It seems that the big companies are moving towards the end of Sofia, near the Ring Road. There are already several large business centers, except the Business Park, since there are serious plans for the construction of good and convenient road connections. Thanks to the good infrastructure, this area of the city is expected to attract more business companies and thus the new office area is expected to be near the new section between the big furniture store “Ikea” and the future “Sofia Ring Mall”, which is expected to become one of the largest entertainment and shopping centers in Sofia.
Besides the business companies that are now coming to the Bulgarian capital and are looking for offices in the high Class A, the region is also provoking the interest of many major retailers of furniture and equipment. Overall, the area between the Business Park and boulevard “Bulgaria” is formed as a new and modern office and shopping area, where except the buildings already familiar to us like the Business Park and the stores “Technopolis” and “Como”, and the Cinema Complex “Arena”, soon there will be many new office buildings and large stores. Before this happens however, the area presents a nice selection of completed office centers. There is a tendency these centers to be rented by the new international companies who are just entering the Bulgarian market before new business areas to be constructed.
Over the past few months the building companies in the capital were occupied mainly by finding new tenants for the existing office buildings and business centers they have built, rather than making new investments. In other words, the trend that is clearly seen is for a slow pace market when office construction is concerned and a focus on the newly established office areas in Sofia. However, the capital remains the main city for the large office projects and continues to be a preferred destination for the big foreign companies who now enter the Bulgarian market.
Currently, there is a significant number of the developers who do not release their new office buildings before finding tenants for them and signing a long-term contract. The new tenants are often companies that come from low-end office buildings in search of better conditions and companies working in an area unaffected by the crisis and consequently expanding its staff. These days the rental levels of Sofia offices from the middle and the high class is about 8-11 Euro per square meter as the rent levels of the top offices remain stable.
The office market in Sofia faces bold relocation of companies in search of a much better quality, but possibly at a reasonable price. Naturally, the offices of high quality and a central location keep the high interest of the companies, while the offices that offer not so good conditions remain empty for a longer period of time. In the end of the last year and in the beginning of this year, there is a high interest in the option of renting virtual offices, since this service is becoming more and more popular among people with flexible businesses.
This year started with more than twenty percent vacant office space in Sofia. According to the prognosis, many companies are about to change their contracts and many new companies are to come on the market in the coming months. These companies are expected to be from the IT sector and different outsourcing companies. The contracts that are expected to be changed were signed during the crisis, so tenants are expected to have many demands for amendments thereto. This will be so, because companies today can easily find a better alternative and modern office space. The virtual offices in Bulgaria are also attracting considerable attention, particularly because of the lower costs.
Currently, the vacant offices are about 330 000 sq m, which is more than during the previous years. The expectations are for around 60,000 sq m of these offices to be rented this year. At the same time are released new offers for high-end office buildings, but they are not as many as during the pre-crisis period. The transactions made are with companies that are moving into new, more spacious and modern business centers. The expectations are for reduced rental levels. The real estate agents expect a few big companies to enter the country and to provoke the office market.
Currently in the city of Sofia could be found more than 330 000 sq.m of offices available for rent. Among the office buildings there are some business centers which can not find long term tenants because of their poor location or lack of parking spaces. At the same time there is a strong interest in green offices and the high quality offices, which have provoked the interested of the international companies that have entered the Bulgarian business market. That is why the vacant offices of the highest class A are not many. This creates a niche for building of Class A office building projects, that are expected to be easily rented or purchased in the near future.
The available offices in Sofia are suitable for those companies who are looking for interesting design, guaranteed comfort and efficiency. Often, the companies have a choice of three or four locations to pick from that offer high quality office environment. The market for Sofia offices is quite active, where the demand is for ones in the city center and in the business districts. The location is the main criteria, followed by the quality and the type of the office. Since the companies’ budgets for the rent of offices is reduced, these companies are trying to optimize the area available and to use their resources in a rational way. Overall, the number of the transactions made is higher than the one in the previous two years. The interest in the virtual offices in Bulgaria remains stable.
The serious supply of office buildings in the city of Sofia in the last few years formed several different segments in that sphere of the real estate business. Several projects of office buildings of the highest quality are being preferred by the companies, while other projects are turning into outsiders. Those investors who have been smart enough to put their efforts on the planning and have carefully chosen the location of their office buildings, and have further insisted on the easy access, the good technical characteristics and the available parking options are now attracting the attention of the companies.
Currently, the companies can choose from more than 350 000 sq.m of available offices for rent or approximately thirty percent of all offices in Sofia. A great part of these offices are located in organized business centers in the outskirts of the capital. The prognoses are that the high-quality office buildings will get tenants in the next two years and will keep their popularity. At the same time, it is expected that the offices of the highest class when it comes to location and amenities will face an increase in the rental levels. Part of the business companies that are still hesitating whether to open offices in the country are currently using the option of the virtual offices in Bulgaria. Once they start to feel more secure they will most probably open offices in some of the high-class office buildings in Sofia.
