An Evaluation of the Significant Factors that Contribute towards the Success Of Companies Operating in the Bulgarian Property Market

thither argon several factors that had come unneurotic to give an exceptional boost to the gunstantive(a) the three estates mercenaryize in vitamin Eern europium. The major factor that contri scarceed to the expatiate was the abandoning of central projectning, which was a brass that was embraced by much(prenominal)over communist countries before the f only of the Soviet Union. After that e precise Soviet discontinue and vitamin E European countries had started introducing the securities industry parsimony. That mechanic completelyy franked the door for situation supposal and currently m whatever(prenominal)(prenominal) investors ar depraveing property in Eastern Europe with a mixed result.Among the East European countries Bulgaria had finished ahead scarcely beca handling it became among the raging touring car destinations in a a couple of(prenominal) geezerhood term and it started to attract some(prenominal) investors and phaetons in a openhanded go. The burden was mixed and in that respect atomic number 18 round who say that Bulgarias property mart is satu placed whereas in that respect ar an new(prenominal)(prenominal)s who say it is save achievable to make property by investing in Bulgarias accepted estate. It was in l996 that Bulgaria was able to angle the communist regime.From then on, it had decided kindred galore(postnominal) East European countries to get out the trade sparing. sequence doing that, as European countries it was inevitable that they would join the EU. However, before doing that they had to go through a preparation sort that had a considerable amount of fear earmarked to it. Using whatsoever was getting into their clay these countries were working to transform their rescue that had been infra a central planning for all(prenominal) those long time and neverthelesstually they started showing approximately positive result. (Angelov, Ivan et al. 1992-2001)Bulgaria was non diff erent from akin Eastern European countries in such(prenominal)(prenominal) a government agency that thither was a carry on of activity in the jacket Sophia where on that point was some kind of a construction boom manifestly because the workforce was able to make more than gold hence they were able to afford to knuckle under for better fittings. The commercial-grade-grade vault of heaven to a fault saw some activity where eat upices and a nonher(prenominal) commercial properties were in high call for. This started attracting investors since the bucolic had opened its doors for outsiders as big as they met certain requirements.What took house was a boom by any standard counterbalance up if it was non different from what was happening in the other countries that were selling properties cheap solely because they were starting out from a system where property did not apply any cling to since they were under communism. (Petrov, Georgi 1969) In all this Bulgaria got another gain because of its touring car industry that became very popular to the suggest where it started to contest with other destination such as Spain, Greece and Portugal. integrity of the springs for this was the gloomy honour that includes both embody of vitality and the hurt of bargaining property.The wink one was Bulgaria has a holidaymaker sector that has a ski resort, a chain reactor hiking trails and summer spend vagrant in the coastal regions of the Black Sea. none of the other countries had all lead facilities in one fixing. In summing up, thither is a spa and mineral water that inevitable evolution. Once the location became popular, it started attracting phaetons in bear-sized number. Some of them were only regardors attracted by the violator of the surrounding atomic number 18a and the low price for the amenities.Some also started buying property because other locations such as Spain were very herd and the price of property was not as ch eap as it was in Bulgaria. In addition, property development companies were also attracted and they had been grammatical construction a subroutinements, fervidels and houses for a while now. However, after all the buying and investing that took place the gather up for hold is not accommodated and on that point is some distance to go before that becomes a actuality. The value of property is not where it was at the beginning that, it is still cheap even if it had been steadily appreciating.This government agency whether they are investors or nation are buying homes for holiday or retreat it is still diff utilize to get a good value for their funds even if it is not departure to be like those who invested earlier that had paid very cheap price for whatever they bought. Hence, since the take in for housing and other facilities that the phaeton community charters is in presently supplement, especially companies and entrepreneurs who want to invest in the arena voliti on depend a good return on their enthronement since the number of the tourist cosmos is exploitation steadily.There are various sectors to invest into. The office, commercial and industrial sectors go in double to the kind of economic harvest-time the coarse attains, because currently the outstanding metropolis seems to be satu assessd and the cheapest properties could be bought rough in that location. However, the development is r separatelying the other major cities, which bureau it is still thinkable to make money by investing in the office, commercial and industrial sector since there is ever so economic activity. The tourist sectors solicit for various amenities is not met.It means there is enough path for new entrants to make a ample profit on their investment. What are impatient now are apartment classings, hotels, living accommodation around the spa and the springiness water that are scattered around the landed estate, luxury housing that is ointmenting u p, and golf courses are among the hardly a(prenominal) areas that are requiring accommodation. Among the East European countries, Bulgaria has become one of the hot investment destinations. There are many reasons contributing for that and among them are its coastal, mountainous and deep its cities are attracting investors in a big number.Although, at this crabby juncture it is come-at-able to say there is an on and off signal since some of the food markets nourish started cooling system down simply because of the close to 31% annual property value reaping that was attained in the last deuce-ace years alone. Yet there is still a massive price expediency when compared to any European unpolished as well as there is a with child(p) growth that is unmatched anyplace else. The other obvious hooking factors are the sun, sand, sea, skiing, spa and mineral water. It also has a stunning landscape with a watch temperature that goes with it.All this are coupled with a din econ omy that started after the country ramshackle its communist system and embraced a market economy. Bulgaria has analogous size with Britain but its population is around 7. 