Sofia ranks third in the world as far as cheap offices are concerned. The average rental for an office in the center of Sofia was 14.75 Euro per sq.m a month in 2012. Lower rental levels of offices are available only in the town of Kito in Ecuador and in the city of Sandan in the South African Republic. The data was collected and analyzed by the consulting company “Cushman and Wakefield”. The lower rental levels of Sofia offices led to the decrease in their overall value. At the same time however the local and international business companies have a good choice of high-quality offices at reasonable and affordable prices. That fact made Sofia one of the preferred places for making business and investments in Eastern Europe. The country has attracted the interest of the companies in the outsourcing industry. This is so, as the country could offer excellent services and production and low expenses for rental, taxes and labor.
The only capitals that can rival Sofia in terms of affordable offices are the Riga with its 16 Euro/sq.m. and Tallin with its 17 Euro/sq.m. At the same time, the average rental price of the offices in Bucharest is 28 Euro/sq.m and 18 Euro/sq.m. in Belgrade. However, the cheap and good offices in Sofia are not the only thing that attracts the foreign companies. The country has highly qualified people, stable micro economy and political situation.
The Schengen zone was formed in year 1985 with the aim to remove the internal borders between the member states and thus to encourage the free movement of people and their integration. The price for that Schengen freedom required many efforts and harmony among the member countries as far as visa issuance rules, coordination and cooperation among the police forces, and fight against organized crime were concerned. Once the Schengen zone was formed and later its members increased in number was formed the Schengen Information System, that helped the zone authorities in exchanging information about the movement of people and goods.
According to the member states of the Schengen zone, the two countries that were last accepted in the European Union – Bulgaria and Romania, still have issues to fight against. These include the problem with the organized crime and the problem with the corruption. The new report that the European Commission is expected to give to Sofia is expected in the end of this year. Until then, the country will go through elections and will have new government. At that time, a new report will also be issued from the Justice and Home Affairs Council. Bulgarians hope that the new government will have enough time to start its work and to give its signals to the European Union and the Schengen zone about its priorities and work plans. Eventually, the country hopes to get positive reports and to be accepted as a member state of the Schengen zone in the near future.
At the end of last year, the demand and the supply of offices in Sofia reached a certain balance level. This happens for a first time in the last four years. The new office buildings in Sofia that were completed and became available for exploitation were almost 140 000 sq.m, while the number of the rented Sofia offices reached 97 000 sq.m. making an increase of 10 %. The prognoses seem good, as in the last three months of 2012 the rented or purchased offices in Sofia city were more than 25 000 sq.m. Many of these new and modern offices in Sofia were taken by new companies on the Bulgarian market or by existing companies that are expanding their business.
The available office premises in Sofia’s best business centers are not many, as they are quickly invested into or rented. The office centers in Sofia that provoke the attention are the ones with top location and fast access, excellent quality of the construction and parking zones. The interest of the foreign companies is concentrated in the business buildings along “Tsarigradscko Schousse” Blvd. There are a few postponed projects for modern office buildings on Sofia’s boulevard “Todor Alexandrov”, which are also expected to provoke the attention while the construction starts.
There are many reasons why Bulgaria has not been accepted to the Schengen space earlier in March. Some of the country’s critics say that Sofia’s politicians were incapable to convince their partners from the European Union that the country is ready to become one of them. Others think that Bulgaria is still incapable of joining the common border and has issues to deal with as far as organized crime, illegal immigration and corruption are concerned. At the same time, the Bulgarian politicians claim that the country has implemented all reforms required and that it was completely ready to be accepted in the Schengen zone in March.
The ministers of justice and home affairs of the EU have now postponed the membership of Bulgaria and Romania for indefinite period of time. The countries that were against the acceptance of the two new members are Germany and Finland, as well as The Netherlands. Their decision is based on the latest annual report for Bulgaria and Romania, according to which the two countries made progress but it was insufficient for them to be accepted in the security zone of Schengen. The zones on which Bulgaria should focus are the local judiciary system, the fight against the corruption in the administration, as well as the fight against the organized crime.
The finance ministers of Cyprus have plans to impose a limit on the cash withdrawals per week, according to BBC. The controls of the draft capital of Cyprus include export limits on Euro and a ban on the cashing of cheques. The deposits with sums higher than 100 000 Euros will find 40 % of the funds being turned into bank shares. According to the finance minister of Cyprus Michalis Sarris, the depositors that have less than 100 000 Euros in their accounts will not be affected by the new rules applied.
Yesterday, the chairman of Bank of Cyrus handed his resignation and was examined by the board of directors of the bank. At the same time, the Department of Work and Pensions in UK announced that the British pensions will no longer be paid in bank accounts in Cyprus and asked the expats living in Cyprus to open accounts in UK. In Greece, Piraeus Bank will acquire all deposits, branches and loans of Greek citizens that were owned by the Bank of Cyprus, Laiki Bank and Hellenic Bank. The finance minister of the European Union announced that he sees no signs of serious withdrawals of savings in the zone after the crisis in Cyprus.
The economy of Cyprus will be hit badly, but there are hopes that it will recover in a short period of time. Currently, the banks in Cyprus are closed and are expected to reopen on Thursday.
