Shopping center in Moscow

Moscow is the leader with over 1 million square meters built, the runner up having only a third of that to account for – 354,000 square meters built in Kiev. Sofia, ranked third, had 207,000 square meters of commercial real estate added in the third quarter of 2012.

The Colliers press release also revealed that the total supply of high-quality retail space in Eastern Europe reached 15.41 million square meters at the end of this year’s third quarter. The region’s total supply almost tripled in the past three years. Yet the space being actively built in retail centers fell by 255,750 square meters in Q3, 2012 from last quarter’s results. Across the analyzed 13 cieties, retail space in the active phase of construction as of two million square meters of leasing space.

When ranked by retail space provision per 1,000 residents, Zagreb came first in Q3 with 1,710 square meters, followed by Bratislava (1,063 square meters) and Sofia (915 square meters). On the opposite side of this top were Athens (64 square meters), Belgrade (148 square meters), Moscow and Kiev both coming in last with the same number – 258 square meters.

Photo source

Shopping malls are in big demand in Eastern Europe, with investors looking to cash in © Roman Milert - Fotolia.com

Reuters reported that almost one third of the €166 billion invested into European commercial property was spent on retail space, according to the property consultancy CBRE Group on Wednesday.

CBRE said that the central and eastern parts of Europe were the fastest growing markets in the region. Of the €37.2 billion invested in retail on the continent, the two markets accounted for roughly 13%, a four percent increase on 2009. Iryna Pylypchuk, Associate Director for EMEA Research at CBRE, told Reuters that this trend was expected to continue in 2012.

In contrast to Western Europe, people in countries such as the Czech Republic, Poland and Russia are experiencing greater wealth than ever before, something which is fuelling demand for high quality shopping malls.

Pylypchuk said that a number of investors had already “tested the waters”, and that these were now confident that prices in the region are realistic, despite the immaturity of Eastern European real estate markets.

Elsewhere in Europe, Germany and the UK continued to attract the greatest share of investment, receiving €10.8 billion and €11 billion respectively. Debt-ridden Iberia attracted the least investment, securing only €0.8 billion last year as Spain and Portugal’s sluggish economies struggled against recession.

A condo on the Black Sea - Golden Sands Sea Resort - €49,000

Since the economic downturn, property purchases now prove to be less prone to significant losses in a climate of worldwide financial turmoil. Therefore, the will to invest is re-emerging, especially where markets like Bulgaria exist.There is no better opportunity comparably in Europe, at least in relative value. The variety of properties available in the country is amazing, and especially given the diversity of landscapes and properties within this market. And then there are logistics and geography to consider. Relatively small areas of Bulgaria cover everything from sandy beaches to snowy slopes, mountainous countryside to metropolitan areas, all within driving distance.

Veliko Tarnovo in Bulgaria - courtesy Ville Miettinen

The low prices and wide range of choices that define the Bulgarian real estate market translate into wider market segments to be targeted by investors. The affordability and various choices turn a large audience from across Europe into potential customers, including neighboring countries which fancy vacationing in Bulgaria, foreign investors and the locals.

A great example is tourist hot spot Veliko Tarnovo (above), a small but rich mountain resort, where a three or four bedroom villa is listed for 65,000 Euros. Or, for 80,000 Euros you can get a two-story, six bedroom house if you’re willing to settle for one of the villages that’s located a few miles away.

Another beach property for only 49412 €

What is also interesting is that even though the resources of Bulgarians are overall larger than five years ago, the prices for properties are lower and the real estate business is on a more steady incline. Recent data shows that throughout Bulgaria, January 2011 brought as many real estate deals as January 2010, with an increase reported in the country’s capital city, Sofia. According to Quest Bulgaria, “there has never been such a strong January for apartment deals in the capital”.

“Analysis of BULGARIAN PROPERTIES based on data of the National Statistical Institute (NSI) about the prices of Sofia apartments, after deducting the inflation the result is that in 2010 prices of flats in the capital returned to levels that are a little bit lower than those in 2005. Meanwhile, people’s incomes based on the average salary of 1 employed person in 2010, after deducting the inflation, are about 65% higher compared to those in 2005.”

If you’re wondering which are the current prices for Sofia apartments, two bedroom apartment prices start at about 70.000 Euros, and luxury apartments listings range from 120,000 Euros to 300,000 Euros.

Local businesses expand and foreign multinationals come to open up shop, while the country’s leaders invest heavily into promoting Bulgaria and what it has to offer – all this catches the eye of smart real estate investors with an yen for interesting properties to buy.

Interested parties can investigate further by visiting Bulgarian Real Estate,  Mirela Real Estate, PDBulgaria, or visit Invest Bulgaria directly.

Enjoy the video below from Invest Bulgaria.

Colin Dyer CEO Jones Lang LaSalle

According to a report (PDF) by global property advisors Jones Lang LaSalle, Europe, the Middle East, and Africa recorded the highest overall volume in FDI of over $136 billion. Furthermore, Europe’s largest markets of the UK, Germany, and France made up about half that region’s volumes, but indicators show too that investors seem primed to reach out into other regions in Europe as well now. One reason for this is the limited entry for core real estate products in Europe’s traditional sectors – this is pushing in vestment monies farther East and South.

Arthur de Haast, Head of the firm’s International Capital Group had this to say about the prospects for this year:

“Barring further sovereign debt crises or financial shocks, the momentum of 2010 is expected to continue over the next 12 months and we predict global volumes for 2011 should increase by 20 to 25%.”

As an indication of the firm’s reach, and to spotlight regions where drastically increasing FDI may occur, this report (PDF) on Warsaw, Poland reveals the depth of the recovery there. The chart below illustrates the 50 percent rise in investment over the last year too. Price increases for properties, along with other factors, appear to this writer to offset the negatives of budget imbalances in Poland.

The Warsaw investment curve - courtesy Jones Lang LaSalle

Still more research shows clearly that some of the Eastern European countries have substantial growth since 2009. Turkey is maybe the best example of the a market where those placing their investment dollars seem likely to do so. The Euro zone of Turkey in particular has seen good GDP and other numbers across the spectrum from office space rental to consumer confidence, and in particular household spending.

Clearly Turkish citizens are showing far greater confidence in their own situation and the economy as a whole. The chart below shows the steady rise in GDP since the worldwide economic calamity hit. What’s more, Turkey’s budget deficit numbers go down in direct correlation to the positive rise elsewhere.

Turkey's consisten rise in GDP - Courtesy Jones Lang LaSalle

While news in the United States still hovers like a harbinger over the real estate industry, it is evident other regions have somehow emerged on a clear path toward not only solvency, but in some cases record breaking growth. As investment monies are freed up, entire economies can benefit from an influx of investment.

Jobs are created, public confidence is reinstalled, and an overall atmosphere of “building” replaces the trough of uncertainty some countries are still locked into. It seems sound advice for citizens and investors to watch these emerging regions for clues as to opportunity and ways out of this economic debacle. Maybe it’s time to look to the East?

Warsaw's Zlota 44 luxury apartments - courtesy e-architect