Aparthotels: new growth spot for non-residential construction in Russia

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Written by Andrey Vakulenko – MACON, EECFA Russia

Russia’s resort real estate market has seen a dynamic growth in recent years, partly due to the emergence of aparthotels – a format attractive to both developers and hotel operators. The coming years are also expected to see a sharp increase in aparthotel construction, supporting the non-residential construction market – according to Andrey Vakulenko, EECFA’s Russian analyst.

Thriving aparthotel segment

Resort real estate has been one of the fastest-growing segments of the Russian construction market in recent years. Aparthotels – apartment complexes with minimal infrastructure and services, and with the mandatory availability of a trust management – have particularly seen a rapid growth, though they are relatively new to the Russian market. The core of the supply is (and will be) resort projects, i.e. aparthotels in locations with developed recreational and tourist infrastructure for seasonal vacations. Urban aparthotels – primarily in metropolitan areas with minimal infrastructure – are rather aimed at business travelers and to a lesser extent at traditional tourism and long-term rentals.

As of Q3 2025, the aparthotel market size stood at 25,200 units with a total area of ​​612,500 sqm and by the end of this year, roughly 143,000 sqm of new aparthotels, or 4,300 new units are expected to open. Based on the announced plans, the next three to four years will register a sharp rise, and by the end of 2029 aparthotels may amount to around 109,800 units with over 3.6 million sqm, almost six times higher than the current level.

Behind the growth

One of the main reasons for the anticipated expansion of the aparthotel format is that domestic tourism gained popularity after 2022 due to the reduced accessibility of many international resorts (because of the suspension of air travel, the weak ruble, visa issues, and other internal or external restrictions). Rise in domestic tourism created stable high demand for accommodation in virtually all key resorts in Russia.

Another reason is that developers specialized in multi-unit residential construction began to start many projects in aparthotel and resort real estate construction amid the decline in the residential real estate market following the cancellation of the mass preferential mortgage program.

Also, there are significant incentives and state support for developing tourism infrastructure and the domestic tourism industry, including the construction of hotel complexes and aparthotels.

Furthermore, in 2024 the status of aparthotels was legalized; they were included in the official hotel classification system, creating uniform standards for the segment and transparent conditions for market participants.

Besides, the departure of many large foreign hotel operators from the market in 2022 led to the expansion of Russian hotel chains (Azimut Hotels, Cosmos Hotel Group, Alean Collection, ZONT Hotel Group, VALO Hotel Services, Mantera Group, among others), which began collaborating with aparthotels, increasing the latter’s attractiveness and guaranteeing a high level of service and trust management services.

Moreover, many investors appeared in the market who found the trust management model used in aparthotels and the opportunity of generating passive income attractive. The operating return on investments in aparthotels in developed resorts managed by well-known hotel brands can reach 7%-10% and higher. And given the rise in the market value of apartments, long-term returns can reach 13%-17% per annum, exceeding the return on long-term bank deposits (currently 8%-10% per year for a three-year deposit).

All this suggests that aparthotels will be a major segment of non-residential construction in the coming years.

Coastal regions: top locations for aparthotels

The aparthotel format is developing most actively on the Black Sea coast, currently accounting for over half of the total supply in this segment. Urban aparthotels are primarily in Moscow and St. Petersburg with just over one-fifth of the total supply.

In the coming years, it is also the Black Sea coast that will likely register the biggest expansion in supply, but new aparthotels are also set to be actively emerging on the Caspian Sea coast, in Dagestan.

In coastal regions (Krasnodar Krai, Crimea, Dagestan), aparthotels under construction already amount to more than a quarter of all multi-unit residential real estate under construction and this figure is expected to grow further.

There is also an increase in the construction of similar projects in other resorts across the country, for example, on the Baltic coast or at mountain and spa resorts in the North Caucasus, the Altai Mountains and the Urals, among others.

For more information and forecast for non-residential construction and the rest of the Russian construction market, consult our current report or the next report scheduled to be out on 12 December.

EXPO 2027 boosts Serbian non-residential construction

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Written by Dejan Krajinović, Beobuild Core d.o.o., EECFA Serbia

Overall construction output in Serbia is expected to decline this year, primarily due to the slowdown in civil engineering as several major road and railway projects were completed last year. By contrast, non-residential construction has entered a new growth cycle driven by investments connected to the hosting of EXPO 2027 in Belgrade. The event will be held in a purpose-built exhibition complex in the outskirts of the city, covering around 80 hectares. Alongside the construction of this complex, numerous public and private investments are indirectly tied to the event, including new hotels, accommodation, leisure, and commercial projects, as well as the reconstruction of museums, cultural heritage sites, and public spaces.

Aerial photo of the construction site of the EXPO 2027 complex – Photo: beobuild.rs

The EXPO 2027 complex itself is a vast construction site, comprising approximately 230,000 sqm of exhibition pavilions, multifunctional venues, congress and conference halls, as well as office and retail space. In addition, a residential complex with around 1,500 units is being built to house participating delegations. The exhibition will run for 93 days, from 15 May to 15 August 2027, featuring around 130 countries and hundreds of events spanning sports, science, culture, and innovation. Total investment could exceed EUR 2.5 billion, with EUR 1.5 billion allocated for the EXPO complex and a further EUR 1 billion for accompanying facilities and infrastructure. This project has been the key driver of growth in non-residential construction and is expected to sustain activity in the sector in the coming years.

