Big international companies are studying the Bulgarian market as an appropriate destination for opening new production facilities, according to Colliers International's Industrial Real Estate Market Overview for the first six months of 2012.

According to the report, Bulgaria is more attractive than other EU member states by virtue of its low production costs, the favorable tax rates, and the good geographical location.

During the reporting period, new production facilities were opened in Bulgaria mostly by international companies operating in the automotive sector.

For instance, Japanese car parts manufacturer YAZAKI bought the Miroglio factory in Sliven, while South African company ALC (Automotive Leather Company) opened a plant for luxury seats and interior for BMW cars in the village of Musachevo.

"Bulgaria will keep developing as an appropriate destination for outsourcing production activities," says Atanas Garov, CEO of Colliers International for Bulgaria.

"We are noticing an increased interest from Western European companies which are studying terrains and existing production bases that can be renovated," he adds.

During the reporting period, demand for industrial and logistics space on the domestic market is mainly driven by food retail chains, logistics operators, and pharmaceutical companies and the region of Sofia has proved most attractive.

The total stock of contemporary logistics, speculative logistics, and industrial space in Sofia increased by 15 000 sq m in first six months of 2012, mainly due to the subletting of logistics bases by their owners.

In the first half of 2012, no large-scale industrial and logistics projects were completed.

Apart from that, no new projects entered the construction phase of their development.

According to the real estate consultancy, the trend has been in place for the past 18 months, indicating a decrease in the volumes of trade by operators owning warehouse space.

According to the report, rental levels remained stable in the first half of 2012 and are expected to remain stable by the end of the year.

Asking rents for prime property in Sofia registered a slight decrease to EUR 3.8 per square meter per month.