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SEE Construction

  • April 2014
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 73 pages

The report covers developments in the SEE construction and real estate sectors in the period from March 2013 to March 2014.

Construction activity contracted in most counties in Southeast Europe in 2013 continuing a trend from 2011. Even though economies in the region have recovered in 2013 posting slight growth rates, the economic activity should strengthen further to provide the much needed boost to the construction sector. SEE governments are still trying to cut costs in order to meet targets for smaller budget deficit so funds for infrastructure projects continue to been reduced. Mainly projects that were co-financed with European Union's funds were started last year.

The outlook for the industry's development in 2014 is more optimistic with most countries in the region expected to strengthen growth this year amid the recovering EU economies, which are the region's main trading partner. The civil engineering sector is again expected to be better positioned than the buildings construction and the pace of expansion will depend on the absorption of EU funds.

The crisis in Ukraine, however, poses a risk to the European economies, especially those in south-eastern Europe, as eventual sanctions on Russia following the annexation of Crimea would negatively affect the economic growth.

Commercial property investments in Central and Eastern Europe (CEE) jumped by 37.6% in 2013 with Romania attracting the highest volume of investments of the countries under review in this report. Croatia followed, ahead of Slovenia, Bulgaria and Serbia. The outlook for CEE is also positive but the annual pace of expansion in 2014 is seen to weaken to only 4% to USD 24.9bn.

As in 2012, investments in retail property dominated the real estate market in 2013 with most SEE countries adding new shopping centre space. Albania, Bulgaria, Macedonia, Romania and Serbia are expected to add new retail space this year as well. Activity on the office property market also higher than in 2012 as the majority of countries in the region witnessed new supply.

Regarding the residential property market, home prices in 2013 increased only in Albania and Montenegro, stagnated in Bosnia and fell in all other countries.

Table Of Contents

SEE Construction
Executive summary8


Construction activity in most SEE countries declines in 2013.9

Construction output in EU28 down 2.9% in 201310

CEE property investments jump 38% in 2013.11



Construction sector's contribution to GDP.11

Value of new construction works in Albania plunges more than five-fold in 2012.12

Building permits value more than doubles in Q3 201312

Albania's construction cost index up 1.2% y/y in Q4 201313

Govt approves USD 25mn loan agreement with Saudi Fund for Development.14


Construction output in Bosnia's two entities increases in 2013.15

Number of completed housing units in Bosnia down 30.4% in 2013.16

Bosnia construction firms cut works abroad.16

Serbia, Bosnia to start tendering for EUR 11mn Drina bridge project in April 201418

Austria's Strabag-led tie-up inks EUR 61mn road construction deal in Bosnia19


Bulgaria's construction output down 6.9% in Q4 201319

Bulgaria's construction sector to grow by 4.3% in 2014 - Oxford Economics20

Building permits down 4.2% in 201320

Tenders for Struma motorway Lot 3 to be launched by mid-2015.23

Bulgaria may open tenders for two sections of Hemus motorway in mid-201524


Croatia's construction output down 4.1% in 2013.25

Croatia's building permits down 19.7% in 2013.25

Croatia's construction sector to grow by 3.3% in 2014 - Oxford Economics26

EIB lends EUR 80mn for Zagreb Airport expansion26

EBRD mulls up to EUR 40mn loan for Croatian Railways Infrastructure27


Construction sector biggest contributor to Macedonia's Q3 2013 economic growth28

Macedonia's 2012 construction works up 15.2%28

Business sentiment in Macedonia's construction sector improves in Q4 2013.29

Contracting foreign market for Macedonian construction companies in 2013.29

Macedonia begins construction of EUR 375mn motorway30


Moldova's construction works up 2.8% y/y in 2013.32

Investments in construction projects up 1.6% in 2013.32

Construction price index rises 8.1% in Q4 2013.32

Construction ministry drafts development strategy for 2014-202033


Montenegro's construction sector one of biggest contributors to Q4 GDP growth.33

Montenegro building permits up 7% in 201334

FinMin says public debt risks from Bar-Boljare motorway project could be reduced35

Montenegro will need at least decade to complete two key motorway projects36


Construction works index edges down 0.6% in 2013.37

Number of building permits for residential buildings down 0.2% in 2013.38

Completed housing units down 0.2% y/y in Jan-Sep 2013.39

BMI sees Romania's residential, non-residential building industry returning to growth in 201440

Romania' construction sector to grow by 2.6% in 2014 - Oxford Economics41


Serbia's construction activity declines 15.3% in 2013.42

Building permits up 2.5% in 2013.43

Serb company Energoprojekt signs USD 155mn deal with China's Shandong for Corridor 11 section in Serbia43

Czech investor to build EUR 110mn Corridor 11 section in Serbia under concession - Serb minister44

