The vacancy rate for office property in Sofia is likely to increase to around 23-28% by the end of this year as a result of several new office buildings opening in the next few months.
These new Sofia office buildings will bring the total amount of office properties in Sofia to around 1,250,000 sq m. The biggest amount of vacant office blocks is in the suburban parts of Sofia and in the Class A office category.
In 2010, the building of office properties continued despite the poor economic situation and several major projects that were started during the boom of 2006-2008 have just been finished recently. As a result of the increased supply the rental rates have dropped and now average around 10-12 euro per sqm for Class A office and 5-7 euro per sqm of Class B offices. As more supply comes online the rental rates for Sofia properties is expect to fall further.
Bulgarian property prices for office increased substantially as Bulgaria entered EU in 2007. This was driven by high demand from new companies relocating to the tax efficient Bulgaria. 4 years later prices have reduced by about 30% and investors and companies are once again looking to purchase Bulgarian properties especially in the commercial sector. Compared to other countries in Eastern Europe and the Balkans, Bulgaria has a very liberal tax structure and with commercial property once again looking attractive investors are starting to reappear on the Bulgarian property market.
The appeal of lower prices, stable government and low tax rates is sure to bring more and more investors in Bulgaria property.