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Smaller is better in Bulgaria

22nd January 2009 Print
In Bulgaria, one of the unforeseen consequences of the global financial crisis is the resurging popularity of small residential complexes. Before the downturn, many investors favoured larger, capital intensive projects built on a huge scale. These developments not only provided excellent return on investment but were of a scale that meant that those involved instantly became high-profile players in the Bulgarian real estate market.

However, with the change in the financial climate, many investors are rethinking their strategies and more modest building projects are once again gaining popularity. “Buildings with a floor space of 3,000 to 5,000 squared metres will be the most in demand this year,” says one Bulgarian property expert. “This is because of the smaller risk,” he added.

Smaller-sized constructions do not need the complex financial arrangements that larger projects demand. By focussing on such projects, small to mid-sized companies have a better chance of obtaining financing otherwise difficult to find in many markets. Smaller projects also allow these companies more independence by not having to enter into multiple partnerships that may expose them to the financial vulnerabilities of their associates.

Where banks were once actively seeking out companies to lend to, many are now hesitant, waiting to see how the current financial situation will unfold. The task of the developer is to best attune himself to the market in a way that affords the most flexibility in a changing financial climate.

James Gonzalez, Market Analyst at Obelisk, finds the trend logical. “In a changing market such as this, for every problem that might arise, so does a new opportunity. It is at times such as these that the most innovative minds come to the forefront. The ability to adjust to changing market conditions is central to successful investing in today’s climate.”

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