LM Legal Services Blog

Office space, shops and industrial space are rented on average for 5 years in Bulgaria. In case of contracts with longer term, the rent is lower than the average and the tenants secure the use of the office for a long time. On the part of the owner long term rental contracts secure a guaranteed income from their property for a long time.  Rents in Bulgaria are updated by using a standard method of measuring of the inflation on the basis of the prices of goods, used within the EU. As in most countries the rent in Bulgaria is calculated on a monthly or on an annual basis. The terms for the extension of the contract are usually set in the contract but when the term of the contract expires and the tenant continues to use the space, it is considered that the contract has been extended indefinitely. In such case the contract is terminated by a notification given by any of the parties one month in advance.

Companies in Sofia which offer office space for rent have a special offer of 3 to 12 rent free months. Tenants who sign a contract with them do not pay rent for some time as a bonus.

The reason for this is the collapse of the rental market of office space in the last few months. According to the statistics, 12% of the office space on offer in Sofia is empty. The average rent of good quality office space is 13-14 EUR per sq m.

Many retailers started leaving the shops in the central parts of Sofia which they have hired and look for new shops in the shopping centers and streets in the outskirts where the rents are lower. Many retailers have terminated their rental contracts for their shops in the central Vitosha Blvd, Solunska, Graf Ignatiev and Rakovski Streets. Most of these retailers sell mobile phones, clothes and shoes. In the last years there has been a boom the sale of mobile phones but now sales have drastically dropped and many shops have closed. At the moment the rent of a shop on Vitosha Blvd is unacceptably high – between 70 and 100 Euros per sq m – while in the shopping centers it varies between 30 and 70 Euros per sq m. It is expected that due to the lack of tenants the rents of retail space in the central parts of Sofia will drop.

The rents of apartments in Sofia and Istanbul are almost the same. An apartment of 75 sq m in Istanbul rents for 431 Euros per month, while the same apartment in Sofia rents for 400 Euros per month. Renting in Instanbul, however, is better because tenants pay for the living are, while in Bulgaria, they also pay for the common parts.

Purchase prices of properties in Sofia and in Istanbul are also similar. A 75 sq m apartment in Instanbul sells for about 80 000 Euros, while in Sofia it sells for 78 400 Euros. The prices of larger apartments in Sofia, however, are by 20 000 Euros more expensive in comparison with Istanbul. An apartment of 120 sq m in Sofia costs 158 000 Euros while in the Turkish megalopolis it costs 123 100 Euros. The reason for this is the increased demand for bigger apartments in Sofia.

The rent of industrial plots of land in Sofia have increased by 8% or by 0,5 Euros (1 lv) per sq m in 2008 in comparison with 2007. The average rent of industrial land in the country is 6.5 Euros per square metres. This is by 1 Euros more expensive than the neighbouring countries. The reason for this situation is that more and more companies have been looking for industrial land while there have not been many plots on offer.

This year the tendency outlined by the recession is owners first to find tenants and only then to start turning their land into an industrial one. Estate agents expect that the demand for industrial land will not be affected by the recession, as it is expected that more companies will relocate from Western into Eastern Europe.