The broader development zone around the EXPO 2027 complex extends far beyond the exhibition center itself. While the core site covers 80 hectares, total development area exceeds 200 hectares. It will include the new National Stadium complex, a center for aquatic sports, a theme park, recreation facilities, and hotels. The National Stadium alone is a EUR 600 million project, designed with 52,000 permanent seats and the capacity to expand by an additional 8,000. Construction began in early 2024 and, despite delays, it is expected to be completed in time for 2027. Other sporting and leisure facilities are also planned for delivery ahead of the event, though it remains uncertain whether all projects will meet the deadline.

Several other public and private developments across Belgrade are linked to the exhibition, including the reconstruction and expansion of museum facilities: a new Natural History Museum building, the relocation of the Nikola Tesla Museum, the renovation of the Aeronautical Museum, and the modernization of the City of Belgrade Museum, among others. The private sector is likewise preparing for the anticipated rise in visitors, with investments in accommodation accelerating. Notable projects under construction include new hotels under the Intercontinental and Ritz-Carlton brands, alongside numerous smaller ventures.

However, the high level of spending on the EXPO 2027 has placed considerable strain on the state budget. To maintain fiscal deficits at around 3% of GDP, funds have been reallocated from other public projects. This has been most evident in infrastructure development and civil engineering, where shifting priorities have led to significant delays on major planned projects. As a result, civil engineering output is contracting faster than expected in 2025, with negative implications for growth in 2026 as well. On the other hand, long-term economic benefits of hosting EXPO 2027 remain uncertain.

After the event concludes, the EXPO 2027 complex will be repurposed as the new Belgrade Fair Complex. The current fairgrounds in central Belgrade, built in the 1950s, are planned for redevelopment once operations move to the new site. This ensures that the EXPO facilities will continue to be used in the years ahead, supporting the economic rationale for the project. Moreover, new transport infrastructure, including a railway link to the city center, river dock facilities, and expanded commercial developments, should further enhance the attractiveness of the location for private investment.

Forecast up to 2027 for the Serbian non-residential market and for the rest of construction subsegments is available in the 2025 Summer EECFA Forecast Report Serbia. To order it or to request a sample report, please contact us.

Q2 2025: drop in construction start in Hungary

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On a quarterly level, the value of started construction projects in the second quarter of this year has been the second lowest since 2020 and the Activity-Start of EBI Construction Activity Report Hungary at current price did not reach HUF 470 billion. In the first half of the year, projects entering construction phase were worth around HUF 1,200 billion, far below the previous years and close to H1 2020 when the pandemic hit.

EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Eltinga, Buildecon (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). Inquiry and price offer for the report.

Building construction performed poorly in Q2 2025

In Q2 2025 the value of building construction starts fell below HUF 400 billion, barely reaching half of the Activity-Start of Q1. After 2020 it was only in Q3 2024 when the value of construction starts was at a similarly low level. The decline in building construction was even more pronounced at constant price: Activity-Start of EBI Construction Activity Report at constant price was last lower in Q1 2015 than in Q2 this year.

Such a poor performance in building construction occurred despite the extremely successful quarter in multi-unit housing construction. The Activity-Start for non-residential construction fell to a critically low level not seen since Q1 2015, below HUF 120 billion. At constant price, the decline is even more drastic, the value in Q2 2025 was less than half of the previous negative record.

The largest building construction projects during Q2 2025 were mostly multi-unit housing ones. Only one non-residential project made it to the list of the biggest projects, Phase 1 of Halms automotive parts manufacturing plant in Miskolc.

Better Civil Engineering Activity-Start, but still at a low level

Q2 2025 saw an improvement over Q1 in Civil Engineering Activity-Start of EBI Construction Activity Report, but projects started only at a value of around HUF 100 billion. In the road and railway construction segment, there was an increase in Q2 2025 against Q1 with projects entering construction phase on HUF 50 billion, a level not considered high.

The biggest civil engineering projects launched in Q2 2025 include the railway infrastructure of the Ivancsa industrial-innovation development area, the XIV/A water shaft in Tatabánya, and the development of the drinking water networks in Ács, Bábolna and Koppánymonostor.

The capital city has the highest share in total Activity-Start

Looking at construction projects launched in the past four quarters, Budapest had the highest value with a share of 34% in total Activity-Start. It still exceeds the 20%-30% typical of the period between 2021 and 2023.

In the previously leading Northern Great Plain, 16% of projects started. The share of Southern Transdanubia was 15%, and that of the Southern Great Plain was 11%. The lowest values ​​were registered in Northern Hungary and Western Transdanubia during the period, with a share of 4% each. In Central Transdanubia and the Pest region, a respective 8% of projects were launched.

Favourable trend continuing in multi-unit housing construction

Q2 2025 far exceeded the average of recent years in terms of the value of construction starts: multi-unit housing constructions started at HUF 250 billion at current price. This is an absolute record, the second highest value after Q1 2025 registered since 2014. Activity-Start of EBI Construction Activity Report in the segment exceeded HUF 200 billion for the third consecutive quarter, way more than the previous highest HUF 144 billion until H1 2024. The expansion was also significant compared to previous years, even when calculated at constant price.

