Analysis of the main sources of investments financing in real estate

AuthorYlldeze Sokoli
PositionVlora University (Albania)
ISSN 2410-3918
Acces online at IIPCCL Publishing, Tirana-Albania
Academic Journal of Business, Administration, Law and Social Sciences Vol. 2 No. 1
March 2016
Analysis of the main sources of investments financing in real estate
Ylldeze Sokoli
Vlora University (Albania)
The development of the construction industry is an important sector and the special
contribution to the gross domestic product and as such should be subject to study, because the
performance of the fund financing the construction production is closely linked to the
performance of GDP, but also the role of this sector in generating economic growth. Even in
our country’s construction sector, as one of the leading sectors of the economy has affected the
growth trend of the Albanian economy. Many developing economies have shown that credit
markets and remittances are the main source of financing long-term investments in
construction. Increased investment in the real estate market includes free financial resources
and other populations, but the development and expansion of this sector has led to the reduction
of unemployment in the country. In periods of economic growth, coupled with the growth of
personal income, people seek to improve their living conditions and seek to take credit for use
to purchase real estate. The role of the banking system in financing for investments in the real
estate market is very important.
The purpose of this paper is to identify what are the factors affecting the financing of
investments in the construction sector, and to analyze the important relationships between
them and the financing of investments in real estate.
The methodology used in the paper is based on foreign literature, materials and works of
local and foreign authors. The data were taken from the reports of Bank of Albania’s Institute
of Statistics, World Bank and others. Linear Regression model is built referring OLS method,
to determine the factors affecting the financing of investments in the real estate market.
The results of this study can be used by relevant institutions and central governmental
institutions for the formulation of policies and strategies for the development of this industry,
as well as the stakeholders of this sector (businesses and construction) professionals to analyze
the dynamics of the development of the construction sector and to evaluate the effect of changes
in macroeconomic indicators in the size of this market development in Albania.
Keywords: investments, bank loans, remittances, real estate, construction sector.
Construction sector size is affected by the performance of the economy, but also the
opposite. Sources for financing investments in real estate are some, but this paper
will treat the main sources of financing in real estate bank credit, remittances, their
impact and other factors in the fund to finance the construction sector.
The role of GDP in the construction sector is estimated to be higher in underdeveloped
countries, while the level of development increases, the role of GDP could be lower
and in some cases even negative (Crosthwaite, 2000).
The growth of the construction sector may be affected differently by different economic
sectors, however, the greatest demand, both for new constructions and reconstructions,

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