Bulgaria’s RRP revisited: slow progress, downsized and removed projects, concerns over timely implementation

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Written by Yasen Georgiev – EPI, EECFA Bulgaria

In our post about a year ago we wrote about the opportunities the RRF could bring to Bulgarian construction. After months of no updates, September and October this year brought news for the future prospects of Bulgaria’s Recovery and Resilience Plan (RRP). In late September 2023 Bulgaria’s government submitted a modified version of the RRP to the European Commission (EC), whereas in early October the country submitted in Brussels its second payment request worth €724mln.

Main government buildings Sofia, Bulgaria. Source: Jack Krier, unsplash.com

The modified version, which still needs to be approved by the EC, comes to meet the respective regulation on EU level that grants allocation for all member states are to be updated in June 2022 based on each country’s post-pandemic recovery performance. Since Bulgaria registered a comparatively better economic outcome in 2020 and 2021 than initially expected, the maximum grant allocation under the RRP was reduced by €580mln (from €6.27bln to €5.69bln).

In order to align the RRP with this downward revision, the government proposed a modification of the plan. It concerns 17 projects included in the original version of the plan, some of them extensive construction works.

Notable downsized projects are those linked to:

  • building national infrastructure for storage of electricity from renewables (decrease by around €400mln to €400mln); 
  • modernisation of hospital facilities (decrease by around €80.5mln to around €100mln);
  • improving the energy efficiency of the building stock (decrease by €43mln to €880mln);
  • modernisation of educational infrastructures: renovation of schools and kindergartens, construction of new ones as well as renovation of student residences (decrease by around €1mln to €290mln).

Three projects were completely dropped out of the updated RRP:

  • the construction of an intermodal transport terminal in Ruse (€23mln);
  • the digital transformation of the Bulgarian Post (€52mln;
  • digitalising of the management, control and efficient use of water (€58mln).

Simultaneously, funding has been revised upward for these projects:

  • the extension of Sofia’s third metro line (increase by around €11.5mln to €122.6mln)
  • construction and/or renovation of youth centres (increase by around €1mln to €33mln).

The second payment, which was initially due by the end of 2022, relates to 61 milestones and 5 targets. Projects under this payment are in such areas as energy-efficient street lighting, smart industry, renovation of buildings, digitalisation of the electricity transmission grid, renewable sources, electricity storage, and the digitalisation of railway transport, among others. Reforms within the scope of the second payment aim at the decarbonisation of the energy sector by boosting the uptake of renewable energy and energy efficiency improvements, providing support for sustainable urban transport, making public procurement more competitive, and many more.

Now the European Commission is assessing the request according to the respective regulation since payments are performance-based and contingent on project implementation and reforms outlined in the RRP.

Against this backdrop, there are growing concerns that Bulgaria is substantially lagging behind in making full use of resources available under the plan. The third payment request (€724mln) should have been submitted by the end of June 2023, which was not the case, since even as of mid-October only 6 out of 46 milestones and targets were implemented. A delay is expected with the submission of the fourth payment request (€612mln) that is due by the end of 2023. It includes commitments for meeting 41 milestones and targets, of which only one was implemented by mid-October.

These delays would not be worrying if the available funding was disbursed under the traditional multi-annual financial framework which allows for budget phasing and transfers between funding periods. However, in case of this funding instrument, all measures must be implemented within a very tight frame: the Regulation establishing the Recovery and Resilience Plans requires all milestones and targets within the national plans to be completed by August 2026.

The delay so far has mainly been due to the lack of working parliament and a political instability over a period of two years. Nowadays, under the condition of a functioning legislative body and a government, which has a supporting majority in it, it remains to be seen how Bulgaria will catch up in channelling these resources in its economy for the sake of the comprehensive and horizontal green and digital transition that all EU countries are currently facing.

Check out the forecast for Bulgaria’s construction sector up to 2025 in the EECFA Forecast Report. Orders and sample report: eecfa.com.

What opportunities the RRF can bring to Bulgaria’s construction

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Written by Anita Dangova, EPI, EECFA Bulgaria

Bulgaria’s Recovery and Resilience Plan (RRP) aims to facilitate economic and social recovery from the COVID-19 crisis and to create a more sustainable, equitable, and successful economy. It includes a set of schemes not only to restore the economy’s growth potential, but to boost it, too. In achieving this, several construction projects to increase energy efficiency and decrease CO2 impact are to be implemented in 2023-2026.

