The Bulgarian office market, ranked 54th in the world, has been under severe pressure during 2009, according to the latest annual survey by real estate giant Cushman & Wakefield.

The principal reasons for this are a combination of reduced commercial demand and the completion of many new projects.

This has caused rental levels to fall in the past year by over 20%. An upward trend is likely after mid-2010, according to the Cushman & Wakefield (C&W) survey.

With office tenants in the capital, Sofia, paying an average annual cost of EUR 205 per square meter, or a monthly charge of EUR 17, Bulgaria slipped from 49th to 54th in international cost rankings over the period of a year.

According to the report, "Office Space Around the World 2010", the average rent for prime office space in Sofia is EUR 13,5 per sq.m. per month, excluding VAT.

"Despite substantially lower market rents of office space in Bulgaria in 2009-2010, we are yet to see serious interest in new office projects in Sofia," said Sergei Koinov, Executive Director of Forton International, which represents C&W in Bulgaria, Serbia and Macedonia.

"We predict that with the improvement in the economic situation of the country, which is expected in the second half of 2010, and completion of part of the new projects, to realize a significant volume of transactions of the office market, which will position the active companies in long-term economic conditions," he added.

The most expensive cities in terms of office space are Tokyo, London and Hong Kong.

Regionally, Serbia, which is ahead of Bulgaria by one position in 53rd place, slipped from 47th position in 2008; Croatia fell two places - from 48th to 50th. Greece moved up the rankings by two places, to 18th place compared to last year's 20th.

There was a worldwide decline in the trend that determined the office markets in 2009, according to the consulting company's data.

Globally, the fall was about 10% - the first mass decline recorded since 2003. The trend has affected every market in the world to varying degrees.

According to Cushman & Wakefield, rent levels in 2009 had the lowest decline in North America -8%, while South America registered only 5%. For Europe, the fall was about 11%, mainly due to the strong decrease in Central and Eastern Europe.

Sergei Koinov remained cautiously optimistic about future trends, predicting they would again become positive.

"Rental levels are expected to reach their lowest point in the middle of 2010, and then we will witness the stability, and in places even growth. The current year will not go without risks and challenges, but it is still expected that 2010 will be a period of recovery and optimism for owners and tenants," he concluded.

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