The text below is kindly provided by PMR Consulting

After impressive growth between 2005 and 2007, in H2 2008 the construction market in Bulgaria started to level off, and in 2009 it is expected to shrink. GDP growth in Bulgaria is expected to slow visibly in the next few years, with a slight reduction very likely in 2009. At the same time the economic climate in construction declined significantly in Q4 2008 and Q1 2009 and returned to the level seen in the years 2002-2004, a period of minor growth in construction. The liquidity of construction companies is very low, and barter payments are becoming common.

On the Bulgarian residential market the slowdown became apparent in the final months of 2008. New buildings and sales of flats were strongly affected by the financial limitations imposed by the banks. The non-residential arena will also suffer from the financial crisis, as the largest projects which were supposed to have started this year have been postponed until an improvement has been seen. The situation is similar with regard to office building. There are very few projects being built at the moment, and the total area does not exceed 230,000 m², despite the fact that at the beginning of 2008 it was expected that more than 800,000 m² would be opened by the end of 2010.

On the other hand, the logistics and industrial areas have been much less severely affected by the crisis. Civil engineering construction in Bulgaria is expected to continue to grow slightly in the coming years, but only single figure growth rates are possible. The development of civil engineering construction will be aimed mainly at two areas: transport infrastructure and environmental development and protection, financed mostly from EU funds.