Real Estate


Real Estate Investment Opportunities:

  1. Investment in new residential, retail, hotel, office, industrial and logistic projects;
  2. Purchasing the real-estate assets from the banks;
  3. PPP with municipalities and states in social residential projects;
  4. PPP with the state in important state projects – schools, prisons etc.;


Residential market

  • Mid-plus and high-end residential market in Sofia will remain stable
  • Price levels will keep steady, while demand growth is expected to continue in 2016
  • 2016 will reveal potential opportunities for investments in residential compounds given the limited supply of this type of product and the growing demand for it.

Office market

High intensity of demand, inclined towards high quality space, was observed during the first half of 2015. Net absorption* of class A and B offices in Sofia was 23,000 m². This indicator marks a decrease compared to the second half of 2014, the explanation being that its calculation did not include pre-leases and relocations from competitive stock, which were the leading transactions at the time. Total takeup** i.e. all leasing transactions on the market for the first half of 2015 was 45,900 m². 47% of all registered deals were relocations, followed by the expansion of companies operating on the Bulgarian market (26%). High growth was seen in the pre-leases (24%). The primary demand driver remained the international companies in the BPO and IT sectors.


Active construction of office buildings in Sofia is expected in the next two years, with the following affect:

  • Market dynamics will increase, especially in the area of pre-leases, which will grow to significant levels in the next 12 months;
  • The large volume of office space expected to be delivered to the market will resume the supply-demand balance in the midterm;
  • Faced with additional stock of high quality projects on the market and a wider variety of possibilities, the occupiers will need to adopt a more thorough and complex approach to the office selection process. » The BPO and the IT companies’ attention towards the secondary cities will continue, provoking higher level of competition among the locations.

Retail market

During the first half of 2015 the efforts of the shopping centres to differentiate from one another entered a more mature phase. Replacements and relocations of tenants, closing of stores, new operators entries were registered throughout the period. The demand for modern retail space remained stable. The absorbed space reached 9,800m² or double the volume in the first half of 2014. During both of these periods, no shopping centre was opened to public. Tenant mix improvement was among the instruments, applied to create a competitive advantage. Colliers analysis indicates that the shopping mall with the highest percentage of turnover for the first six months of the year was Mall of Sofia (4%), followed by Serdika Centre (3%) and The Mall (3%). The new brands introduced to the Bulgarian market in the first half of the year were CCC, Brunello Cucinelli, Wycon. As a result to the recent consolidations and ownership changes undergone in the big box segment, operator’s’ preferences regarding way of possession changed in favour of own versus rent. In the hypermarket segment, the most active chains in terms of new openings in the last six months were Lidl (2), Kaufland (1) and Billa (1), and Lilly (4) and dm (2) from the drugstores. Retail parks continued to further develop and modernize. With IKEA (its second store in Bulgaria) and Comsed, Retail Park Varna turned into the first modern retail park in Varna. E-commerce started to gain speed on the Bulgarian market in the first six months of 2015, with Decathlon and H&M; announcing their online stores. Available space on Vitosha Blvd. registered 5% decline on an annual basis – the lowest value of this indicator for the last 3 years. The retailers that moved to another location shrank by half and fell from 8% to 4%. The Fashion operators continued to manifest strong interest in this high street, which is evident by the low rate of replacements on an annual basis in this category.


  • Despite the lack of new major operators, the retail market demand will continue to grow as a consequence of the large supply, the repositioning of projects or change in expansion plans of retailers
  • Increased activity and higher attractiveness of the retail park segment is expected as a result to improvements in the functional layouts and environment, as well as focus on synergy between operators
  • The gap between rental levels in prime and nonprime shopping centers will widen further – the prime projects will continue to enjoy increasing rental levels, while the rest will need to introduce a variety of incentives to improve their market positioning.

Residential market

New additions are expected to be added to the stock both in existing projects and in future developments. More than 3,300 units will enter the market in the following 12 months, part of them being already sold. Taking into account that the Prima Casa Programme will continue in 2015, the heightened demand is expected to continue into 2016. Buyers will most likely favour one and two bedroom units to the detriment of studios. Given the new stock entering the market, price changes are unlikely in the next 6 months. The residential market seems to have found the perfect balance between offer and demand.

