The second quarter of 2013 showed good results on the office market in Sofia. The good tendencies on Sofia business market from the first quarter of the year remained and many companies decided to invest in Sofia or to outsource their business here. At the same time the new construction processes slowed down, resulting in reduction of the vacant office premises in Sofia. The reports concerning the office situation in Sofia at the moment have no connections with the political situation in the country, as companies are planning their activities for several months before they decide to act. The business climate is favorable and the investors feel save as the country is financially stable.
The companies from the sectors outsourcing of business processes and information technologies, remain the main tenants on the office market in Sofia. In the first quarter of the year were completed several projects for offices for sale and rental. The total number of the sq.m that were completed was 19300, where 17200 sq.m. were built for own purposes. When companies were not able to find larger offices in the office buildings in Sofia they initially pointed out, they were interested to see other, alternative options as well.
In the summer of 2010, the European Commission declared that Bulgaria is ready to implement the requirements that concern the protection of the personal information and can start entering data into the Schengen Information System. In other words, it was stated that the Bulgarian legislation is aligned to the requirements of the Convention for implementing the Schengen Agreement. That is why in November 2010 Bulgaria joined the Schengen Information System. The authorities are able to enter, to update and to take the appropriate actions in order to implement all activities connected with the signals from other countries in the Schengen zone. Bulgaria will be able to enter in the system signals that concern third parties once it becomes a full member of the Schengen agreement.
The individuals, whose data is entered in the Schengen Information System include people who need to be arrested under a European arrest warrant or extradition; foreigners who have a denial to enter the country; missing persons and people who have to be protected; people who are summoned to trial in connection with criminal proceedings; individuals that are subject of discreet surveillance or specific control. In Bulgaria the Schengen Information System will be administrated by the Ministry of Internal Affairs. It will also control the entering of the personal information data.
Since the end of last year there is a tendency among the companies which are looking for an office in Sofia. Both the local and the international companies, as wel as the companies that want to outsource their business that are in search to buy or to rent an office are now showing more interest in the area outside the center of Sofia. A few years ago an office with a very central address was something that all companies required. Today, many of them are in search of Sofia office in the good business centers outside the downtown of Sofia. There are many reasons why is that happening.
According to the real estate agents, who are dealing with finding suitable offices for top companies, the business centers in Sofia are now more appealing thanks to their modern infrastructure and the facilities that they can provide. Most of the new office buildings are of class A, have perfectly maintained common parts that are regularly cleaned. Moreover, the parking in or around these new office centers in Sofia is easy, which is opposite to the parking problem in the center of Sofia. Thanks to the new lines of the metro in Sofia, great part of the new office buildings are now not difficult to reach with public transport as well.
The Information System of Schengen, known as SIS is a special database that is used by the countries in Europe, in order to distribute collected information on individuals. The system is used for the purposes of the border control and national security, as well as enforcement of law. In April was issued the second version of the system, which is set under the regulations of the European Commission. The data collected by the system is being shared among the countries that take part in the Schengen Agreement. Besides the five original countries including Germany and France, Belgium and the Netherlands, as well as Luxembourg, later the Schengen Agreement was joined by twenty countries more.
Currently, the Schengen Information System is used also by Norway and Iceland, as well as by Switzerland, which are not members of the European Union. Hopefully, Bulgaria will join the Schengen zone in the spring of next year and will be able to share the information as well. At the same time, the United Kingdom and Ireland also take part in the Schengen Agreement under the Amsterdam Treaty regulations, which allows them to take part in the convention arrangements of Schengen. At this point the two countries can use the information to enforce law, but still it has border controls with the European countries.
Sofia offices rental market suffered a short period of stress. This is the conclusion made by the leading Bulgarian newspaper Capital Daily, after it made an analysis on the connection between the political situation in Bulgaria in time of elections and the Sofia offices rental processes. According to the professionals that are working in this sphere of business, the hiring of office space decreased dramatically after the political storms in Bulgaria in the period February – May 2013. This is so, as the business companies felt insecure not only about the current situation, but also about the future of the country and whether there will be a favorable economic situation after the elections.
Earlier this year, the real estate agencies registered a growth in the rental of offices, but after the government collapsed, the renting of offices was almost frozen due to the uncertainty and the unpredictable situation. However, there are still companies that are looking for larger offices in Sofia. These are companies that have not changed their business plans and are not afraid of the changes. Such business companies in Sofia exist and they still want to seek and rent an appropriate office in Sofia.
Bulgaria has fully complied with all the requirements and criteria for being accepted in the Schengen area. This was admitted in the latest report of the European Commission that was focused on the area that requires no passports and visas. According to the report, the Commission will keep on supporting the efforts of Bulgaria and its neighboring country Romania to enter in the Schengen area, even if the member states have no one opinion about that entry. Unfortunately, Bulgaria and Romania do not have a deadline for their entry into Schengen zone, after being postponed for several times.
