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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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Globalizations and their effects on real estateThere are several different trends in modern world, each of them called globalization. They have different, sometimes conflicting effects on local and global real estate markets. This article tries to differentiate them, by looking at their main logic, driving forces, and possible economic and social consequences.
Capital globalizationCapital globalization begins when accumulated capital cannot be accommodated within national economy that produces it with rates of return that will allow for the capital sustainable growth over time. Leading western nations after the World War II started accumulating extra capitals by extracting social insurance premium from working population. Trillions of dollars were concentrated into handful of key players looking for new markets where these capitals may be invested with highest possible returns. This highest return is vital for the western social systems to survive the inevitable retirement of more than two hundred million baby-boomers.Main logic of this globalization is to force as many as possible countries to open their capital markets. Given the similar problems that face most advanced nations, the only solution is to find relatively poor and undeveloped nations, e.g. China and India, for massive injection of capitals. Capital globalization leads to appreciation of physical capital in poor countries and real estate market goes up. Millions of people switch from subsistence agriculture to market economy. Millions of peasants go to cities. They become tenants and with economy booming they hope becoming owners. On the other hand, exporting capitals leads to relative not-as-fast-as-it-might-be appreciation of real estate in rich countries.
Goods and services globalizationGoods and services globalization begins when poor and developing countries experience the first meeting with capital globalization. They usually have no internal markets to absorb economic growth, so they turn looking for external markets. Still capital-poor but exporting superpowers, they need more and more markets for their goods and services. Tens of millions people enter the capitalist system each year by moving from subsistence villages to market cities. Without a world war or a major social cataclysm ahead this trend will only get faster.This form of globalization affects real estate market in two ways opposing each other. On the one hand, it helps perpetuate capital globalization in poor countries. Without it capital returns will fall down, and capital exports will stop. On the other hand, it brings down the cost of several tools and construction materials needed for new real estate in rich countries. It therefore keeps prices under control to some extent.
Anti-and-alter globalizationDespite its name this is also a form of globalization. It's a worldwide movement of left intellectuals, environmentalists, and trade unions in rich countries. It tries to stop both capital and goods and services globalizations by opposing to it different strategies: regional trade blocs of developing countries, creating worldwide trade unions, return to subsistence agriculture, and industrial nationalizations, just to name few. This movement has strong supporters among some governments in Latin America. It also uses cracks in economic relations between rich nations.This movement is relatively weak now, but what will be its consequences if it imposes its radical vision on the world? Capital and commercial relations between nations will be eliminated. Big enough markets like U.S.A. or Europe will move on by shifting their extra capitals to domestic use; the technological revolution will partly compensate for the fall in profits. Real estate will move up supported by stronger capital demand and no alternative imported cheap materials. Big enough markets without enough capitals, e.g. China and India, will move on, but only if they extract enough extra taxes from their population. The rest of the world, predominantly small internal markets with or without enough capitals will either stagnate or go down.
Other forms of globalizationThere are also other globalizations, driven by the EU or by rich Muslim countries. European model embraces elements of both capital and goods and services globalization; it tries to impose certain economic and financial rules on particular territory by eliminating foreign competition. Saudi Arabia drives the other form of globalization by linking economic development with propagation and defense of Islam. These other forms of globalization have similar consequences as capital or goods and services. They move real estate up by appreciating physical capital in some areas, and keep this appreciation under control in other areas by exporting extra capitals.
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