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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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There are huge city centers which cast long shadows on whole countries, even big ones such as Paris or London. When we speak about Paris we understand France and when we mention France we most probably mean Paris. There are other cities which shadow even transcends the state borders such as New York City. But there is a unique city that stands on two continents - Istanbul, on the crossroad between Europe and Asia, between Christianity and Islam, between developed and developing world.

The Turkish economy and the economy of its main financial center Istanbul (with a population of more than 10 million) entered a period of recession in 1999. This economic downturn was determined by several reasons. On the first place were the Asian economic crisis of 1997 and the Russian financial crisis of August 1998. On the second place there was a major earthquake in western parts of Turkey of August 1999.

The negative effects of the quake were twofold. On one hand, it disrupted the normal economic life, put the new foreign and domestic investors' projects on stand-by mode and diminished the demand for offices and retail spaces. On the other hand, the quake that took 15 000 lives in the country have shown how unprepared in general are the real estates structures for such major challenge. The state commissions found that the collapses of thousands of buildings were primarily due to the low quality of construction works. This findings resulted in a lack of confidence not only for the residential real estates but also on the commercial market, leaving unoccupied for months thousands of small shops in Istanbul.

Among the factors that still hamper the foreign investments in Turkey in general and in Istanbul in particular is the lack of clearness on whether and when the country may join the European Union. Another negative factor in the business climate is the unpredictability (by the western standards) of the Turkish financial and economic policy. Earlier this week the stock exchange virtually collapsed following a decision by the central bank to force commercial banks to diminish their debts denominated in foreign currencies. This decision turned on red the currency market which resulted in huge withdrawals from the stock market.

Such kind of financial or economic policies when major decisions are made without proper analysis of all the negative consequences may be considered as something usual in Turkey (and in the Balkan region as a whole), but they may keep on distance every interested foreign investor, accustomed with more or less predictable rules of the game in the USA or EU.

The lack of sufficient demand on the commercial real estate market in Istanbul in the last couple of years coincided with the delivery of almost 400 000 sq.meters (1 sq.meter=10 sq.feet) of class "A" office spaces which brought the whole class "A" stock at more than 1 million sq.meters. At some city areas the commercial properties vacancy rate reached 40-45 percent (15-16 percent in average for the whole city).

During the year 2000 the office rents in the city stood in average at $16-17/sq.meter per month, with class "A" offices reaching in average $22/sq.meter per month and the rents in old buildings in less prestigious areas falling to $5/sq.meter per month. Even if the rents levels have remained largely unchanged compared to 1996-1998, the landlords looked for ways to attract new customers by offering larger and larger rent-free initial periods.

Retail market also remained largely unaffected by the economic downturn of the recent couple of years. In the central areas of the European side of Istanbul rents are standing at $60-70/per sq.meter per month while in the Asian side they are reaching $100/per sq.meter per month. Suburban shopping centers' rents are between $20 and $40/per sq.meter per month.

The major difference between the retail market in Istanbul and many western cities with the same proportions is that Turks still prefer shopping in the stores not far away from home where they could meet friends. The infrastructure of suburban hypermarkets* likes several Mills or Malls in the USA or their twins in Western Europe is still struggling to become the major center of shopping culture in South-Eastern Europe. It is considered that in Istanbul the new hypermarket construction will be the driving force of the retail market in the coming years. This will inevitably reflect on the retail market in the city inner areas which will experience an ever growing competition from the huge suburban shopping centers.

* - Hypermarket - Both wholesale and retail store of 5-10 000 sq.meters (50-100 000 sq.feet) or more situated on the city outskirts.

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