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Money vs value in Bulgaria
Real estate news By Petar Kostadinov
09:00 Mon 24 Sep 2007
A month before the municipal elections in Sofia and it seems that the most difficult thing for municipal councillors is not to predict who will be Sofia’s next mayor but to decide the value of Sofiyski Imoti (SI) municipal company. As The Sofia Echo reported on September 14, councillors finally decided to sell the most controversial municipal company, whose name has become a synonym of non-transparent deals with public properties, done in a completely unaccountable way.
SI is 100 per cent owned by Sofia municipality. It deals with all kinds of real estate activities and more precisely with all the property owned by the municipality. This alone, together with the boom of real estate deals in Bulgaria that led to a boom in prices, has made the SI a fantastic opportunity for every potential buyer. During 2001-2003, SI was among the biggest sellers of real estate and land in Sofia. For years the Bulgarian-language media and people from different political parties have claimed that SI was just a way for the authorities to drain Sofia’s money. The codephrase in this scheme was “barter deals”.
The law allowed a municipality to do barter deals with companies and individuals when the deal protected the interest of the municipality. This meant that if an individual wanted to buy a plot of land in Lozenets neighbourhood, for example, he or she could propose apartments in Lyulin neighbourhood to the council in exchange. An audit company evaluated the value of the apartments and if it did not harm the municipality’s interest, councillors could vote in favour of the exchange. This was how most “barter deals” happened in Sofia during the past 11 years of SI’s existence. The problem was that usually the audit was done not by a private auditor but by another municipal company, usually Sofinvest. Hidden behind the closed doors of the council, hundreds of such deals have happened. The public became aware of some deals only after they had happened. In such cases, councillors had to explain to TV cameras time and again how, for example, the price of a sq m in Lyulin was worth an incredible 1040 euro and was equal to Lozenets prices.
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