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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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The forecast for the real estate market (both commercial and residential) in Western Europe in 2002 won't be so shiny as was at the beginning of the last year. The experts say that the economic development rates on the continent although exceeding the corresponding numbers in the USA will be lower than in the previous 12 months (especially in the first half of the new year). The reasons for this economic slowdown are various - from the recession in America and the continuous depression in Japan to the investment fears following the 9/11.

On the residential market we expect the properties to keep their actual price levels in most EU countries and in some major cities even to increase them by 1 to 3 percent in real terms. The best performer is expected to be London even with the expected slowdown of the price risings (from 8 percent rising in 2001 in real terms to 3-4 percent in 2002).

These modest gains in the countries of the Eurozone against any economic logic can be explained mainly by the fact of the Euro notes and coins introduction on 1/1 and with the related process of money laundering. According to official statistics even in the most developed European countries like France the share of the 'parallel' economy is 16 percent, which represents more than $200 billion per year (in other countries like Greece the share of the 'parallel' economy is much more important).

Given the need to clean this money many illegal or semi-illegal businesses will prefer instead of going to the banks to exchange the money, simply to buy a second residence or many residences or assets in different countries in the first quarter of 2002 when the old notes and coins are still in use as legal tender. This thirst to find properties for the useless old money will push higher the prices.

On the commercial real estate market in Europe things look the same or even worse than on the residential market. The upward developments of the office and retail facilities rents will slowdown from 5-10 percent in real terms in 2001 to 2-3 percent in 2002. Here the major exception is Dublin with higher than average volatility and possible rents' downturn because the city is more dependent on foreign (mainly American) investors and many of them are still to announce whether or not they will cut their business plans for 2002.

The European Central Bank has reduced the main interest rates in the Eurozone in 2001 and more reductions are expected in the coming weeks and months. The experts say that this financial easing will stimulate the European economy by the middle of the 2002. They expect that the revamped economic activity on the continent will push up the prices and rents.

On the other hand, we expect the acceleration of the process of corporate mergers and acquisitions on the European level related both with the economic slowdown and the Euro introduction. This process will in turn push down the prices and rents because the main reason behind any corporate merger is to save on the administration expenditures (including office space rents).

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