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RERA to become a global advisory body

The Real Estate Regulatory Authority in Dubai is planning to expand and become an international real estate reference point with the acronym, Menares, it has been announced.

Menares - Middle East and North Africa Real Estate Society – said it will become part of several international property bodies. 'We are in the final stages of establishing Menares. We are aiming to build a professional real estate market and are serious about being first, globally,' said Mahmoud Al Burai, director of the real estate sector development department at Rera.

Rera recently became a member of five organisations responsible for regulating real estate affairs around the world. These include the International Real Estate Federation, the World Association of Valuation Organisation, the Royal Institute of Chartered Surveyors, the Asian Public Real Estate Association and the Urban Land Institute.

Al Burai said Rera's plans were in line with His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai's vision to become a leading, global Arab city.

Menares will be a reference body only, rather than a regulatory one, but Al Burai said the authority would be happy to assist any country in the region with their own property regulation framework.

'Everyone is looking at Dubai. Everyone is looking at Rera as the reference point,' Al Burai said.

The aim of Menares is to encourage real estate education, professionalism and real estate practices, he added. Exact details of the collaboration with the other organisations are still being discussed and will be announced soon.

Global Finance expands Balkans property investments

Greek investment firm Global Finance planned to expand its investment in real estate on the Balkans by setting up a second property fund, to be named Global Emerging Property Fund II (GEPF II), investor.bg reported, quoting Greek media.

GEPF II, with a capital of 350 million euro, was to be the next stage of Global Finance’s investment strategy on the Balkans, which started with the foundation of CERF I, which raised 500 million euro for investments in Bulgaria, Romania and Serbia.

Through the new fund, Global Finance will extend its activity towards countries like Ukraine, Croatia, Bosnia and Montenegro, specialising in acquisitions of plots with “appropriate” location and development of offices and mixed-use compounds.

The European Bank for Reconstruction and Development (EBRD) would take a 34 per cent stake in GEPF II, investor.bg said.

Global Finance’s core activity was directed towards investment in office and retail centres, and residential complexes. However, in countries like Ukraine and Croatia, it would screen the investment potential of industrial and holiday property segments as well.

In Bulgaria, it planned to develop Global Gate Sofia, a multi-functional complex comprising offices, shops and apartments with a total built-up area of 55 000 sq m. It would spread on a 9 000 sq m plot, located near one of the capital’s central boulevards.

Office space vacancy in Sofia stands at 5.2 per cent, said Angelo Plakopitas, Global Finance’s founder and president, going on to explain that new projects were clustered either in Sofia’s suburban areas or along the main boulevards. Currently, one can hardly speak of real class A offices, he added.

Retail areas were undergoing rapid growth, propelled by new retail chains stepping on the market and the dynamic development of the residential segment. In Belgrade the company focused on office projects, given the vacancy rate pf eight per cent and rentals that were higher than other Balkan capitals, Plakopitas added.

Property market adjusting to dropping prices

After years of bullish sentiments dominating the market, culminating in a veritable stock boom over the past two years, the Bulgarian Stock Exchange is now experiencing its first lasting bear market spell. Photo: Julia Lazarova
After years of bullish sentiments dominating the market, culminating in a veritable stock boom over the past two years, the Bulgarian Stock Exchange is now experiencing its first lasting bear market spell. Photo: Julia Lazarova

As the global financial turmoil tore down enduring myths about the global economy, Bulgaria’s domestically-listed real estate investment trusts (REITs) have started losing their appeal as safe havens.

Almost all REITs are trading at 20 per cent and sometimes even 50 per cent discounts on their net assets, said Dimitar Georgiev, broker at Elana Trading investment intermediary.

Heavy sell-offs on fears of a property price crash have evaporated nearly half of the value of the BGREIT index that tracks the performance of the property funds. The gathering gloom pushed the price-to-book (P/B) ratio down to 0.69 over the past months.

The index ended at 53.54 points on November 7, down a staggering 48 per cent from a year earlier, but still less than the other indices of the Bulgarian Stock Exchange, which have lost 65-70 per cent over the same period.

The credit squeeze and dropping demand was forcing REITs to re-assess the value of their portfolios. BenchMark Fund Estates, for instance, wrote down the value of its investment properties to 12.8 million leva, compared to 15.1 million leva over the previous nine months.

The negative outlook has already been calculated in the current share prices, and portfolio quality and managers’ professional skills may help REITs come through, said Svetoslav Soltariev, board member of FairPlay Properties, one of the bigger funds on the Bulgarian market. The fund has cut the outlook for its 2008 distributable profit from 10.4 million leva to seven million leva.

Bulgaria headed for two-year recession – BNP Paribas

The Bulgarian economy will be in the depths of a recession in the next two years with dwindling capital inflows and consumption squeezed by the rising jobless rate, forecast BNP Paribas economist Michal Dybula, a co-author of a report on 2009 global economic outlook.

Neighbouring Romania is also in for big trouble with GDP set to drop 0.6 per cent next year, according to the French lender.

The Bulgarian economy will contract 1.2 per cent in 2009 and 0.3 per cent in 2010.

Economic growth will slow down to 2.2 per cent in Q4 2009 from 4.4 per cent in the final quarter of 2008.

The Bulgarian economy is the most rickety across all Central and Eastern Europe, Dybula said in a separate report on the region.

The wide current account gap is the major challenge before Bulgaria in the face of slowing foreign capital inflows.

The expected protracted recession in the eurozone will freeze cash flows to the region and slash jobs of Bulgarian and Romanian migrants making it harder to send money back home and rising domestic unemployment if they return.

Timothy Ash, head of emerging markets at the Royal Bank of Scotland, told Dnevnik the economy will slow down to two per cent and a negative value should not be ruled out either.