Russia and Ukraine
Against the backdrop of its ongoing invasion of Ukraine, the downward trajectory of Russia’s construction market is expected to continue and intensify, driven by prolonged high interest rates suppressing demand and the availability of finance.
Residential construction has been hit by reduced mortgage availability and declining demand, while most non-residential construction sectors are struggling with slowing consumption, declining business activity, weak household income growth and a lack of public investment.
EECFA said Russian construction could return to growth in 2028 if the state pursued public infrastructure development and eased monetary policy.
Ukraine’s construction market showed “high resilience” in 2025 despite the war, which is keeping the sector 40% below its 2021 output, EEFCA said. Growing markets are commercial, industrial, logistics, residential in safer regions and redevelopment projects for public and transport infrastructure.
Turkey has been heavily involved with housing development, rebuilding 550,000 units that were damaged in the 2023 earthquake.
Formerly 90% of the housing was built by private companies, which has since been taken over by affordable public projects. The EECFA estimates that Turkey’s total construction output will reach €93bn by 2028, at 2025 prices.
Southeast Europe
The report notes that in the last 10 years all but one country in southeastern Europe has rebounded to its pre-financial crisis margin in its construction sector.
Romania’s economy is in flux with the highest inflation in the EU, a stagnant GDP and declining public spending and wages. The construction market may shrink due to climbing labour and energy costs. Despite this, EU programs are funding infrastructure projects, which may boost the sector depending on how overall economic conditions perform.
Serbia’s non-residential market is estimated to grow by more than 10% in 2026 and planned large infrastructure projects will offer long term stability in the country.
Bulgaria’s output is anticipated to increase by approximately 2%, buoyed by an unexpectedly stable economy, especially in the residential sector, despite broader political uncertainty with eight elections between 2021 and 2026.
In Croatia, the EU’s Military Mobility Package has driven civil engineering and transportation spending, plus factories and logistics projects indirectly.
Slovenia’s output is level but slowing, with education, health and railway projects sustaining activity, while residential construction is constrained by limited supply and rising costs despite strong demand.
An EECFA press release says: “The main message is that both east and southeast Europe are anticipated to maintain the high output level they reached last year.
“In the southeast European region, it comes with a little less pessimism compared to the previous forecast, while in the eastern European region it comes with a little less optimism than predicted last December.”
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