Location
The Ancoria E80 "Praskova" Real Estate Fund has been established with the purpose of purchasing a plot, which is located on the main European transport highway (E80), within the boundaries of Herakovo village, Praskova Area, Bojuriste Municipality. The E80 highway is the main transport corridor connecting Sofia and the rest of Bulgaria with Serbia. The plot is situated 22 kms from the Sofia historic centre, 34 kms from Kalotina (Serbia), 15 kms from Sofia Ring Road and 28 kms from the new International airport of the capital.

 
Map of Sofia [enlarge]

  Description
The plot consists of 6 smaller plots for a total area of 40.296 m². It is bordered by:

• the E80 highway on the South,
• the Bulgaria-Greece/Bulgaria Serbia Railways and the proposed Bulgaria-Serbia Motorway on the North,
• and private plots on the East and West.  

The plot has a frontage of 153,76 m along the E80 Highway and a depth of approximately 200 m. It has a flat surface, which is level with the E80 highway, and is mostly rectangular in shape. Enlarged Part from the General Development Plan of Sofia [enlarge]  

Utilities
The plot is in close proximity to electricity, water and telephone utilities.

Planning Characteristics
The plot falls within the Multifunctional Planning Zone, which permits the construction of hotel complexes, trade and logistic centres, factories, warehouses, petrol stations and residential developments up to a total of 20% of the total permitted construction area. This planning zone is associated with the following parameters:

Neither high voltage electric power lines nor underground communication channels, which might create restrictions in the use of the property, are present. The plot is in the process of becoming regulated, which is required before a building permit for certain development is granted. This procedure will take about six months to complete. In addition, a written confirmation has been given by BDJ (a department of the Ministry of Transport) which states that they will review favourably an application for the construction of a railway terminal for the loading and unloading of goods in the northern part of the plot. Currently, a preliminary design of the railway terminal is being prepared.

Local Market Dynamics (Sofia)
Supply
Industrial real estate is a highly attractive segment as seen by developers. Large players from Central Europe and beyond are considering the market opportunities and several projects are either planned for future development or have been initiated in the past nine months. Despite the expected growth in speculative developments, the market is still dominated by owner-occupiers. The total inventory of contemporary owner-occupied and speculative industrial space in Sofia and the region around the town is estimated at 1.200.000 m². This figure includes warehouse, manufacturing and flex buildings.

Only 13% or approximately 160.000 m² of the current inventory is estimated to be speculative space consisting of 14.000 m² flex space and 146.000 m² warehouse space. The historic lack of contemporary space has forced many occupiers to choose a build-to-suit solution. With major speculative industrial projects about to be launched, it is expected that the share of owner-occupied space will be substantially reduced. More than a third of the total inventory in Sofia is located in areas close to the international airport (Druzhba, Gara Iskar, Sofia Airport, Vraxhdebna and Slatina), which provides convenient access to railroad, air and ground transportation.  Besides the airport area, Kazichene and Bozhurishte are the fastest developing new industrial zones, located respectively just outside the eastern and western parts of the town and along main transportation corridors.

Demand
The demand for modern industrial facilities is gradually increasing. Most businesses still choose built-to-suit solutions as existing space is inadequate to meet their specific requirements. Retailers and distributors of food and beverages, pharmaceuticals and electronics are among the companies with growing needs for warehouse space. European Union regulations and requirements are creating a demand for industrial space, which comply with certain standards. For instance, the demand for temperature controlled facilities is expected to increase.

Forcast
New speculative and build-to-suite developments will continue to add to the industrial inventory. Third Party Logistic (3PL) companies servicing large logistics accounts as well as retailers and distributors are expected to experience increased demand for warehouse space. Local manufacturers are expected to expand along with foreign manufacturers who will take advantage of Bulgaria's competitive cost structure and the lowest corporate tax in the EU. A concentration of new industrial developments in Sofia is expected in the eastern part of the city in areas along the Ring Road between Trakia and Hemus Highways, all the way to the town of Elin Pelin. Another concentration of industrial facilities is foreseen in the western part of the town along the European highway E80.  Bulgarian banks are increasing their exposure in these developments and predict growth with limited downside risk for the next five years.

 Prospects
The plot is strategically located on the European highway E80, 750 m south-east of the crossing of the two proposed motorways Bulgaria-Serbia/Greece-Romania, for which EU construction funding has already been granted. The plot has an ideal size, mostly rectangular shape and access to the European Highway E80 along a frontage of 153,76 m. Its long face on the Bulgaria-Greece/Bulgaria Serbia railways and the proposed Bulgaria-Serbia motorway can be used to construct a railway terminal for the loading/unloading of goods. The railway terminal will give the plot a significant advantage over other plots along the E80 highway.

In addition, the plot's location offers ideal billboard and signage advertising opportunities for the owner-occupier company as many thousands of commuters per day will be using the two means of transportation. Only a few plots along the 45 kms long E80 highway have access to the E80 highway while facing the Bulgaria-Greece/Bulgaria Serbia Railways and the proposed Bulgaria-Serbia Motorway. Furthermore, being in the vicinity of the crossing of the two proposed motorways, the plot will be ideal from the transportation/distribution viewpoint.

Predominately, foreign investors have purchased virtually every plot along the highway at a depth of 200 m, in the vicinity of the plot (Heracovo village). Showrooms, offices, hypermarkets and factories have been developed along the highway during the past two years up to 4 kms from the plot. The plot is situated 11 kms from the Porsche showroom and Metro Hypermarket and 6 kms from the brand new impressive Citroen showroom.

Taking into consideration the tempo of expansion along the E80 highway, the construction of the two proposed motorways in the vicinity of the plot, as well as the strategic and physical advantages of the plot, we expect significant appreciation in its price in the next three to five years. Currently, prices in the vicinity of the plot are changing on a monthly basis, a phenomenon, which is common in developing countries and in the new EU members. We see this as a highly attractive investment with limited downside.