Office and retail market

Demand will remain focused on Bucharest office and retail opportunities, with the majority of new players still seeking value add premises rather than prime projects. A growing interest in prime properties was however noticed in 2014 and the trend is expected to accelerate in 2015 and 2016, being aided by a number of core products that are expected to enter on the market. The industrial segment will also continue to catch up in terms of demand and transaction volumes, with a number of players still looking actively for products. On a more macro level, the latest developments in the European markets also reinforce the optimistic outlook for real estate investment. Apart from the US and Asian funds, that continue to flood the European market, the recent Quantitative easing measures announced by the European Central bank will bring another layer of liquidity in the market, which can directly or indirectly be channelled to the real estate segment. An expectation of continued low interest rates and generally easier borrowing is already maintaining investors’ confidence at high levels. As bank lending was still a major barrier to the investment activity in Romania, this spells good news, as European banks with local presence might further shed their reluctance on the segment, channel more funds to it and improve lending conditions. Further yield compression expectations in Western and Central Europe, coupled with an already alarming lack of products, once again raises hopes that the trickledown effect of this investment bonanza to the Eastern European real estate market will further accelerate. In the absence of any major disruptions from Greece and Ukraine, there seem to be few reasons to shadow the local market’s brighter perspectives in the closer future.

Hotel market

Bucharest is attractive for a number of international brands. Hence, the city will face higher movement, especially on the upper-middle segment. Two significant reconversions are already announced for the following 24 months. The former Centre Ville aparthotel will be changed into Park Inn Hotel, which will be operated by Rezidor Group together with the already present Radisson hotel. Howard Johnson will be changed into the luxury Sheraton hotel, operated by the Starwood & Resorts group. Romania’s inclusion in the Lonely Planet’s Top 10 most attractive holiday destinations for 2015 indicates that Bucharest will consolidate its position as a city break destination, especially during summers. The country may become even more attractive after the implementation of the 9% VAT for all touristic services in a hotel starting with January 2015. Currently the VAT is 24%, except for the accommodation services that are already at 9%. Even though we forecast a continuous increase in the demand generated by the leisure segment, all the brands announced to increase their presence on the local market are mainly addressing the business segment. The strengthening of the accommodation industry in Romania will trigger the flow of foreign capital in the country for both developments and acquisitions. Following the improvement in confidence in the economy, more global mergers & acquisitions are expected in the hospitality industry. We have already seen such a transaction concluded by Orbis last year: the acquisition of 38 existing hotels and four more future projects in the main CEE capital cities (Bucharest included) from Accor Group. In addition, we expect higher interest for small scale transactions with individual properties, as it was the case with City Plaza hotel in Cluj Napoca, a 5-star scheme was sold in December 2014 for € 10 mn.

Office market

  • At the end of 2014 total office supply in City of Zagreb stood at 1,252,806 m² including A and B class competitive, owner-occupied and mixed-occupied buildings.
  • Majority of office supply is located in the city centre (including Central Business District, Centre and Business District East submarkets) while the least favourite submarkets are located at city outskirts (Buzin, Lucko and Jankomir).
  • New office completions in 2014 totalled 19,406 m² of space including VMD Kvart Strojarska building A (10,500 m²), Sigma (3,306 m²), and Sindikalni dom (5,600 m²).


  • Total office activity in Zagreb in 2014 amounted to app 82,000 m² which is showing significant increase of transaction activity and signs of market recovery. Nevertheless significant part of take up was generated by relocation of HT (Hrvatski Telekom) to Sky Office tower.
  • Large part of the take up numbers is related to lease relocation and renewals, with the public sector, financial and telecommunication sector. The demand for quality office space rose at the beginning of 2015.
  • The supply is still limited for requirements above 1,500 – 2,000 m² in quality buildings, which could lead to potential upward movement in rent rates.
  • Zagreb office vacancy rate declined 50 basis points at the end of 2014 and now stands at 14.50% . Total available stock in Zagreb was app. 181,656 m² at the end of 2014.

Retail market


  • Zagreb shopping centre market is oversaturated and the developers are shifting their attention toward small-sized and specialized shopping malls in the capital. There are still investment opportunities; especially in secondary cities where retail parks could be the most appropriate solution considering the smaller catchment area and purchasing power.
  • From the investment perspective there are certain opportunities to acquire prime properties under attractive discounts.

Industrial & Logistic market


  • An increase of demand for logistics space is continuing and many present tenants are searching for better quality options and ever more tenants consider BTS (Built-to-Suit) projects as most convenient solution. We expect that trend to continue in 2015 which will drive pre-development and development of new logistic centres.
  • A further drop of the vacancy rate can be expected which might trigger new developments.
  • According to the trends on logistic market we assume further corrections of land prices what will directly affect the attractiveness of this segment for investors and developers. One of the biggest barriers for larger scale developments is the communal contribution, paid per cubic meter. However, we assume that the government and local municipality will gradually change or decrease these charges in order to attract investors.
  • A higher interest from potential investors and developers is still expected and this real estate segment has enough space for improvements in following years.
  • Croatia has favourable geographical position and could benefit from close proximity and transportation routes to Central Europe.
  • In the following years, the stabilization of the economy in general and new infrastructural developments especially in railroads and seaports will have a positive effect on logistic/warehouse sector.