The prognoses of all real estate agents are for stable office market in Sofia during year 2013, following the price levels from 2012. According to the experts, in the first six months of the year there will be no change in the rental levels of Sofia offices. At the same time, the total coverage area of the modern office buildings in Sofia in 2013 will increase, just as it did in the second half of the previous year. During 2013 two huge office centers are to be completed and open their doors to the companies and the investors. These are the Vertigo Business Center and the office zone of Bulgaria Mall, both placed along “Bulgaria” Blvd. In this way the upper part of the boulevard will provoke the interest of the large companies that plan to open their offices in Sofia. A year later, in 2014 will be completed three other major office centers. These are Millennium Centre, City Tower and Capital Fort, which will add another 100 000 sq.m. of office area in Sofia.
The new, modern and functional offices will most probably be invested into or rented by famous IT companies and outsourcing companies, which were the main driving force of Sofia office market in the second half of 2012. The main characteristic of these business centers is that they offer large office premises that could be rented by big companies or ones that expand their business. According to a recent research, the main factor that plays role in choosing one business center to the other is the location and the easy access by public transport and automobile.
Kristalina Georgieva, the European Commissioner for International Cooperation, Humanitarian Aid and Crisis Response, who is also a Bulgarian has normal reaction about Sofia and Bulgaria being still not accepted in the Schengen zone. She gave an interview for Darik Radio. According to her, this is not the highest priority for the country at that moment and it is better not to do things in a rush. The European Commissioner accepts the fact that the member states of the European Community show no strong political willingness to allow entry of Bulgaria and Romania in the Schengen zone. Furthermore, she thinks that such decision could be taken in the next 12 or 24 months.
Kristalina Georgieva interprets the decision of the Schengen member states in two directions. The first one is related to Bulgaria’s willingness to solve it social problems, reduce the unemployment rate and make efforts towards economic growth. The second one is associated with the measures that the country has to take in order to improve the situation for the most affected and suffering social groups. As a European Commissioner, Kristalina Georgieva claims that the social priorities that have to be taken now include increase of the pensioners’ income and financial help for the families with small children. The country has to have stable economic and political situation and then make more efforts to enter the Schengen zone.
The banks in Cyprus will stay closed for two more days at least in order to prevent serious run in deposits. The local authorities hope that the system will start to function in a smooth manner again. Even when finally opened, the banks in Cyprus will be under strict control for keeping the financial system steady after the 10 billion Euro bailout. According to the Finance Minister of the country, the banks will have that control imposed for several weeks aiming to restrict the flow of money. The banks in Cyprus were closed due to an international rescue plan, according to which the two of the largest banks in the country need to be restructured. Their new policy will lead to serious losses for all the wealthy savers.
One of the banks to be restructured is the Bank of Cyprus, while the second one Laiki Bank has to be shut down. This was asked by the European Central Bank, the European Union and the International Monetary Fund in return of the bailout of 10 billion Euros. Those who have deposits in Laiki Bank will lose the savings above 100 000 Euros and those that have great sum s saved in Bank of Cyprus will be forced to contribute to the recapitalization of the bank. The crisis situation broke when the banking sector had grown eight times the country’s economy and the aim of the reforms now are for the banking sector in Cyprus to shrink. The banking sector in Bulgaria is stable, a fact that is backed with the new investors coming.
During year 2012 have been granted 170 permissions for the construction of office and administrative buildings in Sofia. Even so, the number of the office centers has been reduced with as much as 23% compared to the previous year. Last year have been completed offices of class A and B with total office area of 122 000 sq.m., which is a 6 % increase in the existing office premises in the capital. At the same time, the business centers that were granted permission for usage and were completed and ready to be used were 70 % less than the business centers that opened doors in the previous year 2011. Besides the Business Center Sofia in Mladost District, the other main business locations include the area around the boulevards “Bulgaria”, “Cherni Vrah”, “Todor Alexandrov” and “Tsarigradsko Schousse”. The central area of Sofia city offers less new office buildings.
Among the largest office centers in Sofia are the Logistic and Administrative building on “Cvetan Lazarov” Blvd. with its 4500 sq.m, the auto center KIA Motors on “Tsarigradscko Schousse” Blvd. with its 3 000 sq.m., as well as the multi-functional complex San Stephano Plaza with its 2 030 sq.m. There are also many postponed projects for office buildings with total area of 220 000 sq.m, which make 15 % of the total office premises in Sofia that are to be constructed in the future. The main requirements of the clients who are looking for larger offices include energy-efficiency and lower monthly bills for electricity, attractive price, good location and easy approach. The most active companies on the market are the call centers, the companies from the IT sector, consulting companies, tour agencies, telecommunication companies, private schools.
Bulgarian membership in the Schengen zone that requires no visas has been postponed for a certain period of time. This happened in the first week of March when the Interior Minister of Germany Hans Peter Friedrich expressed his concerns about the acceptance of Bulgaria and Sofia. According to him, the two countries, which are members of the European Union, are still not meeting the criteria in order to enter the passport free Schengen zone. He postponed the two countries entrance for the future, in case they manage to control the corruption levels and arrange for better functionality of the judicial system.
How can Sofia join the Schengen zone that was established in year 1985? This can happen in case all members of the European Union make a positive vote, in favor of the application. If one of the countries is against that acceptance like Germany in that particular case, then the membership of the country is postponed until the end of the year and even further. The Bulgarian authorities and the prior Interior Minister of Bulgaria criticized the delay, but confirmed that the country is ready for an open and constructive dialogue with Brussels. He expressed his hope that the progress reports for Bulgaria, prepared by the European Commission will be positive. Currently, the Schengen zone comprises of 22 countries from the European Union plus the countries of Switzerland and Liechtenstein, Norway and Iceland.