Game of Towers – Sofia’s New Dynamics in Office Construction

Demand for offices in Sofia is boosting a huge activity in office building and mixed-use projects, and growing land prices trigger the construction of higher and higher such buildings and office towers. The game of towers has generated a public debate on whether to designate zones where these buildings are to be concentrated.

Written by Yasen Georgiev and Dragomir Belchev, EPI – EECFA Bulgaria

BLU Offices, City Tower, Millenium Center (upper row), Capital Fort (lower row). Sources: http://www.novinite.bg, http://www.blu-offices.com, http://www.capitalfort.com, http://www.icon-bulgaria.com

In 2016 the Bulgarian economy registered a growth of 3.4%, driven mainly by increasing household consumption and export volumes. Forecast for 2017 and 2018 suggests that the country’s GDP will register a further expansion between 3% and 3.5%, reflecting the positive signs from the labor market and their implications on individual demand.

These trends support EECFA’s latest summer forecast for an increase in the overall construction market by more than 5% in 2017 and over 3% in 2018. Building construction is set to grow even at a higher pace, thus reaching an annual increase of around 8% for 2017-2019. Beside the accelerated growth of residential construction, it is the non-residential sub-sector that shows increased dynamics after a year of negative growth.

According to the EECFA 2017 Bulgaria summer report, office construction is expected to rise and reach an average growth of 4.7% over the 2017-2019 period. This forecast is supported not only by the announcement of a number of projects due to start in 2017-2018, but also by the increase in permitted floor spaces of office and administrative buildings in 2016 on an annual basis, as well as by the scale of started projects in Q12017 compared to Q12016.

In this regard, Sofia remains the most economically active city in the country. Despite the emerging demand for contemporary office space in secondary cities, in terms of floor space, 77% of all permitted office and administrative buildings in 2016 are located in the capital city, similarly to the share of started office and administrative buildings in Sofia, in a nationwide comparison accounting for 74%.

What stands behind is demand coming from outsourcing and IT companies that either seek to expand or to offer more appealing office facilities to their employees Continue reading Game of Towers – Sofia’s New Dynamics in Office Construction

GDP revision in Turkey: implications on construction market size

TUIK (Turkish Statistical Institute) had been working on harmonizing its GDP calculation method with the most recent international standards from 2013 on. The first revised figures were published at the end of 2016. After the revision, the construction market size was measured twice as large for 2015 as it was considered earlier.

This presentation is about the revised construction size and EECFA’s opinion: Turkey’s GDP and Construction Investment

Prepared by Janos Gaspar (EECFA Research)

 

 

EECFA 2017 Summer Construction Forecast and Revision

We have released our summer construction forecast on 16 June 2017 on Bulgaria, Croatia, Romania, Russia, Serbia, Slovenia, Turkey and Ukraine. This post intends to summarize the most important projections for these construction markets for the years 2017-2019. These are our main findings; for a deeper understanding, please consult our reports. You can contact us on eecfa.com.

Outlook for the EECFA regions

The highly optimistic outlook for South East Europe is maintained by EECFA. Leaving behind the transitory 2016, when the absorption of funds available in the new EU programming period (2014-2020) was still at a low level, the upcoming years are characterized by a bigger expansion of the construction market than that of GDP. Building construction is predicted to well outperform the total market, with a yearly average rate of 9% over the horizon. The small growth in the region’s total civil engineering market is attributed to the negative expectations in Romania.

Sideway moves, no further market expansion on the horizon are what we consider the most probable scenario for the 3 East European markets together. Turkey and Russia, being far the two biggest markets we cover in EECFA, is expected to show some similarities. In both countries our forecasts are moderately optimistic in the civil engineering market. While in the building construction market the outlook is clearly negative for Russia and neutral for Turkey. In Ukraine, the recovery experienced in 2016 is predicted to be sustained until 2019. Both building construction and civil engineering could expand further with a relatively good pace. Continue reading EECFA 2017 Summer Construction Forecast and Revision

2016 Permit-Completion results of EECFA countries

See this summary table on how construction permit ended up in 2016 in the

  • 8 EECFA Countries where we have members
  • and in Hungary (as Buildecon is the Hungarian member to EUROCONSTRUCT)

T12+

and here you can follow the development of both permit and completion on interactive charts:

  1. Residential permit-completion (number of dwellings)
  2. Non-residential permit-completion (floor area and number of buildings)

On the residential graphs, the number of dwellings is displayed, and you can choose the countries and the data type. Besides these options, on non-residential graphs you can also choose the indicator type (floor area or number of buildings)

Beyond market feeling: 3 indicators we created for understanding better what is happening on the construction market

This post of mine appeared first on the EUROCONSTRUCT blog in mid-February and introduced one of our researches in Hungary. This research is about creating such aggregates from the data of individual construction projects which carry new, up-to-date information on the current performance of construction market segments. Since then, however, we have published our first findings for the EECFA member Romania as well. Most of the original text stands for Romania too, but there are some differences so these are included in brackets.

