During the first half of 2006, foreign investors accounted for more than 40 per cent of the investment in commercial property. From a stability perspective, there are both advantages and disadvantages to foreign investors being active in the Swedish property market. The advantages include the fact that a larger number of investors means that the risks are spread better and the property market becomes more liquid. However, one disadvantage with foreign ownership is that the contagion risk from other countries to the Swedish property market increases. For instance, an international investor may sell Swedish property to cover losses made in another part of the world. In this way, commercial property prices in Sweden may change without any actual change in the domestic economy. Prices for office premises have risen in all of the metropolitan regions since 2005 (Figure 2). However, cyclically-related factors such as rents and vacancy ratios have not altered to a corresponding degree. Ever since the property crisis at the beginning of the 1990s, prices and rents have almost gone hand in hand, but this trend now appears to have been broken. Real prices increased during the third quarter by 36 per cent on an annual rate in Stockholm, 32 per cent in Göteborg and 11 per cent in Malmö. During the same period, rents rose by between 1 and 1.5 per cent in these three cities and the vacancy ratio remained in principle unchanged.
Responding to a question by Investor.bg, BNB says that given the lev’s fixed exchange rate, delaying the entry into ERM II cannot create direct financial and macroeconomic risks for the Bulgarian economy. Could the opposite happen, however? Is it possible for ERM II membership to be negative for Bulgaria if it comes during unfavourable times for the European economy? To put it in different words, should we be in a hurry for the eurozone or should this goal be consistent with the conditions and trends for the time being? We should follow our strategic plan with a focus on the quality of the process. Due to the nature of our monetary regime, based on a fixed exchange rate, as well as our firm commitment to not change it until country’s eurozone accession, our currency being part of ERM II will not lead to any changes in our macroeconomic position. The direct effects will be rather positive, such as increasing Bulgaria’s credit rating and improving the overall investment environment. Spanish economist Daniel Lacalle told Bloomberg TV Bulgaria in an interview that he believes the ECB’s policy of stimulation has long exhausted its efficiency and the only thing it is currently doing is to transfer funds from productive to non-productive sectors of the economy. Lacalle also recalls that negative interest rates have played a significant role in Japan’s difficulties with inflation and growth. What’s your opinion? Is there a risk for the eurozone to get into the Japanese scenario? The global economic environment is far from being conventional.