The official cover of Bulgaria’s RRP; Source: National Recovery and Resilience Plan of the Republic of Bulgaria

How the RRP will impact housing construction

One of the major projects provides support for sustainable energy-efficient renovation of the housing stock since, currently, only 7% of the floor area of occupied residential buildings complies with modern energy efficiency (EE) requirements. The project, to be launched by end 2022 with an implementation period till 2026, will attract a total of EUR 607mln under the Recovery and Resilience Facility (RRF). Multi-family residential buildings will be eligible for financing nationwide and renovated units have to achieve 30% primary energy savings. Residential buildings to be financed under this scheme are divided into two groups depending on the time of application of owners’ associations: 

  • applications until March 2023: 100% of the project funding will be provided from the RRP, 
  • applications from April 2023 to December 2023: 80% of the project funding will be provided under the RRP, and 20% will be in the form of self-contribution. 

Another project with an implementation period till 2025 is dubbed “Program for the financing of single renewable energy measures in single-family and multi-family buildings”. Total planned funding is EUR 123mln (EUR 72mln from the RRP and EUR 51mln in the form of national and private co-financing). The project aims to increase the use of renewable energy in final energy consumption in households by financing new solar systems for domestic hot water and photovoltaic systems. There are two measures:

  • construction of solar systems for domestic hot water supply. The maximum amount of grant per individual household is to be 100% of the cost of the system, but no more than EUR 1000;
  • construction of photovoltaic systems up to 10 kW. The maximum amount of grant per individual household is to be up to 70% of the system cost, but no more than EUR 7700.

How non-residential construction will benefit from the RRP

One of the projects finances – between 2022 and 2026 – the sustainable energy renovation of non-residential buildings owned by municipalities and national authorities (regional administrations, ministries); the Bulgarian Academy of Sciences; public-private partnerships for buildings in the field of production, trade and services; non-profit legal entities, municipal enterprises, and commercial companies. The project consists of two components: 1) EUR 189mln (without VAT) to public buildings; 2) EUR 120mln (without VAT) for manufacturing, commercial and service buildings.

Continue reading What opportunities the RRF can bring to Bulgaria’s construction

Potential impact of the war in Ukraine on the Bulgarian construction market

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Written by Yasen Georgiev, EPI, EECFA Bulgaria

Like elsewhere in the EECFA countries that are not directly impacted by the war in Ukraine, construction market in Bulgaria entered a period of an increasing unpredictability. What stands behind is an interplay between domestic and external factors.

The Bulgarian construction market entered 2022 with a mixed performance: booming residential construction, stagnating non-residential one and a rather heterogeneous civil engineering. Residential construction benefited from favourable financing conditions and fears for inflation that turned property investments into a safe haven. At the same time, non-residential construction was struggling to recover from the Covid-19 shock. Civil engineering was heavily impacted by the lack of clear future prospects and direction because of the political turmoil in 2021 with three rounds of parliamentary elections, and the absence of new EU funding (Bulgaria’s Recovery and Resilience Plan was approved by the European Commission in April 2022, while the EU’s Operational Programmes are still not finalized).

Sofia, Bulgaria. Source: pixabay.com

The war in Ukraine, however, increased the level of uncertainty throughout the entire construction market. Building material costs and shortage and/or equipment shortage were the fastest growing factors limiting the activity of construction enterprises in February-April 2022. Despite the slow pace, the number of clients with payment delays over the last months was also on the rise. As a result, the overall business climate in the construction sector started to deteriorate rapidly in April (Source: NSI, Business survey in construction).

Simultaneously, the headwind from the pre-war period in the residential segment continues. Compared to Q1 2021, permitted residential buildings increased by 20%, dwellings in them by 8%, and their total built-up area by 14%. However, signs of cooling are in sight: compared to the previous quarter, permitted residential buildings decreased by 3.1%, the number of dwellings in them by 23.4%, as well as their total built-up area by 17.1%. On quarterly basis, started residential buildings in Q1 2022 dropped by 4%, their total built-up area contracted by 10%, although dwellings in them went up by 5% (NSI, building permits issued for construction of new buildings).

