Despite the effects of the credit crunch and forecasts for an overall slowdown in economic growth, Bulgarian gross domestic product defied the expectations of economists by recording seven per cent growth in the first quarter of 2008, real estate consultants CB Richard Ellis said in a Sofia office market overview for the first half of 2008.

Bulgaria remains attractive to international companies that outsource and offshore parts of their activities to the country, driven by the availability of well-educated and experienced specialists at lower salaries as compared to Central and Eastern Europe, Western Europe and the US, as well as the low corporate and personal income taxes (both 10 per cent), among others. Therefore, according to the report, Sofia's office market will continue to develop actively at least in the next two to three years.

Office space completion in the first half of 2008 set a record, with completions coming in at levels of over 87 per cent of all completions in 2006 and 58 per cent of all completions in 2007, CB Richard Ellis said.

As a result of this large amount of completions, Sofia now has modern office stock of approximately 808 000 sq m, according to the company. This number will continue to increase, in view of more than 250 000 sq m scheduled for completion by the end of the year.

That said, the consultancy doubts that all announced office projects will actually enter the market by the end of the year. CB Richard Ellis expect that no more than 150 000 sq m will actually enter the market by the end of the year. Another 500 000 sq m are expected by the end of 2010, to make the total pipeline approximately 750 000 sq m.

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