The momentum fuelled so far by maturing government bonds and interest payments may continue this autumn with the launch of the Home Start Program (providing first-time home buyers with a fixed-rate loan of up to HUF 50 million at a 3% interest rate). Also, this autumn, projects financed by the Housing Capital Program this year (a government initiative to help the supply side) may also appear among sold homes. As a result of these, a pick-up in both demand and supply is expected for the rest of the year. In Budapest, the projects of the Housing Capital Program may be the source of a further high level of Activity-Start. In the countryside, more multi-unit housing projects may start due to the livelier demand thanks to the launch of the Home Start Program. In the capital city, the number of available new homes is already at one of the highest levels in recent years because of the previous significant construction starts. This, in addition to the new supply, may make developers more cautious with project launches as the end of the year approaches.

The value of completed multi-unit homes in Q2 2025 was around HUF 90 billion, a slight increase compared to Q1. Overall, Activity-Completion of multi-unit housing constructions slightly dropped in the first half of the year compared to the previous year, remaining roughly at the 2023 level.

Looking at the past four quarters, Budapest has had a massive share in multi-unit housing constructions entering construction phase (75%), while none of the other regions reached 10%. In Central Hungary 77% of such projects started and in Western Hungary 14%, while only 9% of the Activity-Start was registered in Eastern Hungary.

Hotels in focus: the year started off sluggishly for projects, but growth is visible

Hotel construction works boomed in 2019-2020 most, but projects also commenced in 2021 and 2023 at relatively high values. 2024 saw a slight decline, and this year also started rather sluggishly. The second quarter brought some expansion, though; between April and June 2025, the total value of construction starts in the segment was over HUF 20 billion, a major improvement compared to the previous, very weak quarter, and roughly the same as the median for the period between 2023 and 2025. At constant price, we also see that Activity-Start of EBI Construction Activity Report in Q2 2025 does not differ much from previous quarters but is far behind the high values between the end of 2019 and the beginning of 2021. The largest started hotel projects in H1 2025 included Phase 1 of Staybridge Suites Hotel in Budapest and the MCC Talent Development Center project in Miskolc.

Several hotel projects that were launched in previous years have now reached completion. In Q2 2025, Activity-Completion in the segment set a record, approaching HUF 90 billion at current price and exceeding HUF 160 billion at constant price. For example, the 4-star hotel next to the Balaton Park Circuit racetrack and Le Primore Hotel in Hévíz have been completed.

Also, many hotel projects are currently underway which are due for delivery next year, such as the renovation of the Grandhotel Galya in the countryside, and a number of hotels under construction or under renovation in Budapest: Sofitel Budapest Chain Bridge, hotel in Kígyó street, VP36 Boutique Hotel, Paulay Opera Hotel, Hotel Paulay (Puro), Moxy Budapest Downtown by Marriott, and Hilton Garden Inn. Hotel Gellért in the capital city is also undergoing renovation and may be completed in 2027. Klotild Palace St. Regis Hotel and K36 Hotel and Student Hostel are also nearing completion and could open this year.

Original article: Tünde Tancsics (ELTINGA); English version: Eszter Falucskai (Buildecon)

Good news from Türkiye: permit data for rebuilt earthquake-damaged housing included in statistics

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Written by Prof. Ali Türel, EECFA Türkiye

Rebuilding permits, previously excluded from TurkStat’s statistics, were published on 22 August this year. The addition of statistics on rebuilding damaged housing in earthquake-hit regions raised building permits and completions in Q2 2025.

Video by TOKI (Housing Development Administration): Construction projects implemented by TOKI in the earthquake zone in Türkiye.

This May and June saw high construction production in Türkiye

The Calendar Adjusted Index of Construction Production increased by a respective 20,4% and 24,9% in May 2025 and June 2025 compared to the same months of 2024, after declining in the previous three months. Building construction went up by slightly higher rates, 23,5% and 16,9%, while civil engineering grew less, by 9,9% and 16,7% in May and June 2025.

Construction also had high shares in the Turkish GDP. The Seasonal and Calendar-Adjusted Gross Domestic Product in the chain-linked volume index for construction in Q1 2025 expanded by 7.4% annually, while the national average GDP growth was 2,7%. The rise in construction within GDP began after the destructive earthquakes in February 2023. The rebuilding of approximately 870,000 independent units, including 650,000 dwelling units and infrastructure, started in the following months, and the growth rate of construction in GDP increased to 7,2% in 2023 and 9,3% in 2024.

In Q2 2025 we may expect a higher growth rate for construction than in the previous quarter since the completion of 250 thousand dwelling units has been reported until June 2025. Also, a total of 453 thousand urban and rural housing and workplaces will be handed over to legal beneficiaries by the end of 2025 (Source: Anatolian News Agency).

However, building start and completion statistics did not show the same trend in Q1 2025; the total floor area of construction and occupancy permits fell by 20% and 24,9%, respectively, compared to Q1 2024.

Rebuilding statistics in earthquake-hit regions added on 22 August 2025

Q2 2025 saw a sharp reversal of this trend with the addition of rebuilding statistics of damaged housing in earthquake-hit regions. We have been following the process of inclusion of the rebuilding statistics into TurkStat’s published statistics, and we are happy to see that it was published on 22 August 2025.

The delay of including rebuilding statistics can be linked to the effects of law 7471 which aims to speed up rebuilding damaged structures in earthquake-hit regions. The responsibility of the Ministry of Environment, Urbanization, and Climate Change in rebuilding damaged housing caused by natural disasters is further supported by this law. The Housing Development Administration (known as TOKI in Turkish), affiliated with that Ministry, handles the implementation and financing of rebuilding projects. The Ministry’s local branches have been issuing construction and occupancy permits in earthquake-affected regions as outlined in the same law. TurkStat collects and publishes building permit statistics issued by municipalities and transmitted online to them. Since the local branches of the Ministry were not part of this network, rebuilding permits were not included in TurkStat’s previously published statistics. The table is based on the revised statistics and there may still be further revisions in future publications if there is missing data in current rebuilding statistics.