Similar trends are to be seen elsewhere. In Q1 2022 permitted administrative buildings decreased both in number (by 45%), and in total built-up area (by 54%) compared to the previous quarter. Issued permits for construction of other types of buildings are less by 8%, and their total built-up area down by 28%. On an annual basis, there is a reduction of issued permits for construction of administrative buildings and their total area, respectively by 35% and 82%. Permits issued for construction of other buildings sank by 4%, as well as their total built-up area by 1.3%. Against the previous quarter, started administrative buildings and their total built-up area shrank by 21% and 51%, respectively. Started other types of buildings also decreased by 6%, as well as their total built-up area by 15%.

What becomes evident from the data above is that the construction market is most likely to keep a high level of volatility triggered by two opposing market forces:

  1. the need for investors to search for shelter from inflation and
  2. the necessity for developers to adjust to market conditions they are not used to (material shortages, constant upward changes in prices of materials and fuels, and labour costs).

In that puzzle, the situation in Ukraine will further affect the sector, surely not in a predictable way and most probably neither in a positive one. However, the government is yet to finally start investments within the Recovery and Resilience Facility in 2022, which, accompanied by unleashing the EU funding from other sources in the years to come, might secure a soft landing for the sector before its potential new take-off when the market regains momentum again.

EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries, including Bulgaria. The current reports were issued in December 2021 and the next reports will be issued on 27 June 2022. For orders and sample report: eecfa.com

Property demand pushing up Bulgarian residential construction

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Written by Dragomir Belchev, EPI – EECFA Bulgaria

Construction activity

Since the start of the pandemic, the activity of construction companies in Bulgaria was hindered by economic uncertainty, the government’s anti-COVID measures and the lack of workforce due to quarantine or illness. Therefore, during the period of March 2020 – March 2021, NSI (National Statistical Institute) data shows that building construction decreased by 8.4%. However, the sector has signs of recovery as in March 2021 building construction production index increased by 8.0% for the first time compared to the same month a year earlier.

Short-term indicators also suggest the improved confidence of investors after the hesitant 2020. In the first quarter of 2021, permitted floor area was 11.0% more than in Q1 2020, and almost 4% more than Q1 2019. The same trend, but with stronger dynamics, is also observed regarding started floor area. During the first quarter, accumulated construction permits resulted in starting of more than 660 000 sqm., which is nearly 25% more than in the corresponding quarter of 2020, and by 5.5% more compared to 2019.

Sofia (Bulgaria) – Source: unsplash.com (photo taken by Georgi Kalaydzhiev)

Residential property market

Despite the experienced difficulties, residential construction is remaining in the center of investors’ attention due to the growing residential property market especially in the largest cities (Sofia, Plovdiv, Varna, Burgas, etc.). After the initial withdrawal of buyers in the middle of 2020, it became clear that there would be no evident shift on the residential property market.

Regarding the supply side of the market, 15 623 new dwellings were completed last year (Q2 2020 – Q1 2021), which is 17.4% higher than a year ago and is the highest figure in the last 10 years. Still, this cannot catch up with demand which pushed prices up at the end of 2020 and in early 2021. The number of transactions went up in the first quarter of 2021 by 17% compared to the same quarter of 2020, and it is actually the strongest first quarter in the last 5 years. The ongoing housing price increase intensified after 2015. Since then, the accumulated price growth has been over 41%.

There are several factors contributing to the ongoing process:

Low interest rates on housing loans: last year banks improved the conditions of granting loans. The average interest rate on housing loans in March 2021 is 2.75%, which is historic low. The increasing interest in buying a home resulted in a 6% growth of newly granted loans in the period of April 2020 – March 2021 compared to the same period a year earlier. In Q1 2021, 20% of all deals are financed with bank loans but there are significant differences between cities. In Sofia, where buying a property is the most expensive, nearly half of the deals are financed with the banks’ help. In Varna the share is 32%, while in Burgas and Plovdiv the respective deals are 30% and 25%.

Low deposit rates: interest rates on deposits are close to 0% as in the last months some banks started to refuse taking new term deposits, which shifted people’s savings into real estates as the most reliable option.

