The report covers developments in the SEE construction and real estate sectors in the period from April 2014 till April 2015.
After years of contraction, construction activity expanded in most counties in Southeast Europe in 2014. The expansion was helped by increased demand for construction works amid the recovering economies. Increased use of EU funding also played a significant role as 2014 was the last year countries could use funds under the previous 2007-2013 programming period.
The outlook for the industry’s development in 2015 is 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, continues to pose a risk to the European economies, especially those in south-eastern Europe. Economic growth in the region will be negatively affected in case of extended sanctions on Russia.
Commercial property investments in Central and Eastern Europe (CEE) shrank by 27% in 2014, after jumping 37% the year before. Romania attracted the highest volume of investments of the countries under review in this report. Bulgaria followed, ahead of Croatia, Serbia and Slovenia. The outlook for CEE, however, is positive with investment flows seen up 30% to reach $24.4bn in 2015.
The real estate market in SEE countries did not see major developments in 2014. The office market in many of the country stagnated or witnessed limited supply. The retail segment reported mixed results with Albania and Bulgaria adding new supply, while Croatia, Macedonia and Serbia remaining broadly at the levels of 2013.