As of beginning of March, Sofia and Bucharest cities have remained outside the Schengen zone. Restrictions have been set again, which remind people from Bulgaria and Romania about the separation before year 1989. According to Germany, the two countries have still issues to arrange. Bulgaria’s main problems are the organized crime and the corruption. Locals however, find this blocking offensive and point poverty and the low standard of living as the real reason that made the European countries so reluctant to let Bulgaria into the Schengen zone. The country’s bid to be admitted however is postponed, but not blocked forever.
In October 2012, Germany also called for certain travel restrictions for the countries on the Balkan peninsula, including imposition of visa requirements. Even if this idea was shared by other members of the European Union like France and Luxembourg, Belgium and the Netherlands, and even by Great Britain, it was later dropped. This was so, as these countries were more afraid of the Roma population trying to enter their territories rather than the regular citizens from the Balkan countries. Thus, no such restrictions are applied today. Bulgaria is hopeful to enter the free travel Schengen zone in the future, when it finally meets the requirements of the European Union members.
According to Reuters, Cyprus will ask Russia for a new loan in order to avoid a financial bankruptcy, as the island country rejected the 10 billion Euro bailout offered from the European Union, which increased the risk of bank crash and default. The negotiations with Russia are still going on even if the Finance Minister or Cyprus has not made a deal with his Russian colleague the first time. Currently Cyprus has a 2.5 billion euro loan from Russia, but has asked for five-year extension and a second 5 billion Euros loan. At the same moment, Russia has a serious interest to help the banks in Cyprus, as a great deal of the billions is owned by Russian individuals and businesses. In case the country does not take an aid plan soon, the Central European Bank will have to take measures on the Cypriot banking sector.
Cyprus has already rejected the plan offered by the European Union, according to which a levy had to be put on all deposits in order to collect 5.8 billion Euros. Actually, not even one of the lawmakers in Cyprus voted for the bailout scheme offered by the European Union. This is the first time when a national legislature rejects the assistance of the European Union due to its harsh conditions. In the last three years the European Union had offered helping plans to Spain and Portugal, Ireland, Greece and Italy and they all have accepted the measures in order to receive the aid. In general, the European Union usually achieves the outcome they are up to by pressing the smaller countries, but Cyprus is looking for another way out of the crisis.
The construction of new big office buildings in Sofia is currently in a waiting policy situation. This is so, as the demand is towards offices in small centers of a mixed type – with residential zone and trade zone with shops. Currently the projects for new office buildings are postponed, until there are more positive prognosis for the real estate market. With an interim government and elections coming in May, the political situation in the country seems unstable and thus foreign investors will most probably arrange for temporal postponing until the situation gets clearer. The real estate brokers and property managers confirm that this might lead to delay in the sale or the rental of the new office premises in Sofia.
In 2013 two high-class office buildings will be completed along Bulgaria Blvd. – the office zone of Bulgaria Mall and Vertigo Business Center, which will form the area as one of the most prestige business and office locations in the capital Sofia. Three additional business centers of the same high class are expected to be completed in 2014. In the last few years, the projects for new Sofia office buildings are difficult to be completed. Currently, the office projects in Sofia with postponed construction feature area of almost 220 000 sq.m. At the same time the small companies are looking for smaller office centers and working premises with area varying between 80 and 200 sq.m. The main criteria for choosing a certain office are the good location and easy access, the attractive price and the presence of a parking.
Bulgaria is still out of Schengen after Germany opposed to it joining the no borders area. The regime of travel without borders is left for the future, after the meeting of the interior and justice ministers of the European countries in Brussels in the beginning of March. In order for the country to be accepted in the Schengen zone, all ministers have to be unanimous in their approval. According to Germany, Bulgaria has still not met the fundamental conditions required for being accepted in the Schengen area and has to be more decisive and strict when fighting against the corruption in the country. The annual report of the European Union declared that both Bulgaria and Romania have shown progress, but still have to achieve more.