Speculative investment: investors’ invest in acquiring properties in early construction stages with intentions to re-sell after the completion, which generates additional demand, and increases prices. Additionally, the growing profitability of the real estate market attracts the savings of people working abroad who look for investment opportunities in their country of origin.

Residential construction forecast is available in the EECFA Construction Forecast Report Bulgaria that can be purchased on eecfa.com. EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries.

Will COVID-19 shake Bulgarian housing?

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How much the pandemic hit construction activity: short-term implications for the residential property market

Written by Dragomir Belchev, EPI – EECFA Bulgaria

Construction activity

Construction sector in Bulgaria, and building construction in particular, was not affected as hard as others by the COVID-19 crisis. Yet, limited economic activity during the 3-month long state of emergency (between March 13th and May 13th) resulted in a drop of the index of construction production during this period by 16.9% on average. In June building construction output was 4.3% lower as companies in the sector are returning to business as usual. But already started residential and non-residential projects are financially ensured and are expected to be completed on time. And the accumulated started projects during the last several years started to materialize and 3660 dwellings were completed in Q2 2020, which is 56% higher than in Q2 2019. On the other hand, the economic uncertainty temporarily cooled down investor thirst in residential projects. Permitted dwellings in Q2 2020 dropped by 29.9%, while in terms of started dwellings the decline was not so dramatic (-15.6%).

The full exposure of the Bulgarian residential construction to the COVID-19 crisis remains to be seen in the months to come. Unemployment rate reached 5.9% in Q2 2020, which is 1.8 p.p. more than at the end of 2019. In mid-term the loss of income will reflect in people’s intention for buying a home, which could have a cooling effect on investments in residential property.

Residential property market

During the state of emergency, activity on the residential property market was restricted due to hampered administrative services. Additionally, the uncertainty regarding the near future made buyers temporarily pull away from the market. As a result, the total number of home transactions in Bulgaria in Q2 2020 shrank by 27.8% over Q2 2019. In Sofia, which has the largest chunk of the market (around 15%), the decline was lower (-7.6%).

During this summer we saw buyers gradually returning to the market, but while they are expecting a more significant price reduction, sellers are still reluctant to make such sacrifice. The shortage of quality property in big cities still puts the market power in the hands of supply with price levels almost unchanged compared to the beginning of 2020. In short-term, demand for property is fostered by 3 main factors:

  • Despite increasing unemployment, there is no major loss of income of people willing to buy before the start of the COVID-19 crisis.
  • Interest rates on mortgages were stable in the last 5 months, and as of July 2020 the average interest rate reached 2.89%, nearing the historic low of 2.85%. During the state of emergency financial institutions started to be much stricter in requirements, taking into account the affected sectors of the economy. In general, banks have the needed liquidity to finance viable projects of both sides – construction entrepreneurs and families buying a home. According to the Bulgarian National Bank data, the total sum of granted loans remain stable except for a considerable negative change in May 2020 when new housing loans decreased by nearly 28% over May 2019.
  • Buying property as investment is popular among people with free money since deposit rates are close to zero. Such investments could record good profitability especially when made before the completion of the construction project.

One segment of residential property market is experiencing a noticeable upturn. Due to pandemic, people are seeking more freedom and fresh air, which is resulting in strong demand for family houses in the agglomeration of big cities or near to them (in radius of 30 km).

Construction forecast for Bulgaria, including residential forecast, is available in the latest EECFA Forecast Report Bulgaria that you may buy on eecfa.com

Bulgaria C-19 situation in construction (status on 15 April 2020)

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

Physical restrictions

There is no curfew or full lockdown, but there are some physical restrictions most important of which are:

  • Foreign nationals are not allowed to enter Bulgaria (with some exceptions);
  • Introduction of checkpoints at the entry and exit roads of the largest cities (regional centers);
  • All places for public access for gathering of people are closed (restaurants, malls, kindergartens, schools, parks, etc.);
  • 14-day quarantine for all Bulgarians arriving from abroad is mandatory.
  • All employers, depending on the specifics and capabilities, should introduce a remote work for their employees. If it is not possible, employers organize enhanced anti-epidemic measures on the workplace.

The state of emergency, firstly announced on March 13, along with restrictive measures regarding COVID 19, were extended to May 13, 2020.

