Retail Property Market

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2 Retail Property Market EXISTING STOCK After a somewhat dynamic previous semester, the logistic segment was quite quiet in 21 While the first phase of Ruse Logistics Park is technically ready, the arrival of the first tenants is still to happen The total stock of contemporary logistics and industrial space in the four major cities of Bulgaria (Sofia, Plovdiv, Varna and Burgas) has grown by approximately 3% and has exceeded 3,, sq m The number includes new-built and refurbished owner occupied and speculative premises for industrial use The stock in and around Sofia accounts for about 5% of the share 4,, 3,, 2,, 1,, Stock, total, Bulgaria [sq m] The most attractive areas for logistics and industrial development are the municipalities of Elin Pelin and Bozhurishte around Sofia and Rakovski and Maritsa around Plovdiv These zones benefit from excellent road infrastructure and proximity to a qualified work force The Sopharma s new facility in the northern part of Sofia is the largest project entering the pipeline The construction commencement of several other to-beowner-occupied or preleased facilities reveal developers risk aversion in the current market situation BILLA Logistics Center / Completed 21

3 DEMAND AND TAKE-UP The largest part of the market is taken by owneroccupiers, which further reduces the liquidity The major players in FMCG segment could enjoy the benefits of their new built-to-suit facilities During 21 the demand for contemporary logistics and industrial space remained low The vacancy rate in Sofia rose by 8% Demand for land remains very low as the chances for another property boom in short- to medium-term remains low RENTAL LEVELS In 21 the pressure on rental rates has continued and the landlords are now expected to offer incentives to potential tenants The prime rents in Sofia are around EUR 4 per sq m per month Depending on the market developments in the first semester of 211, the rates may stabilize However, more aggressive landlords may further drive the effective rates down In secondary towns the rates range between EUR per sq m per month 2,, 1,5, 1,, 5, Stock, total, Sofia [sq m] Prime rental rates [EUR per sq m per month] LEASE TERMS There is a tendency for shrinking lease term for prime warehouse space from 5 years in the near past to around 3 these days Service charges are ranging from EUR 4 to EUR 1 per sq m per month In most cases, tenants are not charged additionally for parking in front of the loading docks Ruse Logistics Park /Bulgarian Property Development / Phase I in the pipeline for Q1 211

4 14 GDP Index 8 GDP Change Y/Y % * * -6 Unemployment % * * -4-6 Y/Y % GDP Inflation Source: Bulgarian National Bank

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