Greece might withdraw part of development assistance for Serbia's Corridor X.44


Slovenia's construction sector contracts 1.1% in 201345

Annual decline in construction works value softens to 2.9% in 201345

Building permits up 7.8% in 201345

Slovenia's construction cost index down 1.1% y/y 201346

Slovenia's construction sector to grow by 2.6% in 2014 - Oxford Economics46



Tirana house price index rises 8% in Q4 2013.48

Albania's office market stagnates in 201248

Tirana retail stock to increase in 2014.48

Albania's antitrust body clears Marinopoulos' acquisition of Euromax49


Prices of new homes in Bosnia stay flat y/y in 201349

Belgium's Delhaize agrees to sell Bosnian stores to Tropic Group B.V.49

Sarajevo City Centre opens.50


Sofia office market witnesses record-low new supply in 2013.50

Retail property market expands in 2013, further growth expected in 2014.51

New industrial property supply in Sofia up 6.9% y/y in Q4.51

Home prices in Bulgaria down 1.8% in 201351

Bulgarian sales of investment properties rise 49% in Jan-Aug 201353


Prices of new homes in Croatia down 11.2% in H1 2013.54

Zagreb's office market adds 32,123 sq m new space in H1 2013.54

International retailers continue to be drivers of retail demand in Croatia.55

Austria's m2 Gruppe to open Supernova trade centre in Croatia's Zagreb in May 2014.55


Apartment prices in Macedonia down 6.2% in 2013.56

Skopje office supply up 2.3% in H2 2013.57

Residential real estate sector sees steady growth in delivery in H2 2013.57

Sweden's HandM to open first store in Macedonia - report.57


Office prices in Moldova fall by 3% in 2013.58

Avg home prices in Chisinau vary between EUR 500-600 per sq m in 2013.58


Home prices rise 3.2% in 201358

Avg net wage in real estate sector up 27.6% y/y in 2012.59

Montenegro's office market lags behind other capital cities in the region - CBRE59

Podgorica below average for the region - CBRE60


Number of real estate transactions rises 16.9% y/y in 201361

Value of real estate transactions stagnant y/y in Jan-Sep 201361

Residential property prices drop 27.1% in Q3 2013.61

Leasing activity on Bucharest office market hits record-high in 201362

New supply on Romania's retail market seen at lowest in 10 years - CBRE.62

Romania's commercial property investments double to EUR 343mn in 2013 - CBRE63


Prices of new apartments down 4.4% in 2013.67

Vacancy on Belgrade office market continues to fall in 2013 on limited supply, high take-up.67

Belgrade retail market sees no new delivery in H2 2013.68

CBRE expects Serbia's logistics/industrial market to expand in next years.69

Retailer Delhaize Serbia to invest EUR 45mn in 201469


Housing prices down 6.3% y/y in Q3 2013.71

Home sales fall 22% in Jan-Sep 2013.72

Slovenian top court annuls real estate tax73

Table 1 EU Construction Output10

Table 2 CEE Property Investments11

Table 3 Albania Construction Sector's GVA12

Table 4 Albania Building Permits13

Table 5 Albania Construction Cost Index14

Table 6 Bulgarian Residential and Non-residential Industry Data21

Table 7 Croatia's Construction Sector GVA in constant prices (%, y/y)25

Table 8 Macedonia's Construction Sector GVA28

Table 9 Moldova Construction Sector's GVA32

Table 10 Romania's Construction Sector Contribution to GDP Growth37

Table 11 GDP and Construction Output in 2014-201737

Table 12 Romania's Building Permits39

Table 13 Romania's Completed Homes by Type of Financing (quarterly)39

Table 14 Romania's Completed Homes by Area (number, quarterly)39

Table 15 Romania's Residential and Non-Residential Industry Data40

Table 16 Serbia Construction Sector's GVA42

Table 17 Slovenia's Construction Sector's GVA (%, y/y)45

Table 18 Slovenia Building Permits46

Table 19 Average Home Prices in Major Bulgarian cities52

Table 20 Residential Property Indices in 2010-2013 (2009=100)62

Table 21 Romania's Investment Transactions in H2 201363

Table 22 Serbia Housing Prices67

Table 23 Sale of apartments in Slovenia73

Figure 1 Albania Construction Works12

Figure 2 Albania Construction Cost Index13

Figure 3 Bosnia's Construction Output (y/y change in %)16

Figure 4 Bulgaria's Construction Output (% y/y in seasonally and working-days-adjusted terms20

Figure 5 Bulgaria's Building Permits 20

Figure 6 Croatia's Construction Output25

Figure 7 Croatia's Building Permits25

Figure 8 Croatia's Building Permits by Type26

Figure 9 Value of Macedonia's Construction Works28

Figure 10 Macedonia's Number of Newly-Issued Building Permits29

Figure 11 Macedonia's Construction Sector Sentiment29

Figure 12 Moldova Producer Price Indices in Construction33

Figure 13 Montenegro's Construction Output34

Figure 14 Montenegro's Structure of Finalised Construction Works34

Figure 15 Montenegro's Building Permits35

Figure 16 Romania Construction Works index38

Figure 17 Romania's Construction Works, y/y change38

Figure 18 Romania's Building Permits by Area39

Figure 19 Serbia Construction Works43

Figure 20 Number of Building Peermits by Type of Construction43

Figure 21 Number of Building permits, y/y change43

Figure 22 Value of Construction Works in Slovenia (%, y/y)45

Figure 23 Slovenia's Construction Cost Index46

Figure 24 Average Price of Apartments in New Residential Buildings (in EUR)59

Figure 25 FDI Inflow59

Figure 26 Annual change in Slovenia Home Prices72

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