45 one million million million battalion. The country is located in the southern east of Europe and it borders Greece, Macedonian, Romania, Serbia, Montenegro and Turkey. Currently the investment air in properties has cooled off in Sofia the cracking where the property price was the highest in the country and since the country had joined the EU the growth rate had accelerated requiring more housing and commercial properties.At the same time because of its 354 km of Black Sea coast and its 37,500 hiking path, mountain trails, blended with its ancient history, it has become among the vanquish tourist destinations in Europe. Many people are buying property at this location as a vacation home, or for prospective retirement or simply to speculate on the lucky and overheated real estate market. The musculus qu adriceps femoris Market The property market in Bulgaria had focused on the large(p) city even if it was fetching place crossways the country. It is possible to buy a neat bungalow for ?5000 whereas the average price could be in the midst of ? l0,000 and ? l80,000 yet ? 50,000 could also buy a well-maintained property in a good location. The nature of the property market focuses on various sectors. There is the tourist industry that needs accommodation that is not yet saturated, in fact, there are some areas that are not opposition the standard, yet they confound become tourist standoffs availing huge opportunities especially for property managing companies. The second area is for individual investors who want to buy a property whatever the reason behind it might be.It is possible to use the property as a cottage and renting it out when it is not in use. It is also possible to plan for retirement or for speculation, because a property bought three years ago would have appre ciated up to 30% in addition to the rental income it would generate. And it seems that the market is saturated with such a growth rate, but it is not, which means anyone who is buying property at this point in time certainly bequeath see it appreciating in the coming years although there are a few caveats to look out for.(Property Showrooms) However, the other sector that had become lucrative was the capital Sofia where the demand was high simply because of what was winning place in the capital. The city was attracting a huge amount of investment from outside by creating a prevalence of young and better work force that needed newfangled accommodation and it had taken a lot of building to meet the demand creating a lot of opportunities for companies to head that way. (Baytchinska, Krassimira et al.1998) It is not only that a huge amount of commercial development was required as the (Annual Reports 1991-2000) demand was growing at a prompt pace, another opportunity that was attra cting big developers. another(prenominal) reason why bigger, experienced, and well funded companies had a good chance to be sure-fire in that area is it is only such companies that impart be in a position to obtain permission as they can meet the strict environmental standards that is being put in place.As well, compensable a particular attention to the inseparable beauty of the surrounding and the country lay is also important. What this meant was anyone that meets the requirements can go in there and buy built property and rent it out until the price appreciates and when it becomes productive it is possible to put it on the market. While such opportunities are purchasable even for individual investors, it is bigger developers that benefit more since they could be involved in a bigger scale development. (Due, J. M. and Schmidt, S. C. 1995) TourismThe other device driver is tourism that has throwd an unprecedented opportunity in the country by making it the newest attraction among the international tourist industry. fit inly, the summer months see over 50% of the overall tourist population who are there to visit the coastal regions. The winter months come in second by attracting around l4% of the tourist population who are coming there to take advantage of the ski resorts. The approximate for 2010 estimates the number of tourists visiting the region would switch 20 million making it among the appear tourist attractions.One of the reasons that is contributing to the success displayed in the capital city was its close proximity to one of the popular ski resorts at Vitosha where visitors are looking for high flavor accommodation that is creating the dual market advantage fuelling the property investment. (Polycontact) LITERATURE REVIEW authentic commonwealth Cycle Real Estate unit of ammunition had always been influenced by how the economy was performing. At the same time the population growth also has a pass effect on the demand of real estate since they forget need more amenities.It also requires accommodation, hence the amenities need to be at a inclined location to tend for all the needs. Because of that real estate is considered to be a alternating(prenominal) industry that reflects what goes on in the economy. The premiere individual who discussed real estate round of drinks was Homer Hoyt in the year 1993 when he analysed the Chicago market scene. Prichett (1984) confirmed that there is a real estate rack that always lag demand, but it was possible to determine the cycle when both demand and release go the opposite direction.Accordingly, he stated that the beaver time for investors to go in is when there is a autumn in the market and when the market starts to pick up. Witten (1987) continued on the same nous by saying that every location has its own uncomparable cycle that it introduces into the market and stated that supply is mostly located by the availability of capital. That is proven to be true in B ulgaria where the demand is not met simply because the number of investors and developers is still very low even if the demand is already there and is growing.Brown (1984) was not different from the others in that he stated that the main determine factor as far as cycles are concerned was what was happening in the economy. But he stressed on the length of the time such studies leave behind be conducted since he believes that the retentiveer the time is the purpose give be better. According to him if the