EECFA: Eastern European construction growth desynchronises from Southeast

Southeast European construction markets up to 2028

Bulgaria entered this year as the 21st eurozone member amid political turbulence that impacted construction, most notably projects relying on public funding. "Last year Bulgaria's construction sector performed strongly, largely thanks to the residential and non-residential submarkets. In 2026-2028, however, the country's total construction output could see a heterogeneous performance," says Yasen Georgiev at Economic Policy Institute (EPI), EECFA's Bulgarian member institute, who anticipates output to grow by about 2% on average in 2026-2028.

Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), EECFA's members for Croatia, point to funding from the EU's Military Mobility Package (MMP) as a source of finance for a variety of Croatian projects. Transportation projects, both military and dual use, are contenders, so MMP money should lift output in those civil engineering segments. MMP will likely boost some non-residential segments too, since it can finance factories and logistics centres with a military or dual-use purpose. This will help sustain output despite declining finance under the EU's post-2022-earthquake rebuilding programmes and RRF. Energy construction remains confused, with established technologies competing with unproven alternatives, while residential is buffeted by rising prices, declining GDP growth and central bank and government interventions.

Dr Sebastian Sipos-Gug, EECFA's Romanian researcher at Ebuild, notes that Romania's construction market is in a tight spot. "Growth potential is limited, with global and national factors conspiring against it. 2026 might see a stagnant GDP, declining real wages and the highest inflation in the EU. This is coupled with national deficit causing high taxation and austerity: lower public spending, and wage and hiring freezes for public employees. Construction costs are again on the rise due to climbing energy prices and labour costs. The saving grace is EU programmes funding infrastructure, yet with the NRRP running out in mid-2026, the boost is limited. Adding to this is a political crisis that could lead to a government change at a critical moment. But most of these issues should be transitory. By 2028 Romania's construction might return to growth on the back of improved economic indicators, inflation within target, a more efficient energy sector and a more stable political situation."

"Serbia's overall construction output is still consolidating in 2026, led by the correction in civil engineering, while buildings continue to grow," says Dejan Krajinović, EECFA's Serbian Researcher at Beobuild. Residential remains stable with moderate growth, while non-residential is driven by investments related to EXPO 2027, with double-digit growth expected in 2026. Office, commercial and hotel segments benefit, and health-related construction is breaking records. The civil engineering consolidation is anticipated to end in 2027, with new growth in 2028 as large-scale infrastructure projects launch a next growth cycle. "Slovenia's construction output held at just under €6 billion in 2024 and 2025 but is set to edge higher, supported mainly by public spending," says Dr Aleš Pustovrh at Bogatin, EECFA Slovenia. Residential remains constrained by limited supply and rising costs, while offices, retail and industry face cautious investors. Publicly financed segments such as education, health and civil engineering renovation provide stability.

Eastern European construction markets up to 2028

The worsening outlook in Russia, predicted to register the biggest decline, has deteriorated the region's prospects. Yet EECFA still thinks Türkiye could get close to its 2018 peak, while Ukraine's current trajectory is a recovery rather than a post-war boom. According to Andrey Vakulenko at Macon, EECFA's Russian research institute, the downward trend in Russia's construction market, which began in 2025, is likely to intensify in 2026-2027. The main reason is a decelerating economy and prolonged high interest rates, which limit financing and investment. Residential is under the strongest pressure amid reduced mortgage availability and declining demand. Civil engineering will likely stay the most resilient subsector due to major transport and energy projects, and the market could return to a growth trajectory in 2028.

"In Türkiye, state involvement in housing development has grown in recent years," say Prof Ali Türel and Prof Leyla Alkan Gökler, EECFA's Turkish researchers. "Policies to curb inflation have depressed disposable income, creating a housing affordability issue as prices and rents have spiked. The government has intervened, launching residential projects affordable to households not owning a house, built by the Housing Development Administration (HDA). Since HDA has also rebuilt about 550,000 dwellings damaged in the February 2023 quake, the share of public-sector housing has risen, while the private sector's share has declined from about 90%. The forecast indicates total construction output in Türkiye may reach TL 5 trillion (€93 billion) in 2028, at 2025 prices."

"Ukraine's construction market showed resilience in 2025 despite the ongoing war. While it nominally returned to pre-war levels last year, it was still 40% below the 2021 output at comparable prices," notes Professor Sergii Zapototskyi at Uvecon, EECFA Ukraine. "Key growth drivers were commercial, industrial, warehouse and logistics developments, residential construction in safer regions, and projects to restore public and transport infrastructure. In the coming years, the market is expected to grow, supported by reconstruction needs, government housing programmes and international funding. The future performance will largely depend on the security situation, investment resources, labour shortages and the effectiveness of government reconstruction policies."