Construction works

According to the Association of Construction Entrepreneurs, there are no frozen residential construction sites, but it is hard to imagine that the work is going to continue with the same volumes. Additionally, obtaining construction permits is becoming increasingly difficult despite the effort of municipalities to introduce e-services.

Construction works of largest infrastructure projects continue at present, but with slower pace since there are difficulties in deliveries of construction materials. Delays are expected on the Bulgarian part of ‘TurkStream’ due to the obligatory 14-day quarantine for foreign workers who are employed on the site.

We are planning to issue the new EECFA Bulgaria Construction Forecast Report on 29 June 2020. Sample report and order

Anticovid measures in construction

There are no specific anticovid measures regarding the construction sector. Most important current economic measures implemented by the government include:

  • The government will support companies with proven impact from the epidemic by covering 60% of the employees’ wages for up to three months. The initial aid package has been set at approximately €2.3bln, a sum which Prime Minister Boyko Borissov predicts may be insufficient. The list of eligible sectors was firstly narrowed to tourism and catering, later on extended to manufacturing industries. However, this scheme is not meant for companies that cannot prove direct COVID implications.
  • The deadline for annual financial statements and payment of corporate taxes is postponed from end-March to end-June (estimated effect of BGN 800mn/EUR 400mn within the year).
  • Possibility for companies and individuals to postpone loan and interest payments for 6 months.
  • Interest-free loans granted by the state-owned Bulgarian Development Bank directed to individuals, which are in difficult financial situation as a result of the COVID 19 restrictions.
  • Interest-free loans are also planned for companies, but conditions are not clear yet.

Sofia Office Construction: The Beat Goes On (For Now)

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

Bulgaria’s non-residential construction is set to grow in 2019 and 2020. The positive figures in the latest EECFA Bulgaria Construction Forecast Report are backed by, among others, the accelerated growth in office construction which is to witness the completion of many big projects in 2019-2021. The question is not on whether their delivery will impact the segment, but on how.

NV Tower, Balkan Business Center (left), Sky Fort (middle), Synergy Tower, Sofia Tech One,  Advance Business Center (right); Sources: www.markan.bg, www.advancecenter.bg, www.capital.bg, http://www.aaa.bg

As shown by the 2019 Summer EECFA Bulgaria Construction Forecast Report (which can be purchased here), non-residential construction in the country is to be on a growth path in 2019 and 2020, a major driver being office construction. After bouncing back in 2017, and keeping the momentum in 2018, it is relishing a real revival and is predicted to increase by over 10% on average in 2019-2021.

Office-related construction is mainly concentrated in Sofia where all major projects are located. The city is an attractive destination for companies that benefit from a favorable mix of skilled young population, competitive labor costs and rent levels to establish and expand in spheres linked to Information Technology, business process outsourcing and shared services. Companies in these sectors are active in relocations, often driven by their expansion plans and/or the rising preference of their employees for modern office premises.

Existing office space in Sofia totaled 2mln sqm at the end of 2018. In H1 2019 it witnessed the delivery of 100 000sqm and now looks forward to another 400 000sqm with an expected completion till 2021.

These dynamics are fueled by the peak in permitted office space registered in H2 2018 – an all-time high performance that by far exceeded the pre-crisis record of H1 2008 (265 065sqm).

In H1 2019 another 129 545sqm were permitted, which is still a rise of more than 90% y-o-y. It remains to be seen whether this data on permitted floor space will translate into the size of started office premises and, later on, in the number and volume of completed ones. H2 2015 recorded the peak in terms of started office floor space so far and if it is to be outperformed, H2 2019 and H1 2020 seem to be the perfect timing.

Against the backdrop of the latest development, the question is not on whether the delivery of all projects in the active pipeline will impact the segment, but on how. Demand is awaited to see logical limitations in the future because of skilled labor shortage being on the rise, the increased application of AI solutions and the changing behavior of office employees in favor of more flexible and remote work.

This altogether should keep the present rent levels in Sofia, or even put them under pressure. Rents did not considerably change over the last years and even now continue to be among the lowest in the CEE region. Thus, provided that all projects are delivered, office yields will be questioned. This scenario seems increasingly possible unless a new wave of major restructuring and cost-cutting takes place in countries with higher labor costs.

