Investment in big properties like shopping malls and office parks peaked prior to the crisis of 2008-2009. As far as the most expensive single assets - malls - are concerned, the tendency has been to have them resold rather than build new ones. Investors used to come from Greece, Germany, America and Israel; now investment from an unexpected destination, South Africa, is taking their place. Last year, the record for the most expensive properties being sold was broken twice -South Africa's NEPI Rockcastle paid 207 million euro for Serdika Center and the adjacent office building, then came up with a yet higher offer of 253 million euro for Paradise Center.
South African funds have bought - for a total of 1.3 billion levs - three of the biggest malls in Sofia and two more elsewhere in the country. This spring the biggest South African institutional investor, Old Mutual Group, acquired control over an office development project located right behind Poligraphy Plant in Sofia. The South African investors are often backed up by pension and insurance companies in their country seeking both safer investments and relatively high profits. This concept has brought them to Central and Eastern Europe, and last year they arrived in Bulgaria.
Data of Colliers show that investors in the region came mostly from Asia and Africa last year, with local buyers getting ever more active. Local players account for 46% of the transactions in Bulgaria, 53% in Hungary, 50% in the Czech Republic. Interestingly enough, last year one out of every seven euro invested in properties in the six countries of the region (Bulgaria, Romania, Hungary, the Czech Republic, Poland and Slovakia) came from the Czech Republic, the explanation behind this "shopping spree" abroad being the country's strong koruna currency. Yet, South Africa remained leader amongst the buyers in 2017.
The rest of the new owners of malls and office centers do not come from so far away. Poles, Hungarians and Serbs are starting to regard the Bulgarian market as a good starting point for expansion abroad. Despite its profitability rates of 7-8%, higher than the rate in Central Europe, Bulgaria still fails to lure Western European and American funds. A common explanation among consultants is the low liquidity of assets in Bulgaria.
As far as the boom in apartment building in Sofia goes, all projects, with the exception of the Turkish Garanti Koza which is slowly launching the giant Grand Canyon project in the capital, are backed by local construction entrepreneurs.