Office market

At the end of H1 2014 total office supply in Tirana stood at 63,400 m² including A and B class competitive and mixed-occupied buildings. The majority of office supply is located in the city centre (including Central Business District) while the least favourite submarkets are located in the outskirts of Tirana (Kashar and Tirana-Durres Highway). In H1 2014 total gross take-up was recorded at 59,133 m² showing a continuing trend of low vacancy rate at about 6.73 %. Most of the leasing activities are based on renegotiations and renewals done on a case by case basis. Parts of renegotiations include requirements for a decrease in rental rates and or adaptation of the office space.

Prognosis: The arrival of the new buildings will bring the much needed additional office supply, which will have a downward impact on the rental rates. This would be an added benefit to the occupiers as Tirana’s CBD holds some of the highest rents in the Western Balkans.

Retail market

The overall shopping centre stock in Tirana stands at 158,000m² of GLA. Shopping centres with the most significant footfall are Tirana East Gate and Qendra Tregtare Univers. These are oriented outside the city of Tirana but still reachable for the customers. During the first half of 2014 there has been no opening of new shopping centres in the capital city. The current stock present in Albania has satisfied for the moment the needs of Albanian consumers for quality brands. However any vibrant, moderately and low priced brands would be successful in their expansion to Albania as these are the types of brands customers are most sensitive about.

Prognosis: As Tirana shopping centre stock saturation point is achieved, we do not predict new considerable projects to come to the market in the following years. Rents will continue to have downward pressure following a negative outlook on consumer spending. Investors are expected to be focused on search for locations in secondary cities for development of big box stores, retail parks and shopping centres.

Office market

Prognosis 2014 Additional 3,000 sq. m office space related to Old Mill mixed – use project is expected to be delivered at Belgrade market by the end of Q3 2015 New Grade A office development arrivals to New Belgrade CBD market with announced start of construction by the end of 2014, include 1st phase of GTC office building (10,000 sq. m GLA), 1st phase of Immanent office building (9,500 sq. m) and additional two office buildings both comprising each 12,.000 sq. m GLA within Airport City complex. The Belgrade market has become landlord driven and tenants are forced to accept landlord’s terms. Because of this and due to the lack of new supply in the Belgrade office market there is a potential for rents to increase.

Industrial & logistic market

Growth in logistics has become one of the hottest topics in commercial real estate. This has been underpinned by ecommerce enabled shipping, new technologies and the increasing need for more sophisticated supply-chain networks. Expansion in the sector is being closely watched and the three sectors driving these changes in CEE are manufacturing, transport and logistics and wholesale, retail and trade. While these three sectors are not uncommon occupiers in the industrial sector, the frequency and volume of take-up from the diversified sub-sectors within each group is changing. We have observed significant increases in e-commerce demand and take-up, as well growth from operators providing multimodal/ intermodal freight distribution and infrastructure. The changing intensity of consumer (and business) demand and accessible technology has meant that these industries are under pressure to respond more quickly than ever before and, in some cases, provide specialist services to meet that demand. There is clear evidence that strategic locations have been chosen by logistics and retail operators to consolidate their main distribution hubs alongside on-going improvements in the quality of infrastructure and trade networks. In particular, the future of retail is changing and the full impact of multi-channel shopping, mobile technology and fulfilment logistics is not yet known. What can be observed from this study into occupier take-up in the CEE region is that the scale of activity is growing quickly and that the efficiency and accessibility of distribution networks have a profound effect on where this activity is centred. We expect that current market leaders, the Czech Republic and Poland will continue to dominate logistics distribution hub activity regionally. They have already established capacity to service numerous regional/pan-European locations. Growth of e-commerce will be the most likely immediate driver of demand across a host of locations in the form of retail and/ or e-fulfilment warehouse spokes. While the market is at a very early stage, the development of e-commerce in the Czech market suggests we will see both forms emerge in our cities in the near future. Manufacturing is likely to continue to spread south and east to lower cost markets where transport connectivity has improved. This includes Slovakia, Hungary, Serbia, Romania and Bulgaria. Similarly, high-tech production growth will continue to develop in and around existing clusters, particularly those built to support the automotive and electrical goods sectors. To date, we only appear to be scratching the surface of the opportunity in terms of the initial ramp-up in demand for large national and pan-regional distribution hubs. The emergence of more customer/consumer-focused urban spokes in the supply chain system will form the next phase of this change. This could significantly impact existing shopping and retail facilities in many of our towns and cities in due course.