1_intro_normal
Thanks to The National Bank of England for the fan chart and Cosgrove Hall Films for Jamie and the Magic Torch

The regular fan-chart of The Bank of England’s GDP forecast is perfectly honest about the challenge we all face while putting together historical construction data and forecast. Uncertainty is there, not only on the right, but on the left of the dotted line as well, thanks to revisions. This post is focusing on how uncertainty surrounding the present and some months ahead in the future could be eased with aggregated construction project data. These are Hungarian and Romanian examples.

Continue reading Beyond market feeling: 3 indicators we created for understanding better what is happening on the construction market

EECFA 2016 Winter Forecast

EECFA has released its winter construction forecast reports on 2 December 2016. In this post you will find the concise summary on our expectations for the 8 construction markets we are dealing with: Bulgaria, Croatia, Romania, Russia, Serbia, Slovenia, Turkey and Ukraine. You can also find us and our reports on eecfa.com.

eecfa_pressgraph

 

Regional outlook

South-East Europe is very optimistic. After the transitory 2016, when shrinkage in the civil engineering market in the EU countries of the region dragged down the region’s total performance, high growth is expected to characterize the total construction market in the upcoming years. Each EECFA country of the region predicts an expansion beyond 5% for 2017 and a further increase for 2018. Building construction, coming back from low levels, is predicted to expand faster than civil engineering in 2017.

Eastern Europe is at a standstill as a whole. In Russia, we expect a prolonged decline. The total construction market is not predicted to expand before 2018, and we believe that the growth of civil engineering sub-market can only alleviate the loss awaited in building construction in 2017. In Turkey, our stories for the upcoming years is rather similar to that of Russia, slight optimism in civil engineering, slight pessimism in building construction leads to a total market which is not predicted to grow until 2018. In Ukraine, all-round recovery is forecasted. From the very low levels, we expect relatively high growth rates for 2017 and 2018.

eecfa-_presstable

Continue reading EECFA 2016 Winter Forecast

EBI Építésaktivitási Jelentés

  • Hány darab irodaprojekt építése kezdődött meg 2016 1. félévben az országban?
  • 114 darab
  • De ebből mennyi az új építés, és mekkora a volumene?
  • 33 darab és az összes becsült építési érték 66 milliárd forint.
  • És mennyi felújítási projekt indult el oktatási épületeken?
  • 80
  • Milyen értékben?
  • 14.9 milliárd forintnyi, ami 20%-kal kevesebb, mint 2015 1.  félévében.

Az összes magas és mélyépítési szegmensre ilyen és ehhez hasonló adatokat állítunk elő egy kutatás keretében, melynek első kézzel fogható összegzése szeptemberben készült el. Az összes az jelenti, hogy a lakásépítést külön, a nem-lakáscélú magasépítést 9, a mélyépítést 8 szegmensbe kategorizálva aggregáljuk az egyedi építési projektadatokat.

Ezt a posztot egyfajta kézikönyvnek szánjuk, hogy bemutassuk milyen adatok kerültek az EBI Építésaktivitási jelentésbe.

A sajtóanyag itt elérhető: .zip (egy pdf és néhány kép)

A teljes anyag az ibuild.info oldalán olvasható (regisztáció után)

1. A fenti példát folytatva, azon kívül, hogy 114 irodaprojekt kivitelezési munkái indultak el az országban 2016 1. félévében, azt mutajuk még be, hogy ezek várt építési értéke 88 milliárd forint, és hogy ez háromszor annyi mint az előző év hasonló időszakában elindult irodaprojektek építési értéke.

aktivitas_1

Continue reading EBI Építésaktivitási Jelentés

Q2 2016 Permit – Completion results of EECFA countries

In Q2 2016 the number of permits issued in the latest 4 quarters for residential homes increased by 14% in the Balkan EECFA countries together, compared to the same period last year. Turkey registered a 10% growth in this term, while Ukraine’s Q1 2016 (latest available) figures are almost 30% up.

In case of non-residential buildings, permitted floor area remained at the same level in the Balkan as recorded a year ago, while Turkey saw a drop of 1% in Q2 2016, and Ukraine ended up 20% positive in Q4 2015 (latest available).

