Construction Industry in South-eastern Europe Still Struggling To Emerge From Eurozone Debt Crisis

Construction activity contracted in most counties in Southeast Europe in the first half of 2012, continuing a trend from 2011.

boston (I-Newswire) October 19, 2012 - The outlook for the sector remains gloomy as the sovereign debt crisis in the eurozone is denting demand for eastern European exports, leading to a fall in investments. Increased public spending on infrastructure last year helped the construction sector somewhat offset the decline of commercial and residential building activity but funds for large infrastructure projects this year have been cut, following government’s efforts to reduce fiscal deficits by scaling down expenses.

Construction activity in most SEE countries, for which data is available, declined in the first half of 2012, continuing a trend from 2011. The only gainers were Romania and Serbia.

Construction output in EU27 down 6% in Q2 2012

Data from Eurostat showed that construction output in the European Union countries decreased by 6% y/y and by 1.2% q/q in the second quarter of 2012. Of the three EU member states included in this report, Slovenia and Bulgaria witnessed a drop in construction output, while production in Romania grew at its fastest annual rate in more than a year.
Investments in retail property dominated the real estate market this year with almost all SEE countries adding new shopping centre space.

Activity on the office property market remained strong with most of the SEE countries adding new space. Expectations this year are for stagnation in Albania and growth in Bulgaria, Croatia and Romania. Regarding the residential property market, home prices increased in Albania, Bosnia, Croatia and Slovenia but fell in Bulgaria, Macedonia, Moldova, Montenegro, Romania and Serbia.

Sofia was the leader among SEE capitals adding 77,000 sq m of new office space in the first half of 2012, data from real estate consultancy Colliers International showed. Bucharest and Belgrade followed, each adding 40,000 sq m to their office stock in H1.