Real estate investors are unlikely to come back to the Bulgarian market before prices fall to substantially low levels, real estate consultants Forton International forecast in their latest report. Investment deals were only sporadic in the first quarter of 2009, and buyers mostly just studied the offers despite the increased supply.

Sellers and buyers still cannot match each others requirements. "Bulgarian sellers should know that at the moment foreign investors are comparing returns offered by Bulgarian properties with similar properties in Western Europe, where rental contracts are much longer and the judiciary is effective," said Mihaela Lashova, investment sales manager at Forton.

In a new trend that has emerged on Sofia’s office space market, tenants are seeking out ways to optimise costs through rent workouts, look for cheaper offices or rent on some of their office space to another company. Landlords, on the other hand, have come up with new incentives for tenants such as one to three free months for long-term contracts.

Forton estimated that 19,100 square metres of offices appeared on the market in the three months of the year, excluding the new facility of the Bulgarian armed forces sprawled on an area of 15,000 sq m. This represents a significant decrease from the same period of last year, when the market accommodated nearly 45,000 sq m of new office space.

The global economic slowdown has taken its toll on retail space as well, with rent prices on some of Sofia’s busiest streets taking a slide, according to Forton. The study says that there are five shopping malls under development in Sofia with a combined area of 193,000 sq m.

"The transactions we are signing today are the product of negotiations held last year," explained Pavlina Nikova, retail space manager at Forton. She said that supply is buoyant but tenants are cautious. "In this situation investors compromise and retailers set the rules," she added.