A certain number of companies have decided to save on rent and make virtual offices in Sofia instead of onsite offices based in the heart of Sofia or in the modern business centers. These are new international companies that are thinking to settle in Sofia and register a company in Bulgaria and existing small companies that can do their work online and do not need a regular office. The virtual offices in Sofia are a special service that includes the right to use an existing central and prestigious address, telephone landline and even a personal company assistant. Other services are offered as well including checking and forwarding of the emails, receive of fax messages, etc.
The interest towards the services of the Sofia virtual offices increased significantly in the last years of the global financial crises. Some of the clients also rent an office per day or conference halls for a short period of time. In this way they have the freedom to do their job and not pay for a full-time office and all its expenses. The rental levels of the virtual offices depend on the type of the services required, the short-term offices rented and the period during which the office will be used. The rental of these offices for a day or a week includes the expanses made on electricity, water, office supplies.
Belgium, one of the member states of the Schengen agreement, asked for a decision on the expansion of the zone that should be taken by the end of this year. At the end of May, the Foreign Minister of Belgium, Mr. Didier Reynders announced that his country would like to know whether the two countries Bulgaria and Romania will be accessed to Schengen or not. The border free travel area is expected to be expanded, but there is no certain dates on which that will happen. The Foreign Minister of Belgium along with the Foreign Ministry of Romania discussed the possibility for such decision of the expansion of the Schengen zone to be taken by the end of this year.
The process of expansion of the Schengen zone shall be approved after a unanimous vote made by all 27 member states of the European Union that take part in the Council for Justice and Home Affairs of the European Union. According to the predictions of the experts, Romania and Bulgaria will join the Schengen area together since they have already met the necessary technical requirements for entering the border and passport free zone.
The office market in Sofia will be characterized with a lot of activities and a growth, thanks to the increased number of investors in the area. The investments made in the Sofia city offices rose during the first quarter of the year according to the company Cushman & Wakefield. The activity on the office market in Sofia is further supported by the strengthening of the debt financing and the supply of business buildings of the highest class. Moreover, the rental levels of the Sofia offices are the lowest in Europe – approximately 9 Euros / sq.m, compared to 57 Euros / sq.m. for the offices in Paris – the city that has the most expensive offices on the continent. Many investors are now looking for an alternative and they find it in Bulgaria and its capital Sofia. In this city they can find modern Sofia offices, highly-educated professionals and higher return on the money invested, so they decide to outsource their business here.
According to the real estate agents, the tendency for the offices in Sofia from the first months of the year will affect the rest of the year. It is expected that many investors will head towards interesting new markets in Central and Eastern Europe, as they will be ready to register a company in Bulgaria, Sofia and the rest of the capitals of these countries. The offices remain the most preferred asset for the companies investors in Sofia city, both international and local.
The European Commission issues biannual overviews on the functioning of the area of Schengen, considered health-checks. According to the third biannual report that was released by the European Commission in the beginning of June, Bulgaria and its neighbor state Romania are ready to join the passport-free Schengen zone. The European Commission states that Bulgaria and Romania have successfully fulfilled the criteria for applying into the borderless area. Furthermore, the European Commission declared that it supports the efforts of the presidency that are made in that direction. Even so, the European Commission was yet not able to decide whether to lift the control that is made at the internal borders to the two countries.
Bulgaria has complied will all requirements that were laid in front of it in order to be accepted in the Schengen zone. That is why its efforts to become a member state of the Schengen agreement have been supported. At the moment the entry of both Bulgaria and Romania has been postponed. Hopefully, the two countries will be included in the passport free area at some point next spring.
Leading real estate companies predict a difficult year for the sales and rental office market in Europe. The companies comment that many offices in Europe stay available. In the first three months of the year the interest of the companies in the European countries has dropped to its lowest levels since year 2009. An increase in the interest of offices is seen in the countries of Central and Eastern Europe. The office markets there are welcoming new office and business projects, since many international companies are showing interest to register companies in Bulgaria and to open their own offices there. Bulgaria and especially Sofia is a good example of that trend. Many companies are outsourcing their businesses to Sofia, since the rental levels are quite low and there are many good office buildings of the highest class A.