Building permit
floor area,mln m2		Building permit
annual change,%		Occupancy permit
floor area,mln m2		Occupancy permit
annual change,%
2023197,5616,7118,80-15,6
2024180,27-8,7138,2116,4
Q1 202535,24-20,031, 25-24,9
Q2 202554,3661,827,2030,2
Rebuilding permits in earthquake-hit regions. TurkStat has revised the data by including permits of all authorized administrations to issue building certificates.

Less building construction activity without rebuilding works can be related to the high-interest rate policy to curb inflation, currently at a 43% level. Both producers and credit users have problems in production and purchasing produced goods without relying on bank credits. Lowering inflation and interest rates would lead to the stimulation of building construction.     

Forecast up to 2027 for the Turkish construction market is available in the 2025 Summer EECFA Forecast Report Türkiye. To order it or to request a sample report, please contact us.

EECFA countries in the European Commission’s 2025 Macro Forecast

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Written by Dóra Barát – ELTINGA, EECFA Research

This summer ELTINGA at EECFA Research has again looked at how the European Commission sees the EECFA countries. Here is what has changed in the prospects between Autumn 2024 and Spring 2025.

Compared to Autumn 2024, economic outlook has deteriorated in all countries covered, although the projected growth remains positive across the board. The most significant downward revisions have occurred in Romania, Bulgaria, and Hungary, while countries like Croatia, Slovenia, and Russia have seen more moderate adjustments. Growth expectations for both the EU and the Euro Area have also slightly declined, mirroring the broader cooling of optimism across the region.

Average GDP growth in 2025-2026 is projected to be positive in all examined countries, though to differing degrees. Serbia is expected to record the highest expansion at 3.5%, followed by Türkiye (3.15%) and Croatia (3.05%), while Russia (1.45%) is forecast to have the slowest growth in the region. Growth in Euroconstruct member Hungary is projected at 1.65%, falling between the regional average and the broader EU outlook. The remaining EECFA countries (Romania, Bulgaria, and Slovenia) are expected to grow between 1.8% and 2.2%. Despite downward revisions, all countries in the region are forecast to outperform the averages of the EU (1.3%) and the Euro Area (1.15%), continuing the trend of a stronger growth in Eastern and Southeast Europe.

The projected growth rate of gross fixed capital formation (GFCF) for 2025-2026 has weakened in nearly all countries since the Autumn 2024 forecast. Romania has witnessed a major downward revision with the expected growth dropping by just over 4 percentage points, while Hungary has also registered a significant cut of around 2.4 percentage points. Türkiye, Slovenia, and Bulgaria have experienced more moderate declines. In Croatia, the outlook remained unchanged at 3.75%, and Russia was the only country with a slight upward revision. Despite the general slowdown, Serbia is projected to post the strongest GFCF growth at 6.7%, followed by Croatia (3.75%) and Romania (2.95%), while most other countries are set to grow between 1.25% and 2.75%. The EU (1.95%) and Euro Area (1.75%) are to remain at the lower end of the spectrum.

Expectations for the growth rate of gross fixed capital formation into construction have also been revised downward in all countries where data is available. Romania has seen the steepest decline with its projected growth falling from 8.45% to 3.9%, though it still holds the highest rate among the observed countries. Hungary and Slovenia have experienced similar reductions, both dropping by more than 2.5 percentage points. Smaller adjustments have been recorded in Bulgaria and Croatia where the outlook for GFCF into construction growth remains relatively strong at 2.85% and 3.8%, respectively. In the broader European context, the EU and the Euro Area are projected to see only a respective modest growth of 1.9% and 1.6%, slightly below most national forecasts in the region.

The Commission’s view on construction investment is somewhat different from ours. Partly it is because we examine the sector from the bottom. For each segment we come up with an individual story and this is how the total construction market is formed. Our latest forecast is in the 2025 Summer EECFA Construction Forecast Reports. Sample report and order

We, in EECFA, are also less optimistic about the near future than half a year ago. The direction of the revision is mostly downward. In cases of Bulgaria, Croatia and Hungary we project moderate growth which is pretty close to the Commission’s expectations. In four countries, however, we do not think average real growth until 2026 could be positive.

EECFA 2025 Summer Construction Forecast

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EECFA released its 2025 Summer construction forecast on 23 June. See a sample report and place your order on eecfa.com. To get discounts, you may contact us.

Southeast European construction markets up to 2027

According to Yasen Georgiev at Economic Policy Institute (EPI), EECFA’s Bulgarian research institute, total construction output in Bulgaria is anticipated to grow by 3% on average for 2025-2027 with a stronger growth in the middle of the period when the absorption of operational programmes and the implementation of the Recovery and Resilience Plan are to gain momentum. According to the sectoral breakdown, residential construction is expected to be the subsector with the weakest performance, while non-residential construction and particularly civil engineering are predicted to see stronger growth figures. Against this backdrop, the country’s economy is set to register a slower-than-expected growth in 2025 and 2026. In parallel, it is awaited to benefit from the effects from the full Schengen area membership effective from the beginning of 2025 and from the euro adoption expected on 1 January 2026.

Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), EECFA’s Croatian members think that Croatia’s construction as a whole continues vibrant due to the combination of continuing transitioning-economy catch-up growth and large inflows of EU money. Both are beginning to diminish, however, and that will affect all construction segments, some more strongly and more quickly than others. In building construction several sectors have seen the end or are close to seeing the end of catch-up growth. Others, particularly those that benefit most from EU finance, are still going strong. Civil engineering continues to profit greatly from EU funding, and because of the poor initial condition of Croatia’s infrastructure after independence, much catch-up construction remains to be done. Certain government policies will have a great influence on specific building and civil engineering sectors. Those policies include the housing policies embodied in Croatia’s new National Housing Policy Plan until 2030, the new tax on real estate and the country’s renewable energy permitting and electrical grid hook-up fee rules.

‘Romania’s macroeconomic outlook remains positive, but more reserved as the political instability and fiscal uncertainty have done little to improve growth opportunities’ – says Dr. Sebastian Sipos-Gug, EECFA’s Romanian researcher at Ebuild. At the same time, he adds, the country has the largest government deficit in the EU, which will dampen public investment capabilities. All these will make it harder to finance public works and could negatively impact civil engineering. This is doubly worrying as this subsector countered the decline in other construction segments in 2024, and thus the outlook for total construction remains negative in 2025 and 2026 in real terms. Not all is gloom and doom, however. As inflation and interest rates come down, and employment indicators remain strong, private consumption could boost demand for residential and non-residential construction.

‘In 2025 Serbia’s construction is making new gains in building construction, while civil engineering has entered a period of consolidation after the strong expansion during 2023 and 2024′ – believes Dejan Krajinović, EECFA’s Serbian researcher at Beobuild. Building construction is supported by both public and private investments, boosted by the hosting of the EXPO 2027 in Belgrade. Non-residential construction is the main beneficiary of this event, particularly commercial, office and hotel segments, while residential construction is also keeping historically high volumes. Some delays are seen in civil engineering, but the overall performance is still strong with a long list of planned projects in all major subsegments. Domestic demand is still relatively strong, but economic growth and the level of investments are being muffled this year by uncertainties in the global markets, particularly the weak EU economy, international trade issues and the ongoing wars in Ukraine and the Middle East.

‘Total construction output in Slovenia is expected to decrease from the historic high of EUR 5,5 billion reached in 2023. In both 2024 and 2025, it could contract but remain above EUR 5 billion annually’ – as per the opinion of Dr. Aleš Pustovrh at Bogatin, EECFA’s Slovenian member institute. He predicts the sector to return to growth in 2026 and 2027, mostly on the back of a healthy growth in residential construction buoyed by decreasing mortgage rates. On the other hand, civil engineering is prognosticated to shrink significantly in 2024 and 2025 due to some large projects nearing completion, like the new railroad connecting Port Koper. Both non-residential and civil engineering depend to a large degree on public financing that was widely available in the post-Covid period but will become much less available in 2025-2027. Especially if the overall economic activity continues to slow down. This deceleration and more foreign labourers have also caused lower construction cost growth, but other challenges persist such as the additional bureaucratic burdens (changed permitting process, increase in tax, ongoing discussion on changes to short-term rental legislation, among others) and many external risks in the global economic and political environment. 

Eastern European construction markets up to 2027

‘In the forecast horizon, the construction sector of Russia will be under pressure from a range of macroeconomic factors, the main one being the high key rate, which will negatively affect the pace and volume of construction projects’ – according to Andrey Vakulenko at MACON, EECFA’s Russian research institute. The tight monetary policy and the reduced availability of mortgages will likely slow down housing construction, on the one hand. On the other, the high cost of project financing, the general cooling of the economy as well as reduced consumption and business activity will likely shrink the volume of investment in non-residential construction. However, these trends can partly be offset by high volumes of government financing of priority infrastructure and energy projects, which can support civil engineering and ensure near-zero growth in total construction market in 2025-2027.

Prof. Ali Türel, EECFA’s Turkish researcher says that Türkiye has been trying to control high inflation by raising the base rate and managing exchange rate increases through market instruments by the Central Bank and maintaining wage growth at zero or negative rates. This created financing difficulties for industries and businesses, reduced demand for basic consumer goods, and led to affordability problems for mortgage credits. Big declines in building starts and completions in Q1 2025 may also be related to these measures. Yet, the Central Bank’s inflation target for 2025 remains high at 24%. Positive real changes in housing prices relative to building construction costs encourage house building, while their negative real change compared to inflation may be the leading factor in the increase of home sales through equity financing when mortgage credits are not affordable for most households. Rebuilding the quake-damaged 870 thousand units requires about EUR 100 billion and these expenditures have been the primary factor of the large national deficits in recent years.

‘This year, in spite of the continuing war and the economic instability in the country, Ukraine’s construction industry shows signs of recovery and growth on the back of successful programs financing both the construction of new facilities and the reconstruction and restoration of infrastructure in eastern and southern regions’ – according to Prof. Sergii Zapototskyi at Uvecon, EECFA Ukraine. The World Bank estimates that reconstruction would require USD 486 billion. On the negative side for the sector are bureaucratic barriers in the urban planning legislation, shortage of workers caused by mobilization, shortage and high cost of building materials, and logistical difficulties. On the positive side for the sector is demand for housing and the need to restore damaged infrastructure. The near-term future of the industry depends on the level of security, the effectiveness of restoration programs and the volume of international investments.

