At the end of May it became clear that the Emiratis will be given access without visas to several countries, among which being Bulgaria. The decision was made by the European Union and thus Emiratis will now have access to the Schengen zone. This means that people from the UAE will have access to the European property market and potential investments. The currency advantage is on the side of Emirates and this makes the investment in European properties and businesses even more appealing.
This move of the European Union to allow residents of UAE to invest with no visa restrictions in countries from the Schengen Zone is very important. In fact the UAE is the first country that is granted free entry to the passport free area. Thanks to the new offer the Emiratis will have visa-free access to 26 countries in the Schengen zone and eight countries that are not yet members of the Schengen agreement, including Bulgaria and Romania, Cyprus and Croatia, Andorra and San Marino, Monaco and the Vatican. The free entry to the Schengen zone is for 90 days in any 180 day period. Naturally, Emirates has welcomed the agreement as this will save a lot of money and time to the travelers.
The percentage of the available offices of class A in the capital Sofia is dropping and the expectations for a lack of suitable office premises for 2015 are met. The increased interest in Sofia offices of class A, along with the numerous contracts signed and the insufficient construction of office buildings during the last couple of years let to almost full coverage of all office projects of the highest class.
One of the reasons for the decline in office vacancy is the weak investment in such construction projects due to the unstable political and economic situation in the country in 2014. That led to a record low level in the number of the completed office buildings of the highest class A. The newly opened Infinity Tower on “Bulgaria” Blvd. and the recently completed Capital Fort complex of offices on “Tsarigradsko Shosse” Blvd. are more than 80 % full. In general, in 2014 in Sofia was initiated construction of 16.5 sq.m of office space which is almost 9 % less than in the previous year.
On several occasions already the Deputy Prime Minister Meglena Kuneva expressed her believe that Bulgaria will be the next big accession in the Schengen zone. She said that in front of the representatives of the parliament and the government, as well as in front of ambassadors and representatives of different teams, who at one point have made efforts and worked for the accession of Bulgaria in the European Union. The country celebrated ten years anniversary of its full membership in the European Union in the spring.
According to the Deputy Prime Minister, the further activity towards better integration in the European Union is among the main priorities of Bulgaria. This includes the entry into the Euro zone, as well as the participation of the country in the European Energy Union formation, as well as in the formation of European Prosecutor’s Office. The Deputy Prime Minister Meglena Kuneva further stated that the Bulgarian administration plays an important role in the negotiation process and rely on the preparation of the Bulgarian Presidency of the EU Council.
When it comes to rental levels, Sofia is the cheapest place to rent an office. That fact, along with the great number of well-educated professionals with a good command of foreign languages, makes Sofia an appealing destination for the outsourcing companies. The average rental levels for Sofia offices in the heart of the city is 10.5 Euros/sq.m, while the top offices of class A are rented for 13 Euro/sq.m. Sofia remains one of the fastest growing cities in Europe, according to the London School of Economics and the Bloomberg Foundation.
The difference between the office rental levels in Sofia and in the other capital cities on the Balkan Peninsula is not big, yet the average rent for Sofia is lower than the rental levels that are asked for in the rest of these capital cities. On the top of this rental price rating stays the city of London with the average rental price of 85 Euro/sq.m.
Tsestka Tsacheva, the Bulgarian National Assembly Chairperson, recently made a proposal as part of the closing declaration of the Conference of Speakers of the European Union Parliaments, held in the capital of Italy Rome. According to that proposal, the European Union in its role of defender of the human dignity and the fundamental rights should take serious measures for keeping the external land borders of the EU on the most affected routes.
The Bulgarian National Assembly Chairperson stated that the cooperation between the countries of transit passing should be better and solutions have to be reached concerning the migration processes and the sharing of burden between the countries that are affected by the migration flow. She further confirmed that Bulgaria, being an external border of the EU, is among the most affected member states of the union. In that situation Bulgaria managed to present itself as a responsible partner that behaves as a member of the Schengen Zone, which greatly contributes to the European security. That is why Tsestka Tsacheva stated that there is a need for strengthening the idea about Bulgaria entering the Schengen zone. The Schengen area enlargement will strengthen the borders of the country and will be a signal for the European Union’ unity against the terrorism.
Recently made survey showed the tendencies for the Sofia office market and the expectations that the companies and the investors in this sector have. The researched showed that more than 80 % of the companies expected higher income in 2015 compared to the income a year ago. At the same time 60 % of these outsourcing companies working in Sofia are planning to increase the number of their employees in 2015, as well as to hire larger or more offices in Sofia. Most of these companies mentioned the location, the level of expanses, the parking and the easy access as the most important factors in getting a new office in Sofia.
