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Construction and Real Estate
10.06.2008   bulgarien.dk

Times are good for Bulgaria's construction industry, with continued growth in the real estate sector, in addition to a host of infrastructure improvements spurred by EU accession, keeping local firms busy. This success only looks set to continue, with the Bulgarian Entrepreneurial Chamber in building forecasting annual sector growth of between 12% and 16% until 2010.

The private sector accounts for around 90% of housing development, and also contributes heavily to infrastructure works. Local supply companies are stepping up production to respond to the heavy demand, though rising prices for materials are becoming an increasing concern across the sector. EU accession has highlighted irregularities in the tendering process, with calls for more clarity and better competitive practices across the board. Labour issues are also still prevalent, with calls for better educational opportunities to increase the supply of skilled professionals in the industry. It is hoped that the master plan for the development of capital city Sofia, ratified in 2007, will bring some clarity to land usage and provide further opportunities for the private sector. The real estate sector is maturing, with significant interest from foreign investment .

As Bulgarians' incomes grow, and more people move to urban locations, housing costs are on the rise, particularly in capital city Sofia. This has meant steady growth in housing loans and mortgage loans. Despite analysts' predictions of a slowdown, prices increased by 28.9% in 2007, though a much smaller growth figure is anticipated for 2008. Over 90% of Bulgarians own their own homes, though the housing market continues to see heavy investment, spurred on by a shift away from rural dwelling and purchases of vacation homes.

Increased interest is also being shown for office space, with a number of projects underway or recently completed. Much of Bulgaria's available office space has been B-grade, though EU accession has brought about more demand for prime spaces, of which there is currently a lack. Shopping centres are starting to pick up as a concept, with 10 new malls planned for Sofia and a number of other centres in the works throughout the country. This has also led to an increased need for warehouse and logistics real estate spaces, with the average size of units requested increasing 10 times over the last five years. While the outlook for Bulgaria as a whole looks balanced for the short-to-medium term, demand may soon outstrip supply in rapidly expanding Sofia.



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