Q1 2025 sees weak Activity-Start in Hungarian construction

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2025 started off weak in Hungarian construction despite the much higher Activity-Start at the end of 2024 fuelled by launched major projects then. In Q1 2025 the value of started construction works greatly dropped compared to both the previous quarter and the same period of the previous year. The Activity-Start of EBI Construction Activity Report at current price was around HUF 570 billion in Q1 2025; the second lowest quarterly value since July 2020. At constant price, and if adjusted with price changes, it has been the second worst three-month Activity-Start since 2015.

Value of started building construction works fuelled by multi-unit residential projects

Building construction has slightly improved compared to the previous two weaker quarters: the value of started works was well over HUF 500 billion, 18% up from Q4 2024. The improvement, which was also evident at constant price compared to H2 2024, was attributable to the surge in multi-unit residential works. At the same time, Non-Residential Activity-Start continued to see the low levels of the last two quarters of 2024. In the first three months of this year, non-residential construction works of slightly more than HUF 240 billion started, the lowest quarterly figure since 2017. At constant price, no building construction works have started in such a low quarterly value in the past 10 years.

Among biggest building projects launched in Q1 2025 were mainly logistics buildings: CTP logistics halls in Vecsés (Phase 2) and Biatorbágy, and HelloParks logistics hall in Fót. Construction also began on Phase 2 of Building A of H2Offices in Budapest, and the Hungerit poultry processing plant in Szentes.

Critically low value of started civil engineering projects

Civil Engineering Activity-Start was extremely low in Q1 2025 with started construction works worth only HUF 31 billion. This has by no means been the lowest value recorded in the subsector since 2014, both at current and constant prices. Activity-Start in road and railways and in non-road and non-railways amounted to around HUF 16 billion, respectively. Sadly, not a single civil engineering project made it into the largest projects entering construction phase in the quarter.

Regional comparison: Budapest on the lead

According to EBI Construction Activity Report, Budapest had the highest value of construction projects started in Hungary in the last four quarters. And although its share in total Activity-Start slightly dropped, it still stood at 32%, exceeding the 20%-30% typical in the period between 2021 and 2023.

In Northern Great Plain, the region that previously was on the lead, 14% of projects started in Q1 2025. The share of Southern Transdanubia was 16%, while that of Southern Great Plain 11%. Western Transdanubia and Northern Hungary registered the lowest value at 5%, respectively. In Central Transdanubia, 7% of projects started, whereas in the Pest region, 10%.

Multi-unit residential projects shooting up

The latest EBI Construction Activity Report Hungary has found that 2025 started off greatly in the multi-unit residential segment as in the first three months the value of construction starts was almost HUF 300 billion at current price. It has been a record since 2014 and exceeds the previous quarter’s highest value (HUF 209 billion). Even at constant price, the growth in Activity-Start is a 39% rise over the previous quarter.

This increased activity comes as no surprise: the last quarter of last year already witnessed recovery with developers responding to growing demand and preparing for increased interest at the beginning of this year.

The market has confirmed these expectations, and as per ELTINGA’s Housing Market Report, the latest two quarters saw a record in Budapest in the number of sold new multi-unit dwellings. Although a major part of demand came from investors, the question is how long this can last. Developers might become more cautious with project starts towards the end of the year as demand might decrease following interest payments and maturing government bonds.

When it comes to completions, the value of completed multi-unit residential projects in Q1 2025 was around HUF 76 billion, a drop compared to both the previous quarter and the same period last year. At constant price, Activity-Completion in Q1 2025 has been the third worst value since 2019.

Regionally, looking at the past four quarters, Budapest accounted for 70% of multi-unit projects entering construction, while Central Hungary recorded slightly more than 72% of the value of such projects. Eastern Hungary had a 13%, while Western Hungary had a 16% share in Activity-Start.

Better Q1 2025 in industrial buildings and warehouses than in the construction industry as a whole

In Q1 2025 the total value of construction starts of industrial buildings and warehouseswithover HUF 150 billion was slightly higher than in the previous two quarters. True, if we look at the period between 2022 and H1 2024, it was the second lowest value. Last year, in addition to automotive industry projects, several food industry projects started such as Pick’s plant in Szeged, Master Good-Sága plant in Sárvár, or Félegyházi Bakery plant and warehouse in Kiskunfélegyháza.

In the first quarter of this year, as previously mentioned, the largest projects entering construction phase included several logistics projects such as CTP’s logistics halls in Biatorbágy and Vecsés, and HelloParks’ project in Fót. Besides, the construction of several plants began: Unilever’s deodorant factory in Nyírbátor, Phase 2 of Scheider Electric’s Duna Smart Power Systems smart factory in Dunavecse, or Kométa’s packaging plant in Kaposvár.

As for completions in the segment, industrial buildings and warehouses were completed at a value of HUF 250 billion in the first quarter of this year – the third highest value since 2014. Biggest completed industrial projects include CATL warehouse and metalworking plant in Debrecen and HelloParks AN1 logistics hall in Alsónémedi. And we expect to see further major completions this year.

EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Eltinga, Buildecon (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). To purchase the report, ask for a quote

Original article: Tünde Tancsics (ELTINGA); English version: Eszter Falucskai (Buildecon)

Bulgaria’s Resilience and Recovery Plan – Save it or Lose it  

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Written by Yasen Georgiev (EPI, EECFA Bulgaria)

Less than 25% of the funding for its Resilience and Recovery Plan has landed in Bulgaria so far. Last month, the new Bulgarian government, which took office this January, submitted a request to revise its Plan. Will all milestones and targets be achieved and will the country get all payments by the deadline of August 2026?