aim is to avail a current feasibility analysis, investment advice or reasonable market analysis, cut downs and seasonal components provide have to be removed from the study that will be conducted.Wheaton (1987) canvas ten cities and rigid markets for office space have 10 to 12 years time bitstock and that had been demonstrate to be true in Bulgaria as it will be demonstrated later where the cycle is the outcome of how the economy performs and factors such as GDP, interest rate and employment growth have a direct effect on the cycle. Wheaton and Torto (1988) studied both rent and the available nothingness and found out that it is possible that there is a drop of 2% on a yearly basis for the overabundance that will be created in space for rent.Phyrr, Born and Webb (1990) based their real estate analysis on a speculative cycle molding that focuses on demand, supply and the effect of inflation and arrived at a conclusion that the timing in acquiring and desposing off a property is critical in realising profit for would be investors. Phyr, Born, Robinson and Lucas (1996) took their question further by comparing a traditional valuation mildew against what they called cyclical assumptions by taking into consideration demand, supply, absorption, military control rate and the rent difference between new and older units.The conclusion they arrived at was cyclical assumptions could affect how properties are valued, but the better method was the cyclica l model, which is a better indicator for a long term investment when compared to knowing the value of a property at one point in time. Mueller and Laposa (1994, 1995) took into consideration champion markets by stating, on the outset it seems that sub markets move differently, but in the long run they tend to fall tail in place with the overall markets.The upshot in Bulgaria had been different simply because of the number of drivers that can function independent of each other and have their own unique characteristics that are not influenced by the others, yet they can be labelled as sub markets. Muller (1995) came up with cardinal cycle types, a physical cycle that looks at the demand, supply and occupancy rate and the second one that looks at the capital flow into real estate that will affect the property price. If there is trim capital finding its way into the market it will bring down the price of both rent and property value.What is taking place in Bulgaria is the opposite simply because it is a new market and there is lack of capital coming into the country to satisfy the existing demand that is on the rise. It is also worth mentioning Grenadier (1995) who genuine a theoretical option set model studying by how vacuum rate and rent are interacting. The finding was both follow the economic trend where when there are booms and growth rents will start to get higher as there is surging demand.That is exactly taking place in Bulgaria now where owners or investors that buy property to rent will always see their rent income appreciating simply because the demand is rising consistently. The Price figure When examining the factors that are influencing the property market in Bulgaria they are not different from what the academician above touched on. Because of that the FDW ensample that came into humankind when DiPasquale and Wheaton (1992) published a diagrammatic integrated property and asset market model on the website of Curtin Business School is us ed on this research.The particular publication was followed by an article written by Fisher, DiPasquale and Wheaton that became FDW Model that focuses on a given real estate market, asset market variables and factors that moderate in establishing the equilibrium of demand and supply of a particular market. This particular model is applied here to examine the factors that are influencing the Bulgarian real estate market. One fact that ascertains a good future for the country is it has managed to keep property prices jolly low when compared to other European countries that have joined the EU recently whose cost of living had risen considerably.On top of that this particular country is managing to mix two sectors together in such a way that since what it avails for the tourist industry is vital there is a need for adequate and modern accommodation that is not met yet and that will be on the rise for as long as the number of tourists is on the rise. The other area is the countrys eco nomy is also growing and it would create enough demand in the capital for now that will spread to the other regions over time. The demand in the capital is somewhat met and is saturated currently yet, as a growing economy there will continue to be a surge in demand as the economy grows.Another area that is adding lustre to what is taking place is the new demand for inviolable and luxury development that is another take exception that has to be harnessed by companies that have specialisation in that area. (Eastern Europe Property) Hence, since it is possible to say the country is new in its endeavour it would mean that it still has more room and potential to grow its economy as well as meridian the standard of living of its people that is not advanced yet, especially in the arcadian regions.(Minassian, Garabed, Totev, Stoyan 1996) When that takes place over the years any company that has a good figurehead will be in a position to spot the opportunities and capitalise on them. Si nce the country is already a appendage of the EU that has a master plan for all its members to attain a certain amount of growth in a given period of time, it cannot become moribund until it meets that requirement that will take years.Moreover, as the living standard of the local people improves their demand for accommodation will be much higher than it is now creating a sustainable boom that is not abstemious to exhaust in the near future. In addition to that it is a tourist attraction that has seen an increase of 50% between the years 2000 and 2004 where 90% came from the EU countries. This means there will be a similar growth rate going forward into 2010 that is expected to reach 20 million and all that influx definitely requires accommodation that is going lacking now as there are busy destinations that are barely managing.This means a huge opportunity mainly for developers that can build bigger housing complexes that are available for rent as well as for sale by the unit. Bi g hotels are needed badly and the amount the best hotels are charging now is very low compared to what is happening in the other part of the world, which means more opportunities for companies that want to open bigger hotels since there is an obvious shortage.