Archived Articles

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.

Global Real Estate Project
News Index

Directories
  Int'l Realty
  US Realty

Bulgaria is a country with extremely low real estate prices compared with other European and most Eastern European states. You can buy an apartment average by its size, quality and location in the capital city of Sofia for $15-20,000. The same "average" apartment in Moscow and Warsaw will cost you $50,000 and up. If we assume for a second that the other economic conditions in these cities are equal or almost equal (there isn't though two countries in the world with identical economic data and legislature), foreign investors could rush to buy properties in Bulgaria expecting higher returns in the future. Or at least they are told today to do so by most Bulgaria realtors.

But the investors are not coming to Bulgaria in big numbers. If the actual price level was the only criterion for attracting buyers then London or Paris could have experienced a sudden shift of the market winds in the opposite direction. Why pay thousands of US dollars for one sq. meter there if you can buy the same sq. meter for $250 in Sofia?

The minor point here to mention is that these aren't the "same" types of properties given the quality of the building, the quality of life in the city and the living conditions in the country in general. The major point (interesting for any investor) is that the property in Sofia in general so far hasn't proved to be a vital source of income. For some ordinary Bulgarians such investment may be a safe place for money against any unexpected financial storms (there were many in the last 13 years), but for the foreign investors who can choose between many options (stock markets, government bonds, properties, gold etc.) these low prices can't be the main motivation for buying.

Thus the investors have to be assured that their money won't freeze or diminish but will increase. There are some development projects in Bulgaria involving western capitals but their number is insignificant compared with the other Central and Eastern European states. Recent political changes in the country and especially electing a former communist as a new president will hardly affect positively these pessimistic trends. Furthermore, the plans by the key western economic and political organizations EU and NATO to delay the Bulgarian membership will make higher the wall that separates the country from its former communist allies in Central Europe.

There is a vicious circle reigning in the Bulgarian real estate market. The flat market means no or negative capital returns, which keeps at distance the investors. This in turn brings no new money into the system and the result is the lack of upward movement that can attract new investors.

Bulgaria needs some initial big push forward to move the market up. Given the strict financial framework imposed on the Bulgarian government* by the international financial institutions, such initial push can't be made by major government investment projects.

This can be made only throughout the private investments. To catch them, the country needs brighter perspectives for development. The first sign for such brighter outlook may come in November when NATO decides which countries will be invited to join the alliance next.

With or without Bulgaria as a member NATO will remain the same organization. Inside or outside NATO Bulgaria won't be the same country.

--------

* Bulgarian financial system operates under the terms of so called "currency board", which means that the local currency (Leva) is linked to some world-class currency (Euro). If the government wants to print 1 billion Leva, it has to have the same value in Euro. Thus if the government wants to finance some major project it has to borrow money, not to print it.

--------------------

See also the directory of companies providing real estate services in, and general real estate information of Bulgaria.