At the same time the number of the available office premises in Sofia is not seriously increased. There are available offices of class A – yet they are only around 20 000 sq.m in number with rental levels between 10 and 14 Euro/sq.m, depending on the specific requirements of the company. The prognosis is for the outsourcing sector to become the main engine on the office premise market. There are also plans for the re-structuring of existing projects, in order for them to provide excellent office premises of class A.
In an interview for Dark Radio a few days ago, the Bulgarian Deputy PM and Minister of Interior Rumyana Bachvarova stated that Bulgaria is ready for Schengen and sooner or later that entry will become a reality. The Deputy PM further stated that the attitude expressed towards the membership of Bulgaria in the Schengen Area is changing and there is understanding now that Bulgaria is ready to be part of that travel free zone.
Around that time, the Deputy Prime Minister Meglena Kuneva had a meeting in Stockholm with the Morgan Johansson, Justice and Migration Minister of Sweden and Margot Wallström, the Foreign Minister of Sweden. During the meeting were discussed the efforts of Bulgaria to join the borderless area of Schengen. The Deputy Prime Minister of Bulgaria confirmed that Bulgaria relies on the support that Sweden can offer.
After the talks Meglena Kuneva stated that Sweden has committed to support Bulgaria for its Schengen bid in front of the other Nordic countries during the meeting of the European Council in June. Another aim at that meeting was the attraction of investments from Sweden into different projects in northwestern Bulgaria.
Sofia office market had 138 300 sq.m of office transactions in 2014. The net rented offices in Sofia from class A and class B are similar to the ones in 2013. The outsourcing sector showed and still shows positive attitude towards expansion and in fact more than 40 % of the companies asked showed intention for changing their office premise in Sofia for a larger one.
The interest towards the offices in Sofia has been very stable in 2014 and remains such in 2015. There is a serious demand towards the office premises of the highest class A in certain areas in Sofia such as Business Park Sofia, Tsraigradsko Schousse Blvd. and Bulgaria Blvd. The zone near Capital Fort Building is also within the focus of many companies looking for luxurious office premises in Sofia.
Half of the contracts signed concerning offices in Sofia in 2014 were for relocation of companies, 30 % of the contracts were by companies that are expanding their business in Sofia and 10 % from the contracts signed were by companies opening their first office in Sofia. A main engine in the office segment search are international companies working in the IT sector and in the outsourcing sector.
A few weeks ago Kolinda Grabar-Kitarovic, the President of Croatia thanked Bulgaria for the support the country showed for the membership of Croatia in the European Union and NATO. That came as a result from the meeting between the presidents of Bulgaria and Croatia. The two countries keep as priority the accession to the Schengen area of Bulgaria and Croatia. The two countries are now to join efforts in achieving that goal.
Once a political issue, today the accession of Bulgaria into the passport free zone of Schengen is a matter only of meeting the requested technical criteria. In fact, the two presidents agreed that Bulgaria and Croatia have met that criteria a long time ago and are ready to be full members of this travel free zone of Europe. That has been recognized by both the European Commission and the European Parliament.
The two presidents also agreed that the increase in the migratory pressure at the external borders of the EU does require a European solidarity. They also talked about the sharing of burden between the EU member states. The entrance into the Schengen zone of Bulgaria and Croatia will unlock the economic potential of South Eastern Europe and will attract more investments.
According to the Research Report made by Cushman & Wakefield issued in the beginning of 2015 and concerning the office market in Sofia in the previous year, the capital is very stable and the demand towards offices in Sofia is very serious. By the end of last year in Sofia have been completed several projects for office buildings that didn’t add plenty of sq.m to the existing number of office premises, yet that not lead to a serious increase in the number of Sofia offices.
The interest towards the offices in Sofia was concentrated towards offices with great location, with good number of facilities and great transport links. The companies that were driven the office market in Sofia in 2014, are the same which drive the market since the beginning of 2015. These are companies working in the IT sphere, in the outsourcing area, the energetics and in the pharmacology sectors. The number of the rented or purchased office premises in Sofia in 2014 was 154 000 sq.m, which is 40 % more than the previous year.
The rental levels for the offices of class A in Sofia in 2014 and again since the beginning of 2015 vary from 10 to 14 Euros / sq.m. Slight increase in these rental levels for the Sofia offices is expected in 2015. The estimated profits from the rental of the office premises of class A remained stable around 9%.
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