It is expected that by the end of this year and in 2014, on the European markets will be presented more new office projects. Many of them will be located in important new markets in Central and Western Europe. As for the rental levels of the offices in Europe – they are expected to remain the same due to the ongoing recession. The Sofia offices rental levels remain lowest and are expected to keep that even after the slight growth in the rental levels of the European offices that is expected to happen in 2014.
The aim of the Schengen Information System is to collect and store information in accordance to the legislation system of each country. The system features more millions of entries that are called alerts and are usually covering lost identity documents, alerts for missing persons, banknotes and vehicles. The alerts contain certain information such as first and last name as well as the middle initial, sex and date of birth, nationality. The alerts also include information or whether the person is dangerous and armed, and what actions need to be taken if encountered. Bulgarian authority which is in charge for the entries is the Ministry of Internal Affairs. Bulgaria uses the Schengen Information System since the end of 2010.
The Schengen Information System does not collect information on the entries and exits of travelers. Bulgaria currently has such record on the entries and exits of the travelers, but currently that information is not exchanged between the national databases of these countries. Thanks to the new, second version of the Schengen Information System that was introduced in the beginning of June 2013, now more institutions will be able to use the data entered.
The offices for rent in Sofia, as well as the offices for sale in Sofia are among the cheapest on the old continent. The average rent per square meter per month for the offices of the highest class A is approximately 9 Euros / sq.m. At the same time, the office for rent in the neighboring capitals of Belgrade, Budapest and Tirana are around 15 Euro/ sq.m. The offices in Bratislava could be rented for 11 Euros per sq.m. and those in the cities of Athens and Zagreb are available for rent for 12 Euros per sq.m. A contrast could be made with the rental levels for the offices in Paris for example reach 57 Euros / sq.m. and these are the most expensive rentals of offices. The rental levels of Paris offices are followed by the ones of London office premises.
The low rental levels of Sofia offices and the affordable sales of the offices in Sofia are among the reasons why so many foreign companies show interest in the Bulgarian capital. These international companies are outsourcing their business towards Sofia or are looking to position their production in or near Sofia, where they can find well-educated professional managers. The foreign companies like Sofia as an outsourcing destination for yet another reason – the low wages paid in the country.
Hopefully Bulgaria will become part of Schengen Agreement in the spring of next year. The Schengen zone allows for border free travelling and transport of goods. Besides the free movement of people allowed by the lack of border controls, the Schengen zone is also associated with cooperation between police, judicial and customs authorities. The Schengen cooperation between all 27 of its member states allows for the free movement of people. The cooperation among all authorities is a necessity that emerged with the abolition of the internal borders. That is why was introduced the Schengen Information System, which forms the largest database on protecting the public security on the world. It allows for cooperation between the judicial authorities and the police and helps the management of the external border control. Bulgaria uses the Schengen Information System since the fall of 2010.
The Schengen Information System allows for the entries on missing or wanted persons, stolen or lost property and entry bans. The system could be accessed immediately by the police officers all over the countries that form the Schengen zone. Everything is done with one purpose – to help authorizes do their job in protecting people and fighting crime.
Besides SIS, was introduced the Supplementary Information Request at the National Entry or SIRENE, which allows for exchange of additional information between the states. SIRENE provides supplementary information on whether actions have been taken that concern wanted persons, missing persons, stolen vehicles, etc. The focus of the supplementary information system is on everything that goes on in Europe without its internal borders.
In the middle of June leading economists from Germany participated in a debate whether the common Euro currency is to be held responsible for the crises in Europe. The CEO of the Institute for economic research Ifo Hans-Werner Sinn stated that the introduction of the common currency was a huge mistake. In an interview for Frankfurter Allgemeine Zeitung he confessed that the Euro zone is in a situation where nothing positive can be made and declared that what the politicians do is completely wrong: the pouring of more money to bail out troubled countries is not a decision. In this way the debts are socialized and passed on to all taxpayers, while the cheap loans will never be repaid. He and the rest of the economic advisors state that the Euro zone needs was a mechanism for the closure of the insolvent banks. This will be the only way through which the risks of the banks will not be passed on to state.
However, is the end of the financial crises in Europe near? The experts do not have one opinion on the matter. Some see positive signs from the decrease of the unemployment levels in Spain and the delay in the recession in Europe, while others say that nothing is certain yet and that this could be just a temporary thing. Bulgaria is stable despite the political changes. The investors find the country appealing and that is why many of them are registering companies in Bulgaria and outsourcing their business in Sofia.
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.
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