Bulgaria Infrastructure Report Q1 2008

A former Soviet satellite, the Republic of Bulgaria - situated on the Balkan Peninsula in south-eastern Europe - is now home to a vibrant construction industry witnessing a surge in investments from European and international investors. Primary among these are the European Investment Bank and Europe-based multinational contractors, all vying for a piece of Bulgaria's ever-growing construction pie. In economic terms, the construction industry formed over 5% of all domestic production in 2006.

It is estimated that there are over 11,000 companies currently operating in Bulgaria's domestic infrastructure sector employing over 200,000 people. Under its national strategy for integrated development of infrastructure from 2006 to 2015, projects are currently underway or being planned across segments including road and rail transport, aviation, oil, power and water. Due to the growth of tourism in Bulgaria, the country is witnessing a spurt in the number of hotels and resorts, built by both domestic as well as foreign players. Moreover, with some key pipelines being planned through its territory, Bulgaria is all set to become Russia's gateway to Europe for oil and gas transportation.

However, with its share of downsides, the picture is not all rosy for the local construction industry.

Compared with peers from Eastern Europe, Bulgaria has a poor track record of administrative and legal reforms - a situation that has begun to improve following Bulgaria's membership of the European Union (EU). It is largely believed that bureaucratic delays and paperwork has proved to be a serious constraint for the nation's infrastructure sector.

That said, there remains great unrealised potential in the Bulgarian construction industry and this report forecasts growth at an average annual rate of 7.8% over the 2008-2012 period. The industry is expected to reach a value of US$3.34bn by the year 2012.