Skip to main content
Internal Market, Industry, Entrepreneurship and SMEs
12 NOVEMBER 2021
Bulgaria - ECSO country fact sheet
(1.27 MB - PDF)

In 2020, Bulgaria’s GDP stood at BGN 98.4 billion (EUR 50.2 billion), marking an increase of 20.2% compared to 2010 and a 4.2% decline over the previous year.

The decline was mainly due to the precautionary measures taken to tackle the COVID-19 global pandemic.

While the number of enterprises in the broad construction sector increased by 23.2% between 2010 and 2020, the volume index of production in the broad construction sector declined by 12.6% between 2015 and 2020. This was mainly due to 21.8% and 5.2% declines registered in construction of civil engineering and construction of buildings respectively, over the reference period, which mirrored the macro-economic trend.

The total turnover of the Bulgarian broad construction stood at EUR 11.8 billion in 2018, marking an increase of 18.9% compared to 2010 (EUR 9.9 billion). This further increased to EUR 14.3 billion in 2020 , representing an 44.2% increase since 2010. This overall increase was driven by growth in sub-sectors including manufacturing (+62.5%), real estate activities (47.8%), narrow construction (+44.0%) and architectural and engineering activities (+8.0%) sub sectors over the 2010 2020 period, respectively.

Similarly, the gross operating surplus of the broad construction sector increased to EUR 2.1 billion in 2018 , marking a 52.9% growth compared to 2010 (EUR 1.4 billion). This increase was driven by growth in the real estate activities (+106.8%), followed by narrow construction (+45.4%) and manufacturing (+38.2%) sub sectors over the 2010-2018 period. Correspondingly, the gross operating rate of the broad construction sector, an indicator of the sector’s profitability, stood at 17.8% in 2018  (EU-27 average: 16.7%), a 3.9 percentage point (pps) increase since 2010.

In terms of employment, there were 293,347 persons employed in the Bulgarian broad construction sector in 2020, an increase of 6.3% over 2010. This was driven by the growth in the sub sectors in terms of person employed including the real estate activities (+14.3%), narrow construction (+6.7%) and architectural and engineering activities (+0.9%) sub-sectors between 2010 and 2020.

Volume index of production in broad construction sector between 2015 and 2020
Turnover in the broad construction sector between 2010 and 2020
Number of persons employed in the narrow construction sub-sector between 2010 and 2020
House price index between 2015 and 2020

There are several crucial issues hindering the sustainable development of the Bulgarian construction sector. Firstly, the issue of rising number of bankruptcies declared by the broad construction sector companies. In fact, the number of company deaths in the real estate activities, architectural and engineering activities and narrow construction sub-sectors significantly rose by 810.8%, 459.8% and 164.9% respectively over the 2010-2018 period.

Secondly, the issue of late payments by the customers is also prevalent in the sector. The outbreak of COVID-19 pandemic has made the situation even more difficult.

According to the European Payment Report 2021, around half of SME respondents (47.0%) feel that issues with late payment have significantly hindered investment in strategic growth initiatives.

Thirdly, the continuing shortage of skilled and professional workforce in the construction sector continues to be a major concern. The government developed several initiatives to address this particular issue.

The housing market in Bulgaria grew substantially in 2020 despite the challenges stemming from the COVID-19 pandemic, with residential property prices continuing to grow, albeit at a slower pace compared to the pre-crisis. In fact, the house price index for total dwelling grew by 37.4% in 2020 over 2015, with the index for existing dwellings and new dwellings increasing by 40.0% and 33.0% respectively. The market was mainly supported by a growing housing demand, fuelled by the continuing decline in interest rates .

The growth trend steadily accelerated with the post-pandemic recovery: Housing prices growth accelerated to 9.1% year-on-year in Q2, up from 7.5% year-on-year in Q1, according to the National Statistics Institute . Both investors and households seem favour housing as an investment, as deposits interest rates are decreasing.

Under its Recovery and Resilience Plan (RRP), worth EUR 6.5 billion, Bulgaria has allocated EUR 947.0 million towards energy efficiency improvement initiatives including renovation. These measures target multifamily residential buildings, state and municipal buildings, and industrial and commercial buildings .

The plan proposes a dedicated programme to finance stand-alone house energy efficiency measures such as the purchase of energy efficient heat-pumps, solar systems for household heat supply and photovoltaic (PV) systems in buildings that are not connected to heat and gas transmission networks.

With regards to the investment in non-residential construction and civil engineering, Bulgaria has planned to invest around BGN 6.5 billion (EUR 3.3 billion) in the construction of railway infrastructure on its territory jointly with the European Union (EU) .

In the Bulgaria’s Convergence Programme (2021-2023), an increase of the subsidy by BGN 50.0 million (EUR 25.5 million), 0.04% of the projected GDP, for current maintenance and operation of the railway infrastructure for 2021 has been proposed .

Furthermore, Bulgaria has allocated around BGN 1,309.2 million (EUR 667.7 million) for the digitalisation of its railway transport through modernisation of safety and energy efficiency systems on railway lines of the main and wide ranging TEN-T network . These measures would contribute to economic recovery as well as benefit the construction sector.

The outbreak of COVID-19 pandemic has significantly impacted the economic landscape of the country. In July 2021, the interim government proposed to amend the 2021 fiscal budget and use surplus revenue to boost state pensions and prepare the country for any upsurge in the COVID 19 pandemic . This may in turn affect potential opportunities for growth for the construction sector (in the case where investments were for instance investments for infrastructure would be redirected to other sectors). That being said, several governmental measures – though not construction sector-specific, are expected to contribute to benefit the sector and its economic operators .

The overall outlook for the Bulgarian broad construction sector is promising in the long run, primarily supported by increased investments in public infrastructure backed by EU funding.