Residential construction in Bulgaria – Growth goes on, challenges remain

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Rises in employment and income in Bulgaria, combined with low interest rates both on deposits and housing loans, are pushing residential construction as well as the property market upwards. The rise in profit margin increasingly attracts investors in the sector. However, aging multi-family buildings and the growing number of uninhabited properties remain as major challenges ahead of the housing stock in the country.

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

Varna Wave ongoing residential project in Varna, Bulgaria – Source: varnawave.bg

Residential construction and the real estate market in Bulgaria continue to be in the focus of investors and developers. The turning point was in 2016 when the sector registered a growth of 31.1% and it is expected to increase in double-digit terms in the period up to 2019. These developments have a direct correlation with improved living conditions as in 2017 the Bulgarian GDP grew by 3.6%. According to European Commission forecasts, there are no signs for pessimism as they prognosticate a further growth of 3.8% in 2018 and 3.7% in 2019.

The economic development is accompanied by low rates of unemployment and an increased disposable income. Major cities in Bulgaria such as Sofia, Plovdiv, Varna and Burgas are getting more and more attractive, which leads to the concentration of the population and creates a strong demand in the residential sector. Consumer preferences are also changing in favour of quality properties (larger ones and with better location) that are lacking in the market. At the moment supply is still lagging behind, unable to catch up with demand. In H1 2018 completed newly-built residential buildings were 9.1% more than in the same period in 2017. In terms of dwellings, there is a drop of 10.3%, which is a proof of the completion of bigger-scale projects.

As a result, currently over 50% of the deals are made while dwellings are still under construction. Continue reading Residential construction in Bulgaria – Growth goes on, challenges remain

Dealing with construction permits in Bulgaria, Hungary, Romania

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The World Bank has prepared its first Subnational Doing Business report on Bulgaria, Hungary and Romania entitled Doing Business in the European Union 2017: Bulgaria, Hungary and Romania. The report is based on the surveys conducted last year by involving respondents from 6 cities in Bulgaria, 7 cities in Hungary and 9 cities in Romania, measuring 5 indicators: starting a business, dealing with construction permits, getting electricity, registering property and enforcing contracts.

Source of table: World Bank. 2017. Doing Business in the European Union 2017: Bulgaria, Hungary and Romania. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO.

In this subnational research in Hungary, Ebuild Hungary (the parent company of Ebuild Romania, EECFA’ s Romanian member) was responsible for choosing the respondents from the private sector in Hungary on 2 of the 5 Doing Business indicators: dealing with construction permits and getting electricity. EECFA Research, Buildecon, was responsible for coordinating the project on these 2 indicators in the private sector in Hungary. Buildecon also completes the World Bank’s National Doing Business survey on dealing with construction permits in Hungary every year; a survey regarded as a benchmark for investors.

Here we are going to take a look at the key findings on the dealing with construction permits indicator* in Bulgaria, Hungary and Romania, what regional variations are, how the processes could be improved according to the report, why Germany is so efficient in getting building permits and how Hungary is trying to follow suit.

Key findings on getting construction permits

It has been concluded that overall, it is in Hungary where it is the easiest to obtain a construction permit for a warehouse (18 procedures) compared to Bulgaria (19 procedures) and Romania (26 procedures). However, all countries are lagging behind the EU average of 13 procedures.

In terms of the length of the permitting process, it is in Bulgaria where the process is the quickest: on average 141 days, and it is in Romania where it takes the longest time: 256 days. In Hungary it is 164 days, though it is better than the relative EU average of 169 days. There are 2 EU member states, the Slovak Republic and Cyprus, where the process is very long – 286 days and 507 days, respectively.

As far as costs of the construction permit are concerned, it is in Hungary where it is the cheapest to get a permit (0.5% of the warehouse value) and it is in Romania where it is the most expensive (3.4%). Bulgaria is only slightly cheaper (3.2%). By comparison, the EU average is 2.0%.

All three countries have been found to make building regulations available online and clearly specify the requirements for a building permit. Also, it has been concluded that all three countries have strong building quality control mechanisms and strict qualification requirements for professionals responsible for permitting approvals.

On the other hand, in comparison with the EU, the report has found that in all three countries the construction permit procedure is much more burdensome than in most other EU member states. Continue reading Dealing with construction permits in Bulgaria, Hungary, Romania

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

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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