By Theodor Troev, Financial Times
As Sofia expands to meet demand for high-quality office space and commercial premises, the district around the international airport is set for rapid development, reads an article in the Thursday edition of Financial Times.
Because the city lacks a central business district with easy access, adequate parking and modern office facilities, international companies as well as medium-sized and large Bulgarian enterprises have opted to move to the suburbs.
European Union accession, together with high economic growth, has reinforced investors' confidence in Bulgaria's prospects. Sprawling warehouses and glitzy showrooms are springing up around the airport, close to a new international passenger terminal.
Two high-profile foreign projects are intended to transform the airport district, five kilometres from the centre of the capital, into a fully-fledged business hub.
The EUR 250 M Sofia Airport Centre is Tishman International's biggest development in Bulgaria to date. The US-based group is building a landscaped business park on a 165,000 sq m site that will include offices, logistics space and a 250-room hotel.
"Our ambition is to turn the area around the airport into a dynamic and environmentally-clean business hub that will give a new image to the Bulgarian capital," says Alan Levy, Tishman's chairman.
Mirea, the local subsidiary of Alliance Realty Group, plans to develop Sofia Airport City - a 50,000 sq m complex of warehouses and showrooms topped by an 18-floor office block with a view of both Vitosha, the city's landmark mountain, and the Balkan range.
Alliance, which has also offices in Switzerland and has built projects elsewhere in eastern Europe, has already developed a hotel apartments complex in the ski resort of Bansko, and high-end residential properties in Sofia.
"Sofia, as the administrative and political centre of Bulgaria, has a huge potential for class A business and logistic centres," says Eytan Katzeff, Alliance's chief executive.
He says the presence of cutting-edge office and logistics centres will encourage local companies to move in. The EUR 30 M complex will be close to the new passenger terminal and a future metro station - the terminus of a planned extension of the city's subway.
Both Tishman and Alliance hope to build on the success of Business Park Sofia, the capital's first such venture, launched in 2001 by Germany's Lindner group. With 35 buildings spread over a 220,000 sq m site south-east of the city, close to Vitosha, the complex houses about 80 multinational companies and more than 100 Bulgarian businesses.
Last December, Gramercy, the US investment fund, bought the business park for a reported EUR 180 M in the country's biggest commercial property deal to date. Alfa Developments, a local company, was hired to manage the park.
Alfa Developments is already building its own €110m business centre near Business Park Sofia. The complex, Alfa Park, will include office, retail and residential buildings.
Some property companies that have focused on residential projects on the Black Sea coast and in ski resorts, are keen to develop commercial projects.
Bulgarian Land Development raised ВЈ23m last year through a listing on London's Aim market to develop holiday complexes in coastal and mountain resorts and a luxury residential complex in Sofia. This year BLD raised another ВЈ15m in a secondary offering with a view to expanding into commercial property.
Christo Iliev, BLD chief executive, says 1m sq m of office space is under construction in the Sofia area, but there is still a shortage of high-quality office premises.
Myles Summerfield, chief executive of LS Property, a Sofia-based company that focuses on retail and commercial developments in the Balkan region, says the highest returns have been achieved on investments in land around the capital.
According to Veneta Krasteva, organiser of Balkan real estate conferences and exhibitions, supply of office space outside the capital will increase even more.
Elitsa Panayotova, Alfa Developments' chief executive officer, says that outside Sofia, most development will be in Varna and Burgas, on the Black Sea coast, and Plovdiv in central Bulgaria.
Sistec Holding, a Bulgarian company, is building Business Park Varna, the first multi-functional complex in the country's biggest port, a fast-growing service centre for the Black Sea tourist industry.
Christo Georgiev, Sistec chairman, says rents will be 30 per cent lower than in Sofia. The €50m project has nine buildings across 120,000 sq m. "We have more than 60 companies as tenants, and demand for office space is growing. We see ourselves continuing to develop new projects," he says.
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