For several years already, the outsourcing is the main engine that drives the office market in Sofia and also in Bulgaria. The country is preferred by the international outsourcing companies for several main reasons: Bulgaria has the lowest corporate tax in the European Union; excellent internet connection; well-educated professionals who speak at least one foreign language and last, but not least – high quality office premises.
The average size of the offices that are rented in Sofia is 1600 sq.m and the share of the outsourcing companies in the country has reached 65% of the entire office market. The available office premises of high class in Sofia in the end of 2014 were only 6%. The outsourcing companies on the Sofia market are looking for larger premises, as they usually employ more people. These companies are in search only of offices class A with excellent location and infrastructure. This is so, as the office location, the atmosphere and the conditions are part of what these companies offer to their employees.
The main requirements towards the offices in Sofia include large and bright premises with high ceilings, open-space layout, excellent quality of the rental service, parking area, shops and restaurants nearby, public transport, rental levels between 10-12 Euro/sq.m for Sofia offices of class A outside the downtown city area.
In the first week of December Meglena Kuneva, the Bulgarian Deputy Prime Minister for coordination of the European policies and institutional affairs, spoke at the Bulgarian Parliament, stating that Bulgaria is technically ready to join the Schengen zone. According to Kuneva the country has been constantly inspected in the period 2009 – 2011, and all the reports stated that Bulgaria is technically ready to enter the passport-free Schengen zone. Kuneva said that the Schengen accession of Bulgaria depends on the member states are ready to accept it.
The Deputy Prime Minister in charge of European affairs further stated that Bulgaria received serious support for Bulgaria’s entry into the travel free Schengen area from the President of the European Council. She further noted that Bulgaria has undergone a stress test with the migration pressure on its border with Turkey and the country did great. Kuneva is hopeful that Bulgaria will soon receive positive news for the gradual elimination of the borders with Schengen.
The quality office projects in Sofia, characterized with good locations have above 95 % occupancy. At the same time the interest of the foreign companies into outsourcing their business to Bulgaria is quite serious. The local investors show interest in the construction of new office buildings, yet the local banks are still quite cautious. Foreign investors are also showing signs that they wish to invest in new office projects in Sofia and may be in several of the other large cities in Bulgaria. The most sought after office locations in Sofia are already established. The general rule is the good infrastructure, which means proximity to public transport and especially the metro stations.
According to leading real estate companies, the office market in Sofia is stable and is developing well. The quality office buildings with good location are already occupied, so there is room for other new office projects in Sofia. The interest towards the old Sofia office location is strong. There is also serious interest towards the area around the airport and Hladilnika District, near Sofia Paradise Center. The most active companies on Sofia office market are coming from the IT and the outsourcing sector.
In the middle of December the Chair of the European People’s Party Manfred Weber stated that Bulgaria will not join the Schengen Area soon and that the process of joining is a matter of mid-term and long-term work. Mr. Manfred Weber was speaking in front of a group of representatibes from the Youths’ organisation of the Citizens for European Development of Bulgaria, who were on a visit to Brussels.
According to the European People’s Party Manfred Weber, when CEDB Deputy Chairperson Tsvetan Tsvetanov was interior minister, the trust on the part of some European countries increased with the ability of Bulgaria to exert control at its borders. He further said that currently these countries are lacking trust after a year of unstable government situation. Manfred Weber stated that Bulgaria should invest in its security and should start behaving like a partner in the European Union, deserving respect but also taking responsibilities.
In the fall of 2014 the real estate agents registered increased interest by foreign investors towards the Sofia Offices. The interest was mainly from solid international companies which are eager to relocate part of their business activities in Sofia, as well as from companies which have already outsourced their business in the capital of Bulgaria but are expanding and thus in search of more and larger offices. Naturally, these companies are looking for offices of the highest segment – this means offices with top location, fantastic amenities and excellent facilities, plus great location with easy access for both clients of the companies and for the employees.
According to the real estate agents the number of the available offices of class A will decrease significantly as the investments made for the construction of new quality office buildings in Sofia are very limited. This is so as the banks are cautious, which is not bad since the growth will be smoother. The only larger office project now in construction in Sofia is a business building in the center of Drujba District, near the airport. These Sofia offices are to be completed in 2015 and are suitable for companies looking for an office premise and a storage area in one place. The new business center will offer 4000 sq.m of storage area which will be connected to the offices, shops, showrooms in the main business building with total area of 3000 sq.m. The new project will further have an underground garage with 70 parking lots.
In early December the President of the European Commission Jean-Claude Juncker stated that Bulgaria is ready to join the visa free Schengen zone. He further stated that all Europeans should be aware of the high level of readiness that the country has and that Bulgaria might join the passport free zone sooner than expected now. The President of the European Commission made the speech in the first days of December, after he had meetings with the Prime Minister of the country Boiko Borissov in Brussels.
Certain reports were issued, all unconfirmed for now, that Bulgaria will finally enter the Schengen free travel zone in March 2015, when the land, sea and air borders of the country will become part of the Schengen zone in three separate stages. The Prime Minister of Bulgaria stated that he is hoping the entry of Bulgaria into Schengen will not be connected to the co-operation and verification mechanism, valid since 2007 for Bulgaria and Romania in connection with the standards in the justice and home affairs.
In the past few years some of the member states of the European Union were blocking the entry of Bulgaria in the Schengen zone, based on problems connected with the judiciary and law enforcement. However, in the recent years all governments in Bulgaria insist on the fact that the country is meeting the Schengen membership technical criteria. Bulgaria is already applying the Schengen Information System. This database is very important as it shares information about people that should not enter the Schengen zone.
The interest towards investment properties and offices in Bulgaria is very strong and there is tendency for even more serious demand in 2015. The interest comes from the large local companies which are expanding, from the foreign companies that are already on the market, as well as from international companies that are outsourcing their business in Sofia and the rest of the large cities in Bulgaria.
The companies which are opening offices in Sofia or are expanding the business they already started in the country show interest in the well-known business zones of the city such as Sofia Business Park and the southern ring road zone, the central city area, as well as the districts of Iztok, Lozenets and Ivan Vazov. These companies are looking for office premises of the highest class, yet they are not many in number. The prognoses are that in the several years to come the building companies will show serious interest in the construction of modern office buildings, in order to provide office supply to the office demand in Sofia.
The President of the European Parliament Mr. Martin Schulz has recently announced, that the admittance of Bulgaria into the borderless Schengen area of the European Union has a legal aspect and depends on the country meeting certain criteria. Martin Schulz spoke on a joint conference with Boyko Borisov, the Prime Minister of Bulgaria, stating that when the member states of the European Union meet certain criteria, they are entitled to various legal rights. According to that the question whether Bulgaria will join the passport free zone of Schengen should be seen from that point of view and is not a political question.
Bulgaria, along with its neighboring country Romania, joined the European Union in 2007. Both countries hoped to become members of the Schengen zone in 2010, however several of the member states of the Schengen agreement opposed due to fear of issues with organized crime and corruption. The President of the European Parliament is to pay a visit to Bulgaria in the spring and talk about the Schengen bid. This will show confidence in the government of the coalition, as well as in all parties that are presented in the National Assembly.
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