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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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Since some time U.S. real estate market shows signs of exhaustion. Demand is falling. Interest rates however remain forbiddingly high. Some predict economic crisis in 2007-2008. Can this happen to Europe too? Is the old continent doomed to follow the American trend? One thing is certain, if there is an answer, it won't apply to all European countries given their different market trends, different financial systems, and different secondary engines for real estate market development.

Europe is a continent with multiple current market situations. This alone prevents making any generalizing conclusion as to the direction this market will take as a reaction to American demand and eventual economic crisis. The bulk of countries are part of the euro zone. This financial mechanism clearly benefits countries like Spain and Greece, where relatively cheap credit is still an engine for extra real estate demand. These countries to be more precise show too signs of market deceleration, but properties there still get additional value over time. On the other pole are countries like Germany and Italy where the situation is bleaker, but the reason for this isn't the current downturn in America.

EU members that aren't part of the euro zone, Britain and all Eastern Europe, show different trajectories from either U.S. market and from euro zone members. Eastern Europe for example will actually benefit from outflow of capitals from North America in search of better returns. All these post-communist countries need many more years of extensive investment in both residential and commercial real estate in order to meet some minimal West Central European EU standards. Whether they will really benefit from this cash flow is conditioned on different factors, some having nothing to do with the market itself, e.g. whether EU will or won't stop additional business outsourcing from Western to Eastern Europe.

And of course there is one more group of European countries, centered on Russia, which development is more dependent on oil and other energy prices than on anything else. City of Moscow for example has to multiply its office spaces by a factor of 10 just to be able to reach the average level of the richest EU countries. Hundreds of thousands if not millions of Russians are moving from inhospitable Asian vastness to Europe therefore adding demand to the real estate market in cities like Moscow.

If there is some correlation between the real estate market in North America and Europe, it will be indirect and it will have to take into account all these secondary factors. For example, the capital outflow to Europe in case of economic crisis in the U.S. will increase both supply and demand in Europe therefore increasing inflation and subsequently the main interest rates. This may cut short the emergent economic recovery in Europe in the same way as in 2001-2002. With some exceptional cases Europe in general is a continent with aging and stagnating population. Real estate demand in times of crisis is and will be mainly concentrated in specific niches like retirement housing or expatriate retirement communities. At the same time there will be still demand for new office and modern retail spaces in post-communist countries. Any economic and real estate crisis in the U.S. will eventually affect Europe, but the scope of this influence will be distributed highly unevenly among countries.

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