The commercial real estate sector in Bosnia-Herzegovina continues to be affected by low demand and high vacancy rates. Activity is expected to remain subdued in the short term, but over the long term there is significant potential in the market. We believe that interest from international occupiers and real estate developers will increase and lead to the development of the sector in the years ahead.

Following challenging economic conditions in 2014 caused by the severe regional flooding, the economic picture in Bosnia-Herzegovina has been improving this year and the country is forecast to see economic growth of 1.7% in 2015 and 2.2% in 2016.

In the office sector, market fundamentals are likely to improve in line with economic performance. Occupier demand is expected to increase in response to higher GDP growth and improvements in the output of the tertiary services sector. But this improvement will be gradual. The market is predicted to remain stable over the next two years, before picking up from 2017 onwards.

In Kosovo, the real estate property market is constrained by its legacy. As a result of the 1999 conflict, thousands of homes were damaged or destroyed, up to 75,000 properties were abandoned, and land records were either destroyed or moved to Serbia, where they remain. Many citizens lost access to their properties, ownership records are incomplete or unreliable, and vacated properties were occupied illegally (about 20,000 claims on property that was illegally occupied as a result of the conflict are still being processed by the Kosovo Property Agency). Real property is now owned privately, socially or by the state, or one of the publicly owned enterprises, primarily public utilities that are also being privatized. In 2006, there were an estimated 600,000 buildings of all types, of which 250,000 were in rural areas. There are about 2 million land parcels and an estimated 350,000 property owners. Government institutions are weak; property rights transactions often go unregistered until there is a need for documentation of a procedure or loan, and then the registered owner may not be available.

Montenegro’s house prices – as recorded in the official statistics – are falling.  But the reality is that there is strong property demand, a healthy construction sector, and (especially) booming tourism and foreign luxury property demand, which in turn is making some locals very rich. In the second quarter of 2014, the average price of new residential dwellings in Montenegro fell by 6.5% from a year earlier, to €1,147 per square metre (sq. m.), according to the Statistical Office of Montenegro. On a quarterly basis, the average price of dwellings dropped 0.7% during the latest quarter.

Yet there’s obviously strong demand. Indicators for residential construction activity are soaring.  The total number of dwellings sold in new residential buildings rose by 16.6% to 196 units in Q2 2014 from the previous quarter, based on figures from the self-same Statistical Office of Montenegro. About 80% of all total sales during the quarter took place in Podgorica, the country’s capital.

In the first quarter of 2014, the total number of building permits rose by 31% y-o-y to 227 units. Likewise, the number of dwelling permits issued surged 49% y-o-y to 873 units in Q1 2014. Over the same period, the total floor area of building permits also soared by 43% to 63,918 sq. m.

Montenegro isn’t a rich country.  But foreign investors are being drawn in droves to the Adriatic coastal areas, particularly the islet of Sveti Stefan and the coastal town of Budva, now key resorts for the Russian new rich to show off their money.

Budva is a charming coastal resort and Venetian walled port-city, with sandy beaches and a diverse nightlife, and is the centre of tourism, accepting well over half a million visitors annually. The larger Budva area had the most expensive housing in Montenegro, at an average price of €1,890 per sq. m. in Q2 2014.

The marvellously beautiful adjoining village of Stefi Stefan was a famous resort between the 1960s and 1980s, visited by celebrities like Orson Welles, Elizabeth Taylor, Sophia Loren, Princess Margaret, Carlo Ponti, Ingrid Bergman and Kirk Douglas.  Now after the war it is back, with an Aman resort.

The major foreign property buyers in Montenegro include Russians and British buyers.

In terms of price, Budva’s average price of €1,890 per sq. m. in Q2 2014 is way ahead of Podgorica, the country’s capital, with an average dwelling price of €1,098 per sq. m., and Bar (€1,024 per sq. m.), Ostalo (€789 per sq. m.) and Niksic (€600 per sq. m.).

“The rugged beauty of Montenegro continues to attract high-profile visitors, including Michael Douglas, Catherine Zeta Jones, Madonna and The Rolling Stones,” says Glenda Lazare of overseas investment specialist company, Key Universal. “It is being tipped as the next Monte Carlo.”

Some of the residential projects which are currently under construction include Belvedere Residence (71 apartments), Poseidon Apartments (174 apartments), Harmonia building (120 apartments), Obilaznica (148 apartments), Gradnja Promet Ljubovic (165 apartments), Gradnja Promet Zabjelo (115 apartments), Block 6 Zetagradnja (180 apartments), and City Quarter (120 apartments), according to CBRE Montenegro.

Foreign property demand is expected to rise further these coming years with Ryanair launching several new flights from across Europe (such as from Brussels, Milan, Barcelona, London, Oslo and Stockholm) to Montenegro.