In Russia, residential completion of the latest 4 quarters decreased by 2% in Q2 2016 and non-residential completion stood at 1% in comparison with a year ago. (Russia-wide permit data is not available)

The updated interactive permit-completion graphs of EECFA countries are available here:

  1. Residential permit-completion (number of dwellings)
  2. Non-residential permit-completion (floor area and number of buildings)

On the residential graphs, the number of dwellings is displayed, and you can choose the countries and the data type. Besides these options, on non-residential graphs you can also choose the indicator type (floor area or number of buildings)

As we regularly issue forecasts, for us the most important question of this compilation is whether the newly incoming data are in line with our latest (short-term) forecast or not. So below we have highlighted some countries and tried to put the figures into this perspective.

  • Residential permit– Biggest growth rates: Serbia

Almost 13 thousand permitted dwellings in the Q2 2015 – Q2 2016 period translate to a 44% growth on comparable basis. This is supporting our view that completion could start increasing this year.

residential-serbia

 

  • Residential permit– Biggest growth rates: Ukraine

Permit reached an estimated 178 thousand in the last 4 reported quarters together, which is a 29% increase, while completion was above 110 thousand. It does not contradict our view that completion in 2016 will remain at around its 2015 level.

residential-ukraine

  • Residential completion – Biggest markets: Russia

In the Q2 2015 – Q2 2016 period 1 170 thousand dwellings were completed, a 2% drop on comparable basis. Data so far are in line with our expectations.

residential-russia

  • Residential permit – Biggest markets: Turkey

Almost 960 thousand dwellings were permitted in the last 4 quarters including Q2 2016, meaning a 10% increase compared to a year ago. Completion stood at around 725 thousand, 3% more than in Q2 2015. These are in line with our predictions.

residential-turkey


  • Non-residential permit – Biggest growth rates: Serbia

In Q2 2015 – Q2 2016, surpassing well its 2007-2008 level, 1.5 million m2 non-residential floor area was permitted, meaning an almost 100% jump from a year ago. This is supporting our optimistic outlook.

non-residential-serbia

  • Non-residential permit – Biggest growth rates: Slovenia

Slovenia is coming back from very low levels, in the Q2 2015 – Q2 2016 period altogether 735 thousand m2 non-residential floor area got permit, an increase of almost 60% over a year earlier. This is also in line with our positive outlook.

non-residential-slovenia

  • Non-residential permit – Biggest markets: Turkey

Permits for around 48 million m2 of non-residential floor area were issued in the latest 4 quarters until Q2 2016, which is virtually the same level than a year ago. This does not contradict with our soft-landing scenario. Completion is 11% in the positive territory in the Q2 2015 – Q2 2016 period against the corresponding period a year ago, but in case of non-residential sub-sector, the connection between output and completion is not as strong as in case of residential.

non-residential-turkey

  • Non-residential completion – Biggest markets: Russia

Coming down very slightly from the peak, in Q2 2015 – Q2 2016 around 30 million m2 non-residential floor areas were competed. Investment into non-residential construction has been shrinking recently, so this does not contradict our pessimistic outlook.

non-residential-russia


The interactive graphs are updated half-yearly, in between 2 report issuance. If you would like to have the row data in xls, feel free to contact us.

Data are from national statistical offices: NSI, Crostat, KSH, Insse, Rosstat, SURS, SORS, Tuik, Ukrstat

Q4 2015 Non-residential: permit – completion

viz_test

As almost all Q4 figures were published, we have updated our interactive graphs containing quarterly development of permit and completion in the countries we cover. Beside the residential market, now we have put together a similar one about non-residential buildings. The same 3 data types are provided and you can choose from floor area and number of buildings.

Looking at non-residential permits, a substantial growth is experienced on the Balkan. The only exception is Romania, but, for example in Serbia the permitted floor area is almost 100% above its 2014 level. The biggest countries of EECFA region suffer through, and all this is pretty much supporting the scenarios we have foreshadowed in our reports.

The interactive permit – completion graphs are available here:

1. Residential (number of dwellings)

2. Non-residential (floor area and number of buildings)

While putting together the non-residential figures, I became curious about how the levels are comparable to other European countries. Although some exact matchings have been found, the aim was rather to put the country level market sizes into another context (since we usually contrast them in money terms). The basis of the compilation is permitted non-residential floor area.

permit_comparison_2015

UK is not mentioned in this list, but it is most probable (based on the value of new non-residential construction) that its market in terms of floor area is bigger than that of France. However, permit data is not available in UK. The same is true to Russia, so completion is shown here instead. And one final note to the table is that permit generally refers to newly created spaces and rarely accounts information about renovation-like activity.