No reforms, no money

Do you remember the Resilience and Recovery Facility (RRF) the European Commission came up with to assist member states after the pandemic? Unlike traditional EU funds, this instrument in the form of national Resilience and Recovery Plans (RRPs) is meant to provide grants in exchange for specific reforms, making it a performance-based tool going hand in hand with time-bound milestones and targets (i.e. reforms). The completion of the latter is strictly tied to the disbursement of funds for public investments which literally means “no reforms, no money”.

For various reasons, in many EU member countries the implementation of the RRF is not going according to initial plans, and governments are currently submitting requests for revisions. They are to be reviewed and eventually approved by the European Commission. This is the case also with Bulgaria and its RRP that is financed with EUR 5.69bln in grants. As of mid-May 2025, though, the country has received less than 25% of the overall amount in the form of a first installment totaling EUR 1.36bln.

What is now at stake is the remaining EUR 4.32bln

The question is when this sum will be disbursed and whether the disbursement will be in full. The overall completion rate of the milestones and targets Bulgaria committed to in its RRP is at 38%, which stands for 122 finished reforms out of 321 in total.

To make things worse, the respective regulation at EU level says that all milestones and targets are to be achieved by 31 August 2026, and any payment under the RRF is be executed by 31 December 2026.

The new government is trying to speed up implementation and get full access to eligible funding

To address the accumulated delays (resulting also from a series of seven parliamentary elections in three years) and several underperforming parliaments that failed to adopt the respective legislative reforms, in April 2025 the new government submitted a request to the Commission to revise its RRP.

Bulgaria proposes to remove or modify several measures across the plan while cancelling or downsizing projects currently delayed. Since some of the proposed modifications concern outstanding issues under the second payment request, along with the modification request, Bulgaria also withdrew the payment request, with a view to resubmit it following the approval of the amended plan.

The biggest construction-related projects that are to drop out of the new RRP include a programme for the construction and reconstruction of water supply and sewerage systems (EUR 152mln), a project for heat and electricity co-generation from geothermal sources (EUR 123mln) and a pilot project for green hydrogen (EUR 33mln).

Other investments to see reduced funds are the construction of industrial parks and youth centres with an overall cut of EUR 15mln. While funding for all of these projects is to be potentially channeled from other EU programmes, there are projects that will receive more from the RRP than initially foreseen like the construction of the third metro line in Sofia with EUR 33mln in additional funding.

If proposed reforms and modified projects are approved in Brussels, the government expects to get the second and third RRF payment in the course of the year, while all remaining installments are to be disbursed by the deadline in 2026.

Needless to say, this seems like a very ambitious plan given the insufficient performance of the RRP in Bulgaria so far. This could also be seen in the official position of the government – the country may receive all payments by the deadline of August 2026 but will not have time to make all investments. This would mean that the projects underway at that time are either going to be downsized or put on hold until money from other sources is secured.

Segment-level construction forecast on Bulgaria can be found in the EECFA Construction Forecast Report. The new forecast will be out on 23 June. Orders and sample report: eecfa.com

BCG tanulmány: 2035-re megnő a kereslet az energiahatékony építőanyagokra

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A Boston Consulting Group (BCG) idén februárban publikált egy tanulmányt a tavaly felülvizsgált EU-s EPBD irányelv apropójából, amelyben az energiahatékony anyagok és technológiák iránti jövőbeli keresletet modellezte. A tanulmány szerzői: Johannes Blauhuth, Lorenzo Fantini, Martin Feth, Jannik Leiendecker, és Alberto Pizcueta. Kőrösi Péter (ELTINGA) összefoglalója.

Klímasemleges új épületek az EU-ban 2030-tól

A klímavédelem célkeresztjébe került a legnagyobb energiafogyasztó Európában: az építőipar.  Európa szén-dioxid-kibocsátásának több mint egyharmadáért az épületek felelősek, ami összefügg azzal, hogy energiahatékonyságuk átlagosan igen alacsony. Emiatt az épületállomány dekarbonizációja középtávú uniós irány – már rövid távon is érzékelhető célkitűzésekkel.

Az Európai Unió célja a fosszilis tüzelőanyagok fokozatos kivezetése és a megújuló energiaforrások elterjedésének felgyorsítása, ezért tavaly májusban felülvizsgálták az épületek energiahatékonyságáról szóló irányelvet (Energy Performance of Buildings Directive – EPBD). Az új irányelv előírja, hogy a 2030-as évek elejére az épületállomány legrosszabbul teljesítő elemeit fel kell újítani, 2035-re pedig a lakóépületek energiafogyasztását 20–22%-kal kell csökkenteni. Továbbá 2028-tól minden új középületnek, 2030-tól pedig minden egyes új épületnek zéró kibocsátásúnak kell lennie.

A tagállamoknak 2026 májusáig kell átültetniük az irányelvet a nemzeti jogrendbe.

A BCG előrejelzése az energiahatékony építési technikák és anyagok iránti keresletre

Az új irányelv várhatóan már a következő negyedévekben hatással lesz az európai építőipar működésére. Bár a nemzeti szabályozás kidolgozása némi időt vehet igénybe, az első lépések már befolyásolhatják a befektetői döntéseket és a közbeszerzési szabályokat, különösen a középületek és az energetikai felújítások esetében.

