Offices in Bulgaria to invest

10.03.2008

Source: HIGHFLIGHTS Magazine www.vagabond-bg.com

FOUR REASONS TO INVEST IN BULGARIAN OFFICE BUILDINGS

The cost of office space is still relatively low. In Sofia, a square metre ranges from 1,000 to 3,500 euros; in Varna, 800 to 2,500 euros; in Plovdiv, 600 to 2,000; and in Burgas, 700 to 2,100.
Rental demand is high and it is estimated that it will rise by a steady 30 percent annually in the next four years. At present, a square metre of rented office space varies from at least 10 to 40 euros in Sofia, five to 30 euros in Burgas and Varna, and in Plovdiv, five to 20 euros.
Prices will rise over the next two to three years, propelled by the shortage of completed projects which meet the needs of companies. The investment return rate on offices in Bulgaria is 9-10 percent annually, while in the UK. Spain and Central Europe it is a modest four percent.

BUSINESS AND ADMINISTRATIVE BUILDINGS RULE THE REAL ESTATE MARKET IN BULGARIA

Bulgaria, like Scotland and Estonia, is one of the European countries which have a major shortage of office space - only 10 sq m per employee. Despite the mushrooming new developments of office buildings and business parks, the lack of class A offices in Bulgaria has been a serious problem for the last five years.

Until the end of 2006, most companies rented Bulgarian apartments in blocks of flats, located usually in city centres. That year brought the beginning of a new trend with many of the unsuitable apartments being vacated for new premises, designed especially for business and administrative purposes. Sofia was the first Bulgarian city to experience this relocation craze. Due to the lack of suitable building land, the new office complexes were built on the outskirts of the city. Soon other major cities followed suit and more business parks were built.

The way Bulgarians understand it, a "business park" is an area, usually away from the city centre, consisting of 20-30 office buildings, parking space, logistical and trade facilities, and cinemas, which provides a variety of services.

Surprisingly, the largest business park is not in Sofia as is usual with innovative projects, but in Stara Zagora. This city, which has 152,000 inhabitants, is one of the four Bulgarian cities with an international credit rating and is the most important business area of Southern Bulgaria. Business Park Stara Zagora covers over 260,000 sq m and the total amount of the investment is 150 million euros.

Sofia Business Park is designed as a city within the city, situated on 220,000 sq m. It comprises 35 buildings with a total of 300,000 built-up sq m and 3,000 parking spaces. According to official information, the developer of Sofia Business Park sold it to an American real estate fund for 180 million euros, which makes it the most expensive real estate deal in Bulgaria. When the last building is finished, the park will be home to 400 companies and 10,000 employees. The park is located in Mladost IV - one of the previously least prestigious districts of the capital now turning into a desirable spot.

Business Park Varna is a much smaller project built on 67,430 sq m. What makes it unique in Bulgaria is the design of the offices in the multifunctional buildings which are open plan. The location of the only business park at the Bulgarian seaside is excellent - just 10 minutes from the centre of the city and the airport.

It seems that the new business parks and separate office buildings will turn out to be an excellent substitute for the unsuitable Bulgarian apartments. They provide comfort and prestige to the companies that rent them and even more important, they save money.

Currently, a square metre of office space in a business park in Bulgaria costs 9-10 euros on average, while the same area in an apartment can reach 40 euros plus. In addition, relocating to purpose built premises is cost effective. A company can rent the exact amount of space it needs without having to pay for a whole apartment.

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