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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
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Eastern Europe: Businesspersons and rental marketSince late 1980s Eastern Europe has seen a new social species arriving, the businessperson. Unlike the local entrepreneurs, the foreign representatives of this species came with their high housing and office expectations. A whole new segment on rental market was thus created to serve these new customers. This market has gradually shifted from amateurishly renovated apartments to modern residences and specially designed A-class office buildings. After so many new developments mushrooming across the region people already start feeling fatigue of change, they need a pause, even more than their immediate neighbors from the western part of the continent.
Rental markets follow businesspersonsAt the dawn of democratic era East European post-communist countries could offer little if anything to visiting foreign businesspersons. The only housing deserving their attention was located in so-called 'diplomatic buildings', a specially designed and managed by the state apartment blocks that served foreign diplomatic corps during the communism. These apartments and few villas however were extremely scarce in accommodating thousands of new residents. This was a 'golden age' for thousands of entrepreneurial citizens from Warsaw to Tirana who upgraded their own housings and offered hospitality to wealthy foreigners. In almost any major post-communist city with some notable exceptions there was a zone of old buildings inherited from pre-communist times. With limited budgets for renovation many apartments were offered to the market. Some were used as residences; some were turned into offices. The rents there were very different from the general rental levels; usually they were inflated by hundreds of percents. Some foreign businesspersons preferred instead of renting at such high rental levels to buy cheap and turn housing into residences and/or offices.
New developments come into ageYears come and go, foreign business trips become more regular, and foreign capitals start pouring into special projects for long-term rentals. The 'golden age' for the small owners offering their relatively small apartments at very high rents is over, or almost. Some still use their strategic location, but the most are out of the prime market. By that time many 'diplomatic' buildings have more business than diplomatic clients. With the new democratic age comes also significant reduction of the diplomatic corps abroad and reciprocal reduction of the number of foreign diplomats at home. 'Diplomatic' buildings are still well positioned on the market with their well-established networking. Their weakness however is the decaying infrastructure; what was appropriate for foreigners in 1970-80s may be hardly sufficient in 2000. By that time businesspersons need, in addition to all other amenities, some integrated Internet connection; they gradually start asking for Wi/Fi access points and other new technologies as part of the rental package. Only developers that can offer all these extras can ask for premium rents.
Are changes happening too fast?Communism went down in Eastern Europe because of the widespread understanding that as a system it lost the technological and thus economic war against the West. Some saw this system change as a last chance to catch up with the most advanced countries. Whether or not this is really the last chance isn't an issue in this article. Almost 2 decades after the communism was eliminated as a social belief system, the societies in question are still struggling with the speed of changes imposed by the West. With so many new devices and infrastructures coming into life it will be very difficult to reap the expected capital returns on new investments designed to serve the business community. We see the Western Europe trying to take a pause for the same reasons. This exhaustion is even more present in Eastern Europe where changes are following in mad speed one after another for almost 2 decades. Society there isn't ready to assimilate that fact that the new office buildings today may be in need of capital renovation in just 25-30 years and this only in order to catch up with the new technologies that will be invented by that time. These are still societies where people build houses to last for many generations.
Cost of living index including rents in some major East European cities (index 100 as a reference applies to Zurich, Switzerland, which is outside the region) --------------------
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