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SEE Construction and Real Estate Report - 2015

SEE Construction and Real Estate Report - 2015

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.


Executive summary 6
REGIONAL OVERVIEW 7
Construction activity in most SEE countries returns to growth in 2014. 7
Construction output in EU28 up 3% in 2014 7
CEE property investments shrink 27% in 2014. 8
CONSTRUCTION INDUSTRY 9
ALBANIA 9
Construction sector’s contribution to GDP 9
Building permits value down 81% in Q4 2014 9
Albania’s construction cost index up 0.1% y/y in Q4 2014 10
BOSNIA AND HERZEGOVINA 11
Construction works in Bosnia up 6.2 in 2014 11
Number of completed housing units in Bosnia up 17.8% in 2014 12
Bosnia construction firms cut works abroad. 12
BULGARIA 12
Bulgaria’s construction sector returns to growth in 2014 12
Building permits down 2.1% in 2014 13
CROATIA 13
Construction sector’s contribution to GDP. 13
Croatia's construction output down 6.6% in 2014 14
Croatia’s building permits down 1.5% in 2014 14
MACEDONIA 15
Construction sector one of biggest contributors to Macedonia’s 2014 economic growth 15
Macedonia’s construction works up 49% in 2013 16
Business sentiment in Macedonia's construction sector improves in Q4. 17
MOLDOVA 17
Moldova’s construction works up 1% in 2014. 17
Investments in construction projects up 4.4% in 2014 18
Construction price index rises 8.1% in Q4 2013. 18
MONTENEGRO 18
Montenegro’s construction sector expands 1.9% in 2014. 18
Montenegro building permits up 13.4% y/y in H1 2014 19
ROMANIA 20
Construction works index falls 6.7% in 2014. 20
Number of building permits for residential buildings down 0.3% in 2014 21
Completed housing units down 2.3% in 2014. 22
Value added by construction forecasted to resume growth in 2015. 23
SERBIA 23
Serbia’s construction activity shrinks 3.9% in 2014 23
Building permits up 2.1% in 2014 24
SLOVENIA 24
Slovenia’s construction sector expands11.3% in 2014 24
Value of construction works in Slovenia jumps 19.4% in 2014 25
Slovenia reduces number of building permits issued in 2014 25
REAL ESTATE 27
ALBANIA 27
Albania’s office market stagnates in H1 2014 27
Tirana retail stock increases in 2014. 27
BOSNIA AND HERZEGOVINA 27
Bosnia's Federation new home prices rise 0.6% in 2014 28
BULGARIA 28
Sofia office market witnesses low new supply in 2014 28
Retail property market continues expanding in 20114. 28
New industrial property supply in Sofia up 3.7% y/y in Q4. 29
Home prices resume growth in 2014 29
CROATIA 30
Zagreb’s office market adds 19,406 sq m new space in 2014 30
Zabreb’s shopping centre stock sees no new delivery in H2 2014. 31
Industrial sector remains least developed real estate sector in Croatia 31
MACEDONIA 32
Skopje office market sees no new supply in H2 2014. 32
Residential real estate sector continues growth in H2 2014 33
MOLDOVA 33
Apartment prices in Chisinau fall by 2.6% in 2014 33
Prices of long-term hiring of residential property in Chisinau stable in 2014 33
MONTENEGRO 34
Home prices fall 5.5% in 2014 34
Montenegro’s office market lags behind other capital cities in the region – CBRE 34
Montenegrin retail stock at just 59,000 sq m 35
Residential and mixed-use market 35
ROMANIA 36
Number of real estate transactions down marginally y/y in 2014 36
Value of real estate transactions in Q4 estimated at €514mn 36
Modern retail space deliveries to reach 166,000 sq m in 2015-2016 37
Romania’s office market sees revival after period of limited activity 37
SERBIA 38
Prices of new apartments up 5.8% in 2014 38
Vacancy on Belgrade office market continues to fall in 2014 on limited supply, high take-up. 38
Belgrade retail market sees no new delivery in 2014. 39
SLOVENIA 40
Housing prices down 4.4% in 2014 40
Home sales fall 22% in Jan-Sep 2013. 41

Table 1 EU construction output 8
Table 2 CEE Property Investments 8
Table 3 Albania's Construction Sector GVA 9
Table 4 Albania's Building Permits 10
Table 5 Albania's Construction Cost Index 11
Table 6 Croatia's Construction Sector GVA in constant prices (%, y/y) 14
Table 7 Macedonia's Construction Sector GVA 16
Table 8 Moldova Construction Sector's GVA 17
Table 9 Romania’s Construction Sector Contribution to GDP Growth 20
Table 10 Construction Sector Performance 21
Table 11 Romania’s Building Permits 22
Table 12 Romania's Completed Homes by Type of Financing 22
Table 13 Serbia Construction Sector's GVA 23
Table 14 Slovenia's construction sector's GVA (%, y/y) 25
Table 15 Slovenia Building Permits 26
Table 16 Average home prices in major Bulgarian cities 30
Table 17 Residential Property Indices in 2010-2013 (2009=100) 37
Table 18 Sale of apartments in Slovenia 41

Figure 1 Bosnia's Construction Works 11
Figure 2 Bosnia's Construction Works by Type 11
Figure 3 Bosnia's Completed Buildings 12
Figure 4 Number of Completed Buildings 12
Figure 5 Bulgaria's Construction Output 13
Figure 6 Bulgaria's Building Permits 13
Figure 7 Croatia's Construction Output 14
Figure 8 Croatia's Building Permits 15
Figure 9 Croatia's Building Permits by Type 15
Figure 10 Value of Macedonia's construction works 16
Figure 11 Macedonia's Building Permits 16
Figure 12 Macedonia's Number of Newly-issued Building Permits 17
Figure 13 Moldova Producer Price Indices in Construction 18
Figure 14 Montenegro's Construction Output 18
Figure 15 Montenegro's Building Permits 19
Figure 16 Construction Works Index 21
Figure 17 Serbia Construction Works 24
Figure 18 Number of Building Permits, y/y change 24
Figure 19 Value of Construction Works in Slovenia (%, y/y) 25
Figure 20 Average Price of Apartments in New Residential Buildings 34
Figure 21 Annual change in Slovenia Home Prices 40

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