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Bulgaria's Building Sector to Survive the Global Financial Crisis

Tuesday, Nov 18, 2008

Markus Neurauter
Managing director of Raiffeisen evolution project development

Undeniably, the global financial crisis will have a negative effect on the building market in Bulgaria, but its consequences will be far from fatal. As the buyers developed a distinguished taste for high-quality buildings, the investors who fail to match these higher standards will be most affected by the crisis. The already financed projects and those which are almost implemented will hardly be directly affected by the negative tendencies on the world markets, but these which have been partially financed will definitely experience some difficulties, as the Western and the local banks have become more reserved to granting loans. Generally speaking, Bulgaria will overcome the global credit crunch almost unaffected, because a stable growth in the country's GDP is expected.
At the same time, the real property market in Bulgaria will cool down and the growth in the sector will become slower, following a decrease in the demand. The reason for the lower demand is that the access to house loans in the poorest EU member state has already become more difficult. The positive aspect of the slowdown in Bulgaria's construction sector caused by the global financial crisis is that the investors and municipal authorities will be able to catch up with the building of infrastructure and facilities. The new homers now pay more attention to the details - they tend to prefer high-quality engineering and friendly neighbors.

Source: Standart newspaper