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

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