The two countries have been criticized because of the lack of progress in their fight against the organized crime and corruption and the insufficient results in the judiciary sphere. Bulgaria, as well as Romania, have to make efforts into improving their justice system. Once this is a fact, the two countries will be able to join the travel area of Schengen that comes with no borders. Currently, the people who live in and use the Schengen zone are around 400 million in number, according to the European Commission. By joining that passport free area, Bulgarian people will get many benefits – both from a political and from an economical point of view.
Earlier this month, the state of Andorra announced that it will introduce an income tax for the first time in its history. The small country, situated between Spain and France was made to do so under the pressure from its European neighbors that are struggling with tax evasion and avoidance to pay taxes, as BBC reported. The Prime Minister of Andorra Anthony Marty confirmed that the new law will come into force before the end of June. Until now, the legal and the physical persons in Andorra were not obliged to pay a tax on their income. With the new law that will be accepted, the state will comply with the international tax standards in Europe.
Andorra is a parliamentary principality state, but is represented by two heads of state – the President of the French Republic and the Bishop of Seo de Urhel from Spain. The state has a government since 1986 and is not a member of the European Union, but still uses the euro as its national currency and maintains special, tax-free economic relations with the Union. During their last meeting, the EU finance ministers agreed to start negotiations with Andorra, Switzerland, Liechtenstein, Monaco and San Marino for the exchange of banking information, which is now considered a secret and could not be revealed. The European Commission aims to achieve exchange data policy on bank account holders throughout the European Union in order to prevent tax evasion.
The general situation on the office premises market in Europe for the first three months of the year is predicting difficult moments for this segment of the real estate properties. In the first quarter of the year, the rental levels of the offices in Europe in general has dropped to its lowest level since 2009. At the same time, the interest towards the offices in Sofia remains stable and several new Sofia business buildings with rental offices are about to open. The reason behind that is the interest of the international companies which are looking to open their offices in Sofia and to outsource their business in the capital of Bulgaria. This is so, as the country offers good office buildings with offices premises of class A, located in the central areas of Sofia city and the presence of many young professionals.
Even so, the tendencies are for more empty office premises throughout Europe, since many companies are still suffering from the financial crises and are trying to optimize the office area they use. According to the prognosis, at the end of 2014 there will be many new offices in Europe and in our case – including Sofia city. Most of the new office projects and business premises are situated in Western Europe and in Central Europe. They will offer all facilities and extras required, but will come at reasonable rental levels, in order to be afforded by the companies. This tendency in Sofia office market and European office market is expected remain until the end of the year due to the ongoing recession.
Bulgaria will be supported by the European Commission in the country’s desire to enter the Schengen zone, which allows for passport-free trips. Bulgarian accession in the Schengen area was approved in the third biannual report on the Schengen zone functioning and the free movement for the period November 2012 – April 2013, which was issued by the European Commission. The full support from the European Commission is something that the country and its people need. Bulgaria, along with Romania, was blocked from entering into Schengen by the Council of Foreign Ministers, although in June 2011 the same council announced that the two countries are ready to join.
The possible access of Bulgaria into the Schengen zone will be very positive for the business, as it will lead to easier and more trips. At the same time, the local tour agencies will be able to organize more combined holidays. By becoming a member of the Schengen agreement, Bulgaria will develop into a transit country with two main directions – from Turkey and Greece towards the countries in Western Europe and from the countries in Western Europe to the resorts in Turkey, Greece and hopefully Bulgaria. Moreover, Bulgarian entry into Schengen will allow for the development of the general economic collaboration in the area, unification of the requirements and standards applied, integration of the value added tax and more freedom for positioning the business centers.
Investors who want to start their business in Bulgaria and find its Sofia a great destination for outsourcing their business will be pleased to find out the various positive aspects of Sofia city. The capital of Bulgaria provides several very good office buildings of the highest class A, as well as numerous professionals that can help them with consulting and company registration, financing and taxation process. Investors who want to register their company in Sofia will be able to choose from joint stock companies, limited liability companies and sole trader enterprises, depending on their purposes and intentions. They will have to complete a pack of documents, prepared according to the legislation of Bulgaria. The company registration includes reservation of a company name, opening of a company bank account, signing of power of attorney, registration at the National Insurance Institute, National Statistical Institute, Local Tax Authority and the Commercial Register.
Once the company is registered, then comes the sweet but also hard part and that is to find a suitable Sofia office that corresponds to the business intention and needs. As mentioned above, in the city of Sofia could be found excellent offices that correspond to all requirements for class A office premises. Most of the Sofia offices are organized in the Business Park Sofia in Mladost District, along Bulgaria Blvd. and Tsarigradsko Shousse Blvd., as well as in the center of the city and in Lozenets District.
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