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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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• Moscow 2000
  
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The prices began to increase from the level of $100/sq.meter (1 sq.meter=10 sq.feet) in 1990. At the end of 1991 the average price for 1 sq.meter rose to $250, one year later - to $708 and it reached its highest levels in March 1995 - more than $1300/sq.meter. In that period the market was characterized by strong demand and relatively weak supply. It was not until 1992 that began the privatization* of the municipal properties. In this year alone the privatization covered 365 000 apartments (14,1% of all included in the lists).

After the prices reached their peak in the middle of 90s they began to fluctuate between $1100 and $1250 in the following 3 years. This period ended with the financial crisis of 1998.

The paradox of the real estate market in Moscow is that this phenomenal increase of the price levels in the first half of the 90s was coupled with the deepest economic crisis in the national memory. The Russian GDP (General domestic product) and the main industries have fallen by 40 percent between 1991 and 1997. In this period of crisis the building companies in Moscow supplied the market with almost 100 000 apartments and houses annually. The prices of these new constructions exceeded $4000-5000/sq.meter for the most prestigious locations.

It is worth noting that Russia is a country where everything, at least every important thing, is decided by the politicians in the center. There is no independent economic life above some level. The market as a whole is so regulated (as foreign investors can witness), that political protection is necessary for every big or even smaller business to flourish. That's why after the collapse of communism in the early 90s every economic structure found it necessary to settle in Moscow. Even companies that in the typical market economy could have nothing to do in the capital city, even they built their huge main offices there. Take for example the natural gas giant Gasprom or the biggest Russian oil company Lukoil. They both raised buildings for hundred of millions of US dollars. Their only intent was to get closer to the Kremlin and to the policy-making process (just imagine Microsoft or Chevron settling right in front of the White house in Washington D.C.).

This corporate invasion in the capital city increased rents well above the average level set by the other big cities in Russia. Many small companies used residential properties as offices that further increased the rents. In the middle of 90s for some locations companies had to pay more than $100, even $200 a month for sq.meter which made Moscow one of the most expensive cities in the world together with Tokyo.

In the middle of 90s the market found its equilibrium for a couple of years and the financial crisis pressured down the prices to their actual levels. Since December 1999 the real estate prices in Moscow have gone down by 5 percent and in July were around $680/sq.meter. In the city center the average price for 1 sq.meter is $850. In the suburbs the prices can go as low as $500/sq.meter.

On the commercial market the office spaces are cheaper now and the class "A" by Western standard can be found for as low as $40-50 a month. The office prices are calculated from a formula when 1 sq.meter costs 5-7 times its annual rent. That means for example that an office that is rented for $50/sq.meter a month ($600/sq.meter a year) can be bought for $3000-4200/sq.meter.

The experts don't foresee any revolution on the real estate market in Moscow in the following months. This can't be taken for granted for the coming years. There are different scenarios for future developments which can be called "optimistic" and "pessimistic". In a country like Russia the state imposes its will on all the other social spheres of life. If the new president decides to continue market reforms with western help, this will lead to new positive developments on the real estate market. If he chooses again to begin a process of nationalization and to ban or restrict the foreign investments, then thousand of offices class "A" may become vacant.

Now the Russian society lives between hopes and fears (hope for someone is fear for someone else). So far the president Vladimir Putin hasn't decide which way to follow. But he will have to do it in the future because the markets now have adopted wait-and-see attitude and the present obscurity is worse even than some bad kind of policy.

* - The privatization of the residential properties meant that persons who lived for years in the municipal-owned properties had a right to become owners and eventually to sell their properties.

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