Ha az EU-s célok teljes mértékben teljesülnek, jelentős felújítási hullámra számíthatunk és a zöld építkezés is fellendülhet. A BCG előrejelzése szerint a modern szigetelőanyagok és a nagy hatékonyságú ablakok iránti kereslet évi körülbelül 10%-kal, míg a hőszivattyúk és napelemek iránti kereslet évi 6-8%-kal bővülhet.

A lenti ábra a keresletet modellezi az EPBD-célok teljes megvalósulása esetén, mely 2035-re 70 milliárd eurós piaci volument jelent Németországban és 415 milliárd eurós piaci volument az EU-ban.

Az EPBD célkitűzéseihez időben alkalmazkodó vállalatok előnyre tehetnek szert versenytársaikkal szemben az egyre szigorúbb energiaszabványok és a fenntartható építési trendek környezetében.

Forrás: Boston Consulting Group (BCG), White paper: The building sector and EPBD – Demand impications for energy-efficient materials and technologies, February 2025 by Johannes Blauhuth, Lorenzo Fantini, Martin Feth, Jannik Leiendecker, and Alberto Pizcueta.

Összefoglaló: Kőrösi Péter (ELTINGA)

Controversies remain for Slovenian giga rail project nearing completion

Posted on by efalucskai

Written by Dr Aleš Pustovrh – Bogatin, EECFA Slovenia

With the main construction consortium submitting a claim for another EUR 350 million now, the project of Port Koper in Slovenia has again caught public imagination. Despite its 80% readiness, given its past controversies, it is facing scrutiny in its final phase. The second double-track railway line, scheduled for completion in 2026, is set to remove the bottleneck of the existing single-track one between Koper and Divača.

Exterior of the tunnels on the second track route – Source: https://drugitir.si/en/media-center/photo-gallery

Why such a large-scale railway investment was necessary

Port Koper, Slovenia’s largest seaport, saw consistent growth over the past two decades and evolved into a major logistics gateway for Central and Eastern Europe. In 2024 alone, the port handled approximately 23 million tons of cargo, 3% up from the previous year, while container throughput reached a record 1.13 million TEUs. This performance positions Koper among the leading Adriatic ports, competing closely with Trieste and Rijeka. However, growing volumes of container traffic, vehicle imports, and bulk cargo pushed the port’s capacity toward its limits, particularly due to inadequate inland rail connectivity. The existing single-track railway between Koper and Divača became a major bottleneck, hindering further expansion and reducing overall logistics efficiency.

To enable continued growth, enhance competitiveness, and shift freight from road to rail, the construction of a new, modern double-track railway became essential. The new 27km line is designed to fully replace the existing track and significantly boost capacity—from 90 to 212 train compositions per day—enabling the annual transport of nearly 37 million tons of goods, nearly three times more than before.

An EUR 1.172 billion project

The project is highly complex as it requires significant altitude gain and traverses challenging terrain (20.5km of the new line runs through tunnels and an additional 1.2km over bridges). These engineering challenges have driven up costs considerably. The latest estimate for the project, excluding VAT and calculated at current prices, stands at around EUR 1.172 billion. Project costs have escalated over time.

Initially, in 2010, the project was estimated at around EUR 700 million as a single-track route. Once the plan was changed to a double-track design, costs were expected to rise, but no clear or transparent cost projection was communicated to the public. Combined with an unclear financing structure, this led to growing public concern and political controversy.

As a result, a national referendum was held in which a majority of voters supported the continuation of the project. This decision was later upheld by the Slovenian Supreme Court. To manage the project, the state established a dedicated company, 2TDK, which also implemented a civil oversight and advisory board to address public concerns. A special management and supervision system was introduced to improve transparency and accountability.

Preparations began in 2019, and major works commenced in 2021. Construction is carried out by several prominent companies organized into consortia. The main infrastructure works, including tunnels and viaducts, are executed by a consortium of Kolektor CPG (Slovenia), Yapı Merkezi İnşaat ve Sanayi A.Ş. (Türkiye) and Özaltın İnşaat Ticaret ve Sanayi A.Ş. (Türkiye) on a combined value of roughly EUR 628.3 million.

The final phase of the project, valued at EUR 203.8 million, covers railway system installation including tracks, signaling, telecommunications, electrification, and tunnel equipment, and is handled by another consortium comprising SŽ-Železniško gradbeno podjetje d.d. (Slovenia), Kolektor IGIN d.o.o. (Slovenia), GH Holding d.o.o. (Slovenia) and YM Construction d.o.o. (Slovenia).

Viaducts Gabrovica and Vinjan – Source: https://drugitir.si/en/media-center/photo-gallery

Controversies casting a shadow on completion

Although there were occasional public reports of cost overruns and technical challenges during construction, the project remained largely out of the public spotlight until 2025, so this year, when the main construction consortium submitted a claim for an additional EUR 350 million in costs, citing technical difficulties.

Simultaneously, the Civil Oversight Council raised concerns about poor project governance, accusing 2TDK of opaque and inefficient decision-making. The company’s management firmly rejected these accusations. In response, the Minister of Infrastructure, Ms. Alenka Bratušek, visited the construction site and assured the public that 80% of the work had already been completed and that the project would be delivered on schedule by 2026.

Nevertheless, due to past controversies and rising scrutiny, public trust remains cautious, and the project is expected to face increased attention in its final phase.

Segment-level forecast for Slovenia is available in the EECFA Forecast Report. EECFA conducts research on the construction markets of 8 Eastern-European countries, including Slovenia. Orders and sample report