The city of Sofia is among the European capitals with the greatest number of available offices of the highest class A. In the last year 2011, the rental levels of the offices have been stable. The same tendency could be seen at the office markets in Central and Western Europe, as well as in Russia. The office markets in Moscow and London have faced an increase in the rental levels of approximately ten per cent, while the office markets in Sofia, Athens and Dubai has underwent a decrease of eight per cent. The reasons for that for the city of Sofia is not the lack of interest but the increased number of offices available for rent. The tendencies for Sofia city are for a great number of the available offices and stable return levels of the investment.
Approximately 1.4 million square meters is the overall area of the offices in Sofia with more than 27 000 sq.m of new offices being completed in the last months of the previous year. The rental market is still in a slow phase and there are not many contracts sign. Those, which show interest in renting a new office, are usually companies that want to relocate and have access to better conditions and more extras in the office buildings of class A in Sofia. More than 150 000 sq.m of offices are to become completed and functional until the end of year 2012. The rental levels of the offices are expected to remain stable. The interest in the virtual offices in Bulgaria is also keeping its good levels and many companies are choosing that formula for making successful business in the country.
The offices in the Sofia business centers offer stable rental levels. The prices of the office premises of the prestigious class “A” cost about 12 euros per square meter for rent, while those of class “B” cost approximately 8 Euros per square meter. There are many companies that are trying to renegotiate and thus to reduce the level of their rent. There are also companies that benefit from lower prices and move from lower to higher class offices, mainly in the offices of the class “A” type. The available offices in the capital are about 25%.
The demand for offices along the major boulevards in the capital, as well as in the center has slightly decreased. The same applies to the demand for office space in the business centers of Sofia, which are in placed in other parts of the capital. At the same time, there is interest in the virtual offices, which provide flexible solutions for companies with specific needs.
For some time now, the offices in Sofia are in the focus of interest of the major outsourcing companies. These companies provide many new jobs in Bulgaria, and are renting a great part of the office space in the capital. The large companies usually register companies according to the requirements of the local laws, and thus step on the local market. They often create new job positions by taking advantage of the difference in the levels of wages in Sofia and those in the more developed economies. This, of course, is very good for the office market in Sofia at a time when most Bulgarian companies are shrinking their consumption and staff and transfer to smaller offices in less prestigious areas. Of course, there are small foreign companies in the IT outsourcing sector, which closed their offices in Sofia and opened virtual offices or moved to other countries where their costs will be even lower.
Most of the outsourcing companies in Sofia, however, have concentrated their activities in Bulgaria and occupy less than 40 percent or approximately 30,000 sq.m of office space from the beginning of this year until now. In other words, these big companies have very good influence on the labor market and the office market. Currently, large office projects such as the European Trade Center to “Tsarigradsko shosse” Blvd. is three quarters full and all of its five buildings are open. This is just one example of the many available commercial buildings in Sofia city.
According to the market research, Bulgaria ranks fourth in this part of Europe as a good place for investment and outsourcing. Aside from the financial side of things, the low taxes and the stable economy, Bulgaria attracts with its well-organized and stable business environment. In the offices of the outsourcing companies in Bulgaria work employees with good education and high work culture that are paid reasonably.
Now that the deadline for the company re-registration in Bulgaria is near, many company owners in the country should act quickly and arrange that procedure. Otherwise, they will have serious troubles with the ownership of their properties. All the companies, which are not included in this new online register according to the regulations of the Trade Register Law, shall be removed from the register of companies in the country. This will also result in a loss of the company assets, which includes properties as well. This is so, because the companies that have not went through the re-registration process shall be blocked and will not be able to sell their properties.
How can you re-register your company? This you can do in two ways – you can either come to Bulgaria or arrange everything from abroad. Since travelling can be time and money consuming, you can send a signed Power of Attorney to our lawyer, who can represent you and do that for you. The lawyer will prepare all the necessary documents ad will send them to you for a signature. Since the deadline is near, make sure to act quickly and arrange everything on time. Once the company is re-registered, all its financial reports since year 2007 should be published in the online register. The deadline for this is three months and that service, as well as other tax advisory services in Bulgaria are also offered by our company.
The deadline for the process of re-registration of companies in Bulgaria is at the end of the year or 31st December 2011. In case of failure to complete that procedure, the owners of companies might lose them and also lose the properties that are bought on the name of the company that is not re-registered.
This is important information for all those investors, who have purchased properties by company registration in Bulgaria before year 2008. According to the Trade Register Law, which is applicable to the Bulgarian companies, requires that all existing companies must go through the process of registration into the new online register by the end of this year.
According to the regulations of that law, which came into force in the beginning of year 2008, the companies which are not added to the new online register shall be removed from the register of companies in the country and will lose their assets, which includes properties as well. The companies that are not re-registered shall be blocked and will not be able to perform any activities at all, including sale of their properties.
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