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Simeon Mitropolitski is a Canadian analyst, of Bulgarian descent, and former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with the hot political and economic topics, both Bulgarian and international. ("A Royal Solution." World Press Review. June 1997, provides English versions).

He was part of the first group of Bulgarian intellectuals that began the opposition movement that finally put an end to the communist regime in the country, and in 1996-1997 participated in the international monitors' teams during the elections in several Balkan countries - Romania, Albania and Bulgaria. In 1999 he was among the few Bulgarian journalists that supported NATO military operation against Yugoslavia. In 2002 Simeon and his family emigrated from Bulgaria to Canada where they now live in Montreal, Quebec.

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Real estate in Bulgaria is an endangered species. Perhaps it should be added to the Red* list.

Bulgaria is a small and rather poor country somewhere in the middle of the Balkan peninsula. In a sharp contrast to the natural beauties and temperate climate, the market in general and the real estate market in particular have been reporting diminishing trends for the past 10 years following the fall of the communist dictator Todor Zhivkov.

The first shock to the economy was inflicted by the forced emigration of several hundreds of thousands of ethnic Turks in the spring and the summer of 1989. The majority of them were hard-working young and middle-aged people, who had to leave their houses and apartments in a hurry. After 1989 followed the mass wave of emigration of hundreds of thousand of ethnic Bulgarians. The whole population before 1989 ran to almost 9 million people, now there are no more than 8 million left and the emigration is continuing.

In Bulgaria, even in the communist era, the majority of the nation lived in their own houses and apartments. This fact could be explained with deeply rooted psychological factors. "Klein, aber mein" say Germans (Small, but mine) and this proverb can be fully applied to the Bulgarian national mentality. The recent official figures show that 85 per cent of all the households in the country possess at least one dwelling and 35 per cent own a second residence (mostly in the county). Thus the massive exodus from Bulgaria left many thousands of homes empty, both in the cities and especially in the small towns and villages. As a result, the higher than usual residential supply was devastated by the meager demand and the prices collapsed to the one of the lowest rates in Central and Eastern Europe.

Only in some luxury areas in Sofia and around it (luxury only by the Bulgarian standards, in the US they will be rated as higher middle class) the prices can reach 1000 dollars per sq. meter (1 sq. meter= app. 10 sq. feet). Inside the Sofia beltway the prices for residential properties usually vary between 200 and 400 dollars per sq. meter. In the small towns the demand is so meager that a house can be bought for a as low as 50 dollars per sq. meter. The constitutional restriction for foreigners to buy land lots make the arable land relatively cheap. Even in the most productive farm areas in the northeastern parts of the country the prices per acre are 5-10 times lower than the prices for the same quality land in the West Europe.

In the rent market the situation is somewhat different. The rents start at 4-5 dollars a month per sq. meter in the residential areas and can break the 50 dollars barrier for some commercial purposes when the demand exceeds the supply.

The shortage of demand in the real estate market as a whole was primarily due to the low level of incomes in general (the average salary in Bulgaria in the 90s only occasionally broke the ceiling of 100 US dollars a month, taxes and social securities included). The slow and non transparent process of privatization did not bring into the country enough foreigners, ready to settle down and expand their business. The constitutional restriction for foreigners to buy land lots, which is expected to be abolished in the coming years, still further aggravated the situation on the real estate market in Bulgaria. As a result, if in the 80s approximately 20 000 family houses and apartments were built per year, at the end of 90s the construction shrank to 7 000 units per year.

The bank system was not and still is not prepared to respond to the public demand for cheaper lendings. With a main interest rate now below 4 per cent per year, the banks lend money with interests at least 16 per cent per year, which means FOUR TIMES the main interest rate. Some would probably argue that this is due to the lack of experience in the Bulgarian financial sector, even they would depict it as a birthmark of a country, very recently freed from the communist rule. In reality, the same conditions for the people wishing to take credits are put by some foreign-funded institutions like the Bulgarian-American Credit Bank (BACB). It lends credits (not less than 10 000 dollars) denominated only in US currency with 16 percent annual interest rate for a period not exceeding 10 years. If taken, such a credit would result in a monthly mortgage of some 167 dollars.

One of the main conditions of the BACB for accepting to open a credit line is to be proved that the household earns at least twice the mortgage sum, which means 334 dollars a month. Given in mind that the real incomes of the 2-working members households do not exceed 200 dollars, it is not so difficult to imagine that these kind of credits are affordable only for a very limited social group that could not inject any positive signals into the whole market. If the readers from the US still cannot realize the true situation that reigns in the banking home credit market in Bulgaria, just imagine that for some 10-years credit in America, covering a house for 150 000 dollars, you will have to pay 2525 dollars monthly mortgage. And the main condition for your household to receive this credit is to earn at least twice that sum.

The main pillar of the market economy is that everyone decides only upon his or her private interests and the result is in most cases something better. One of the curious aspects of these BACB credit lines is the fact that this institution is (or at least it pretends to be) a subsidiary of the Bulgarian-American Enterprise Fund, a private US corporation, which is mainly funded by the US Congress. It is not sure whether the US congressmen know how exactly the American taxpayers money are spent on this project but it is certain that the conditions, set by the BACB, are benefitting only a few rich households in Bulgaria that could buy anything they want even without bank credits.

*The IUCN Red List of Threatened Animals

Simeon Mitropolitski is a Bulgarian analyst and former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with the hot political and economic topics, both Bulgarian and international. Some of them were translated in English ("A Royal Solution." World Press Review. June 1997). At the end of the 80s he was part of the first group of Bulgarian intellectuals that began the opposition movement that finally put an end to the communist regime in the country. In 1996-1997 he participated in the international monitors' teams during the elections in several Balkan countries - Romania, Albania and Bulgaria. In 1999 he was among the few Bulgarian journalists that supported NATO military operation against Yugoslavia. In early 2002 Simeon and his family emigrated from Bulgaria to Canada where they now live in Montreal, Quebec.