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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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Several Balkan capital cities show staggering average and maximum prices for residences. In Bucharest (Romania), the average residence is sold for more than $2,000 per sq. meter, with the most expensive properties sold for more than $4,000; for Tirana (Albania) the corresponding numbers are $1,500 and $3,500; for Sofia (Bulgaria) - $1,500 and $4,500; for Belgrade (Serbia) - $1,200 and $3,200; for Podgorica (Montenegro) - $1,500 and $4,000; for Skopje (Macedonia) - $1,300 and $2,500. The numbers, at first, don't seem so staggering; in fact, in Europe there are cities with much more expensive residential properties, e.g. London and Paris. Unlike these continental champions, however, most Balkan capitals lack many preconditions for being so expensive. In fact, some of them are as expensive as Vienna or Berlin, capital cities of countries with much stronger economies, and much more affluent middle class. Perhaps, this is the key for understanding the Balkan paradox.

Human nature has an important flaw of trying to link similar outcomes with similar causes, and to apply those causes that exist in close enough environments to situations far away from our immediate experience. To simplify this statement, if we are convinced that certain things happen because of certain causes, and we have plenty of reasons to believe in this given what's happening in our neighborhood, city, or country, we tend to think that similar outcomes in far away countries might have the same causes. To illustrate this point, if we tend to link the real estate market with booming economy, higher demand by more people and stronger middle class with more disposable incomes, we'll tend to think that wherever the real estate shows such outcomes, the same causes will produce it. Well, the problem with the Balkans is that the economies of the most post-communist countries aren't as strong as the countries with similar levels of market development; as for the middle class in these countries, it varies from not very significant to barely existent. What's the reason for this paradox?

It's hard to establish a unified model explaining it, because as we'll see, some regional capitals have more of particular causes and less of others. Nevertheless, they all at the end 'show' unusually high market levels. At the bottom, there is some distortion coming from the statistical methods. An average price of $1,000 per sq. meter in a market of 100 properties may mean that they all are sold for $1,000; or that 90 percent are sold for $900 and 10 percent for $1,900; or 80 percent are sold for $500, 10 percent for $700, and the rest for $5,300 per sq. meter; this combination of different possibilities is infinite. These three pictures, however, show three different markets, egalitarian, moderately diffused and highly diffused. Knowing that a Balkan city X has an average market level of $1,500 and the highest market end of $4,000 per sq. meter doesn't say much about the median price, the price that divides in half the number of buyers. In fact, this median price may vary on the scale much below or above the statistical average. In a market that has at least some very rich buyers ready to pay a lot, in such a market the highest end will pull up the market, although most of the buyers may still be rather poor, or at least substantially poorer than the official average would suggest.

That's exactly what's happening in the Balkans. A small social group, hardly more than 5 percent of the total population, with extremely high incomes, only by the local standards, occupies a predominant place on the market, thus determining the statistical average and the highest price on the market. The reason why such a small group disposes with such significant resources, after decades of egalitarian social policy, isn't a matter for discussion here. Just any society in the world has such upper class; the problem with the Balkans is that they rather lack middle class in the Western meaning, or 70-80 percent of the population that gain sufficiently not to worry about the food (less than 20 percent of their expenses) and paying the rent or the mortgage (another 30-35 percent of their expenses). There are people in the Balkans that qualify for this status, but they are nowhere near the middle class share by the Western standards; this different basically makes sense, given that the countries under question are at barely a third of the economic level, some are even below, reached by the Western Europe in general.

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