|
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
|
 |
London market - defying gravity or following TokyoBritish economy continues to astonish the experts. Almost 3 months after the tragic events in the USA, it still defies the gravity and posts better than expected growth rates. In the third quarter when all the other major industrial countries announced zero or negative augmentation, UK still boasts to have reached 0,6 percent growth. Even with forth quarter less brilliant than the previous, British economy will continue to look like an island of stability within the sea of post 11th September uncertainties. At the beginning of 2001, in that far distant past where nobody seemed to predict what would follow soon, we forecasted that the office market in London would continue to grow in the coming month even years. And that was true till the last month. On the residential market the growth continues even now, fueled by the recent interest rates drops by the Bank of England. So what we should expect on the real estate market in London in the coming months? Will it continue to defy the gravity in the future or will become the next remarkable example of property market burst following that of Tokyo a decade ago.
Optimist scenarioBritish optimism lies in the prospects of a quick economic recovery in the USA and continental Europe. The strong British pound doesn't stimulate the export very much and the demand slump on the both sides of the Atlantic will sooner or later affect the island. In London the hot question these days is how much the Americans will spend in the Christmas shopping season? If they go and spend their federal surplus rebounds, then the recovery in America is around the corner.A brisk recovery in the USA will stimulate the demand, will accelerate the British exports and will put an end to the economic uncertainties. The companies will start again to invest in new projects, to occupy new office spaces etc. In other words, British economy will receive its new gulp of air as well as the real estate market in London. But what if there isn't recovery around the corner?
Pessimist scenario 1There are crises and crises. Some last months, other last many years. The last decade was a period for unprecedented prosperity for the USA, but for Japan it was a decade of economic stagnation. If there is a crisis, we should look at its reasons. Without eliminating them we couldn't expect soon another cycle of prosperity. So what will happen particularly in the UK if the recovery in the USA isn't around the corner?The first pessimistic scenario implies that the monetary policy of the strong pound will be left unchanged. The exports will be damaged; the amount of investments will be decreased; the economic activity will suffer and the real estate market will experience a downturn pressure. How long it will last depends on the next economic upturn around the globe, especially among the major trade partners of the UK - Europe and the USA.
Pessimist scenario 2The British government in principle wants to accept the Euro (the common West European currency). This won't happen tomorrow but anyway the discussions in London are heated on that point. If the current crisis lasts year or two, government and Bank of England inevitably will blame the policy of the strong pound and will prescribe the only possible medicine - pound devaluation like in the early 90s (with or without accepting the Euro).What that will have as an effect on the local real estate market? The first effect even before this devaluation takes place will be the massive outflow of foreign investments. Many American and European investors have counted on the strong pound and no one wants to see his (her) investments to wash away by a sudden change of policy. The second result of such policy change will be a crash of the actual price and rent levels. Endnote: British economy continues to grow but its future growth depends on the conditions beyond its borders. If America and continental Europe recover from the crisis by the beginning of 2002, Britain won't experience a major negative impact on its economy. If global crisis lasts for months and years, then the negative consequences on the London real estate market will be inevitable.
--------------------
See also the directory of companies providing real estate services in, and general real estate information of London.
|
See also:
