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Bulgaria Construction and Real Estate Report - 2016

Bulgaria Construction and Real Estate Report - 2016

The report covers developments in Bulgaria’s construction and real estate sectors over the period July 2015 – June 2016. It includes selected financial indicators for local REITs with total assets above BGN10mn (€5.1mn) as of end-2014.

The annual growth of construction output has been negative in November 2015 – April 2016. In 2015, construction production rose y/y in nine months. The Q1 2016 data on building permits showed positive annual growth in terms of both number and total gross area. The data about buildings, the construction of which started in Q1 2016 were ambiguous, with an increase in the number of buildings, but a decline of the total gross building area.

In real estate, the sector stock index BG REIT has performed significantly better than the Bulgarian Stock Exchange’s blue chip index SOFIX over the period Jun 25, 2015 – Jun 24, 2016. There were no new shopping centre openings in the past year.

The housing prices continued to recover throughout 2015, according to statistics office data. The Q1 2016 data on newly built residential space were largely positive as well.


Key Points:
The annual growth of construction output has been negative in November 2015 – April 2016
The sector stock index BG REIT has performed significantly better than the Bulgarian Stock Exchange’s blue chip index SOFIX over the period Jun 25, 2015 – Jun 24, 2016
There was M&A activity in both the construction and real estate sectors over the past 12 months
The report includes selected financial indicators for local REITs with total assets above BGN10mn (€5.1mn) as of end-2015


EXECUTIVE SUMMARY 4
Macroeconomic overview 5
World Bank keeps Bulgaria's 2016 GDP growth forecast at 2.2% 5
Monthly data mixed so far in 2016 5
Construction 6
Sector Developments 6
Bulgaria’s construction output decline worsens to 10.4% y/y in April 2016 6
Construction business climate indicator improves in May 2016 7
Building permits number up 1.5% y/y in Q1 2016 8
Starts of new building construction up 2% y/y in Q1 2016 9
Market News 10
Real Estate 15
Sector Developments 15
Sector index BG REIT outperforms blue-chip index SOFIX over past 12 months 15
Residential 16
Data on newly built residential space largely positive in Q1 2016 16
Housing prices continue recovery in 2015 16
Retail 16
Office 17
Industrial 17
Agricultural Land 18
Market News 20
Financial data of REITs with assets above €5.1mn 25

Table 1 Financial indicators of REITs with end-2015 assets above BGN10mn (€5.1mn), BGN 000s 25

Figure 1 Construction production index, % y/y, working day adjusted data 6
Figure 2 Business climate in construction, % 7
Figure 3 Building permits issued for construction of new buildings, % y/y 8
Figure 4 Performance of stock indices SOFIX and BG REIT over period Jun 25, 2015 – Jun 24, 2016 15

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