They were followed by hotels with a share of 15%, offices with 8% and development land with 3%.

Prime yields have remained stable since the end of 2023, at 7.75% for office and retail spaces and 7.5% for industrial and logistics properties.

Declining investment volumes as a result of higher interest rates in Central and Eastern Europe reflect a broader trend that began in Western Europe. While Bulgaria is expected to see increased investment levels in 2024 compared to last year, they will likely fall short of the levels recorded before the interest rate hikes, the property consultancy noted.

In 2023, the total volume of real estate investments in the country dropped to 221 million euro from 294 million euro a year earlier.

Bulgaria’s delayed adoption of the euro, largely due to the failure to meet the inflation criterion, may be pushed back further because of the lack of a regular government. However, the Eurozone accession process is projected to begin in 2025, which could boost international investor interest in the country.

Despite this, low liquidity upon exit is expected to remain a key concern for international investors, indicating that local capital will continue to lead the market, Colliers said.