Current supply of logistic space in Sofia still lags behind demand and rentals, which currently come to as much as 5-6 euro a sq m, higher than in most countries from Central and Eastern Europe (CEE) region and rivaling prices in the United States and Western Europe, Andriana Petkova, managing partner in ProCon International Property Consultants, said at a discussion on trends and new ideas in real estate investment, held on March 5.
Available infrastructure and plot acquisition prices were the biggest issues that had to be overcome by investors in logistics segment. Such developments normally spread on large areas of at least 200 000 to 300 000 sq m, which means that plot consolidation comes as a crucial item on the agenda.
If the average land price after consolidation exceeds 30-40 euro a sq m, the contemplated industrial development is no longer reasonable in terms of simple cost-benefit analysis. This is why a lot of entrepreneurs restructure their projects into retail schemes, which generally rent at higher levels and poured resources could pay off in shorter time, Petkova said.
The market has witnessed a drastic growth of prices in certain areas, geared for development of logistics parks. Land near the Sofia Airport, which used to sell at 25 euro a sq m, struck 2 000 euro a sq m, after owners found out that this region is targeted for large-scale industrial parks.
However, there are certain suburban areas, such as Elin Pelin, Ravno pole, Kostibrod, Bozhurishte and Ihtiman in the long run, where one can still find land at reasonable prices, Petkova said.
They are likely to grow into logistic hubs in the foreseeable future, Boris Milchev, head of the legal department of architecture and urban planning agency with Sofia municipality, said.
He tried to give the areas, which have the highest potential to grow as Sofia’s industrial regions - Lomsko Chausse, Europa Blvd, Tsarigradsko Chausse in Plovdiv’s direction.
Northern districts, including the widely discussed Kremikovtsi region, are also very appropriate for such establishments, as a cross-section of all types of land transport – highway (considering both existing and projected ones) and railway, Boris Milchev said, adding that they have all the makings for growth as logistic centres, despite the talks about residential projects that would be developed there.