The concern of the German Minister Friedrich, there is a risk that citizens who are outside the European Union can enter Bulgaria and then go to the rest of the European countries if the borders are open and there is lack of control. He claimed that he wants to keep the European Union from such invasion of immigrants. The Schengen zone allows for free travel with no visas and no passports being checked at the borders. Besides that, all European Union citizens are allowed to remain in any state in order to study or to work. Currently, the Schengen zone covers 22 states, members of the European Union, which means approximately 400 million residents. The countries that are not included are Bulgaria and Romania, Cyprus, Ireland and Great Britain. On the other hand, four countries that are not members of the European Union are part of the Schengen agreement and these are Norway and Iceland, Liechtenstein and Switzerland.
Even if the free movement of people from the European Union within the Schengen area is now largely achieved, there are a few exceptions. Under certain circumstances, internal border checks are introduced again for a temporary period of time. For example, the moments when such check borders were used are during the Football World Cup and the European Championships, as well as during the NATO summits and the meetings of the Group of Eight. In the summer of 2012, Germany, France and several other countries used border checks when a member country of the European Union allowed refugees that were too many. Such measures however, could be used in case there is serious threat to the public safety. For example, Germany and France were afraid that Greece was no longer able to patrol its border with Turkey in an efficient way due to its inner problems and crisis. In general, the countries that are part of the Schengen zone are trying to be as careful as possible, since when a person is already inside the Schengen are, there are no more borders or other checks applied.
Currently, Bulgaria is still outside of the Schengen zone, but will eventually become one in the future. The country is trying to answer all requirements that are applied, to fight corruption on all levels and to be strict with the crime fight. The country now has a new, interim government and new elections coming in May.
The ruling party in Cyprus lacked just one vote in the parliament to push on the bailout conditions it agreed upon on Saturday. The main dispute is about the one-off tax measure on deposits in the country, that are expected to gather some 5.8 billion Euro in order to stabilize the banks. The initial reports were for two rates – 9.9% for deposits over 100 000 Euros, and 6.7% for those below this sum. Now Cypriots try to renegotiate these terms in favor of the smaller depositors. The unofficial consensus is for 12.5% on the deposits above 100 000 Euros and 3 % on those below that sum. Several authoritative business newspapers predict even a higher rate of 15% for the deposits over 500 000 Euro. According to the governor of the Cyprus Central Bank people with relatively small amounts in all banks should be exempted from tax.
Today will be organized a teleconference between the finance ministers and central bankers of the European Union area, during which shall be discussed whether the new ideas are acceptable. The European Central Bank announced that Cyprus has to decide how and by whom it will collect the sum of 5.8 billion Euro. The finance ministers and the creditors in the face of the European Commission, the European Union and the International Monetary Fund are ready to confirm their promise of 10 billion Euros, but first they want to hear the exact figures and arguments that the measure will be efficient. The financial services in Cyprus make 70% of the gross domestic product. Currently, there is no such statistics for Bulgaria.
The Sofia office market is developing well and today we can point out a few tendencies that characterize it. In the last couple of years in the city of Sofia have been constructed smaller, boutique-type office buildings for mixed usage. This means that these buildings offer residential zone and office zone. The main reason behind that is that the investors are trying to answer the demand of the buyers in the city of Sofia. In year 2012, the focus was on small to middle-sized office premises with coverage of 80 to 200 sq.m of area. Of course, there was also a demand for large offices with size exceeding 1 000 sq.m, mainly from certain companies from the IT sector and from companies that were looking to expand their business. In general however, the large office buildings in Sofia often remained with too many large offices that had no companies to rent them. At the same time the smaller offices were answering the needs of the small business. According to the experts, in the near future there will be a balance between the supply of office centers in Sofia and their demand.
In the last few years, many companies in Sofia decided to relocate their offices from the old buildings and locations into modern business centers due to the better working conditions and the reduced office rental levels in Sofia. For example, in year 2012, the offices in business centers of class A and B have reduced their selling prices with almost 7.5 %, compared to year 2011 and their rental prices with almost 16 %. In the end of last year, the average price of the office premises in Sofia was 5.80 Euro per sq.m. Currently, the office market in Sofia city is stable and no major changes are expected. The investment in Sofia offices is attractive and the companies are improving their offices and looking for more and better extras and facilities.
