Bulgaria’s construction industry’s forecast is looking better than in the past five years, with average annual growth in real terms set to rise to 2.10% in the period from 2016 to 2020, compared with a decline of 1.95% during 2011 to 2015, according to Timetric’s Construction Intelligence Center (CIC).
As a result, Timetric’s CIC said it expected the industry to rise from a value of US$9.8 billion (€8.6 billion) in 2015 to US$10.9 billion (€9.6 billion) in 2020, measured at constant exchange rates.
Investments in road, rail and transport infrastructure, as well as improvements in consumer and investor confidence, and in regional and global economic conditions, are seen to be the main drivers behind this growth.
Timetric said there were, however, limitations associated with the industry’s future outlook, most notably as a result of limited funding, fiscal constraints, the ending of incentives for new renewable energy, and high dependence on European Union funds for infrastructure projects.
Infrastructure construction was found to be the largest market in the Bulgarian construction industry, accounting for 47.1% of its total value in 2015. According to Timetric research, the market is expected to increase in importance over the next five years, to account for 48.7% of the industry’s total value in 2020.
The market will be supported by the government’s plans to improve the country’s transport infrastructure, such as the Transport Infrastructure 2014 to 2020 programme.
Various road infrastructure projects are also planned to be completed over the forecast period, including the Struma motorway, which will connect Sofia with the Greek border, and a motorway that will connect Varna with Burgas.
Timetric said the infrastructure market was forecast to grow at a CAGR (compound annual growth rate) of 4.39% in nominal terms, to value BGN7.4 billion (€3.78 billion) in 2020.
The infrastructure market will be followed by residential construction, which is expected to account for 14.6% of the industry’s total value in 2020.
The demand for housing units declined during the review period, thanks to the weak economy and tight credit conditions. However, Timetric said that the residential construction market was on a path of recovery, along with general improvement of the economy, demonstrated by the increase in building permits and residential property prices. Timetric, therefore, expected market output to record a CAGR of 2.68% in nominal terms, to value US$1.4 billion (€1.2 billion) in 2020.
The Timetric report is called Construction in Bulgaria – Key Trends & Opportunities to 2020.