Arco Vara signed a preliminary contract to sell its developed office building Madrid BLVD in the capital of Bulgaria. Earnings from the transaction will be invested into purchases of new properties and the company will now focus on the development of the residential real estate.
Madrid BLVD, a commercial and residential building developed by Arco Vara, was completed in 2010. The building with two underground and 9 above-ground floors includes a parking garage, apartments, a shopping center, and offices. All apartments in the building are sold, but Arco Vara was still involved in the lease of commercial and office spaces, amounting to nearly 7,500 m² in total.
According to Miko Niinemäe, the CEO of Arco Vara, owning and managing a commercial building no longer fits the company’s strategy. “Arco Vara’s strategy for the next few years is the development of high-quality residential real estate. Dealing with commercial premises requires a special team, and having it while operating only one building is quite expensive,” he explained.
According to the preliminary agreement, the transaction cost of Madrid BLVD, located in the center of Sofia, is 9.1 million euros. A final sales document will be signed within 6 months. The buyers of the building are three businesses investing in commercial real estate in Bulgaria. “The sale price turned out as expected,” confirmed Niinemäe. He said that Arco Vara will receive a part of the sale amount after the conclusion of the preliminary contract, and the rest after the sale is completed. Arco Vara plans to invest the funds from the transaction into new plots suitable for residential construction.
According to Miko Niinemäe, Bulgaria continues to be an important market for Arco Vara in addition to Estonia. “Similarly to Estonia, we will focus only on building homes in Bulgaria onwards. Recently, we signed a general contract with the Bulgarian branch of the internationally well-known Austrian construction company Strabag, for the development of the Botanica Lozen residential project’s first stage. This development is located near Sofia, in a very beautiful and natural environment, within only a 15-minute car drive from the city center. Our goal is to develop living environments where we would like to live ourselves. I believe that the private residences of Botanica Lozen absolutely fulfill this criterion,” said the CEO of Arco Vara.
At the moment, Arco Vara does not plan to do business with commercial real estate objects. “We cannot rule out anything in the distant future, but we do not intend to get involved in commercial real estate before 2026,” said Miko Niinemäe.