The parliament of Cyprus is to hold an important emergency session this afternoon in order to discuss a bailout scenario. The plan is expected to save the country from bankruptcy but the deal is not to the liking of the people. The bailout deal is expected to come into force on Tuesday, 19th March, when Cyprus will get a financial packaged of 10 billion Euro as agreed with the European Union and the International Monetary Fund. The debt is expected to be 100 % covered by year 2020.
The parliament aims introduce a one-time levy on the deposits over 200 000 Euros in the Cypriot banks with 9.9 % and all the rest deposits with 6.75 %, thus aiming to collect around 5.8 billion Euros. The plan aims to compensate the owners of deposits by offering them shares in the bank. There will also be taxation on the interest rates, that generate income form the deposits. The bailout plan for Cyprus further includes an increase from 2.5 % to 12.5 % in the nominal corporate tax, aiming to collect additional 200 million Euros a year.
There are expectations that the International Monetary Fund will probably help Cyprus, but the amount is not specified yet. Russia is expected to help with the extension of five years of the loan and a reduction of the interest on it from the current 4.5%. At the same time, Nicosia may be forced to privatize its telecommunications company, ports and energy company. Until 2018, the banking sector in Cyprus should match the average size of the banking sector in the other EU countries. Currently Cypriot financial sector is eight times larger than the national economy, compared to the European Union where it is about 3.5 times. At the same time the situation in Bulgaria remains stable, with the new interim government already in charge and operating.
In year 2012, the office market in Sofia city was characterized with dynamics as far as the renting of administrative premises is concerned. The number of the rented offices last year exceeds the number of the offices that have been taken in 2011 and 2010. The total square surface of the rented offices in Sofia for year 2012, the capital of Bulgaria, is estimated to be 76 500 sq.m. On these basis have been calculated a 30 % increase in the rental levels of the office premises and 1.5 sq.m increase in the offered office premises area. Currently, in the beginning of year 2013, there are 330 000 sq.m. of offices offered on the market, with most of the business premises being concentrated outside the city center, in the business zone of Sofia.
The main factor that has influence on the rental market of Sofia offices is the unstable economic situation in the country. Because of that, two offices out of ten are empty and in search of a company to rent them. Later in 2013 and in 2014 there will be several big projects for office buildings that will be released, like Bulgaria Tower with its 20 000 sq.m, followed by Vertigo Business Center with its 18 000 sq.m. In the end of 2014, the office market will welcome three other projects City Tower Capital Fort and Millennium Centre, which are expected to add another 100 000 sq.m. of office premises. These business buildings will be constructed according to the latest technologies and will have all extras required for making business. The offices there are expected to be rented or purchased by registered IT companies, off-shore and outsourcing companies.
Located in Luxembourg, the small village of Schengen played an important role back in year 1985. Then was signed the first agreement among several countries of the European Union that aimed to remove the border controls between these countries and to get common borders. The agreement was named after the village and the free travel zone became popular as Schengen zone. Ten years later, in 1995, the countries that applied these rules were eight. Throughout the years, their number increased to twenty-two states, members of the European Union but also non-members such as Liechtenstein and Switzerland, Iceland and Norway. Other countries, such as Ireland and Great Britain, do have border controls but are still sharing information with the countries from the Schengen zone. Bulgaria, along with Romania and Cyprus are waiting to be accepted. In order for Bulgaria to be accepted in the Schengen border free travel zone, it still needs to cover certain requirements and standards.
The Sofia based politicians are making their best to answer the requirements and to make sure that Bulgaria secures its borders with the neighboring countries that are not members of the European Union, in order to prevent crime and to stop the entry of illegal immigrants. Bulgaria has already gone through a certain transition period of several years, but in the beginning of March, its entry in the Schengen zone was postponed.
Schengen zone could be entered from many parts of Asia and Africa through a special visa. This is also valid for countries like Turkey and Russia. People from Australia and Japan, North and South America can enter the zone without a visa. At the same time, the Western Balkan countries except Kosovo, do not need visas for the Schengen area.
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