Real estate investment trusts are becoming more attractive to investors, says Manyu Moravenov, managing director of FairPlay Properties (FPP).
Moravenov gave more information on the fund's two ongoing projects - a residential complex and office building in Studentski grad, comprising retail areas, as well as a housing compound near Sofia's ring road in the southeast of the city. Investment in the first development (to reach 30 000 sq m in gross actual area) is estimated at 40 million leva and in the second compound (50-60 000 sq m in gross actual area) - 75-80 million leva. Finance will be secured through the already performed capital raise, through loans and sales revenues.
Currently, the company is preparing the projects for future construction works in Studentski grad, scheduled for completion by the end of the year. The preliminary contract for the plot is to be rubber stamped by the end of March.
The second project, larger in scale, is still at the opening stage. It will embrace a 10ha plot. A procedure for buying half of the land is in progress. Completion is due by the end of 2011.
Off-plan sales in Studentski grad complex will start in spring at 1 100 euro a sq m excluding VAT. Expected yields from the project fluctuate between 30 and 50 per cent.
When asked about REITs' attractiveness to investors, Manyu Moravenov comments that it is a matter of attitude towards risk and time span. REITs are oriented towards investors with an investment period of at least one to three years. However, FPP's shares fetched 100 per cent returns in 2007. The REITs will be more and more interesting to investors especially after the crisis on the market. BGREIT registered the smallest decrease compared to the other indexes on the BSE.
