The construction industry in Serbia saw a significant increase last year and early 2020, both in the field of residential construction and in the area of new office space. According to an earlier eKapija report, data from the recently released Annual Financial Statement Bulletin showed that the construction sector business in 2019 was extremely successful. Thus, the positive result of 311.8 million euros increased by 49.2% compared to 2018, while the total number of employees of 77.770 workers increased annually by 5.291 workers.
In the first three months of this year, through the Central Registry of Integrated Procedures for Issuing Construction and Other Permits in Construction, a total of 25,410 applications were received, 16.8% more than in the same period last year, when 21,760 applications were received, the Agency business registers (APR) announced.
And then the whole planet was hit by a pandemic, which has been slowly expanding since January of this year, and in March it momentarily closed the markets and borders of both our and neighboring countries.
In Serbia, the state of emergency was introduced on March 15, and in the first two weeks it was necessary to adapt to the new circumstances, reorganize the workforce and resources. The first was the emergence of key organizational problems – a workforce that generally has a different place of residence compared to the place of employment, and so restrictions on movement and curfew completely removed certain groups of people from the construction site. The ban on weekends, as well as curfew starting at 5pm every day made it impossible to work two shifts, with construction sites almost halving their performance. The contractors were forced to find a new workforce at that moment, but at the same time to reduce the number of employees on the construction site, in order to comply with all the protection measures proposed by the Government at that moment.
Supply of materials and difficult transportation emerged as another problem. Shortly after the introduction of the state of emergency, companies that lacked supplies were left without a significant portion of construction materials. Equally important is the emergence of protective equipment, which at the time had to be procured in order to operate in accordance with the recommendation of the Government and the health care organization, and protective equipment was not available at that moment due to high demand. However, all these problems, which occurred in the first two weeks after the introduction of the state of emergency, began to stabilize slowly in large construction sites by week 4. Employers were finding ways to overcome them, and now, one and a half months after the introduction of the state of emergency, we can say that circumstances have been accepted to some extent and that the organization is adapted to the situation.
It is important to note that from the very beginning, the construction industry of Serbia had support in the country, which found ways to meet and overcome the new situation in the easiest possible way. It was important for the construction industry to survive, and this was largely achieved.
With a share of close to 6% in GDP and 35% growth last year, the construction sector is one of the main drivers of economic growth, which is why it needs to be supported by special measures to overcome the negative effects of the pandemic, they said from the Alliance for Property and Urbanism of NALED.
According to the available data from the ministry, there is no decrease in the number of building permits issued in relation to this period last year, which is even more, according to NALED data, in the first two months of 2020 we already had 2,700 permits issued, 29.1 % more than in the same period last year. However, there is a slight decrease in the investment value field. Also, in the first two weeks of March, there has been a decline in real estate sales as well as office space rentals. However, we will have the right information only after the state of emergency is over. The consequences of a fall in demand and sales will only be felt in the next year, and full market normalization is expected in just two years.
According to Provincial Prime Minister Igor Mirovic, the Government of Vojvodina has abandoned four infrastructure investments due to the coronavirus epidemic: reconstruction of facades in Subotica, reconstruction of the Theater Square in Novi Sad, reconstruction of traffic infrastructure in Pancevo and reconstruction of the City Stadium in Zrenjanin, he said.
– The coronavirus crisis has brought us certain problems in the economy and that is why we will have a fall in revenues. The budget will be reduced by 35 million euros or 5.43%. However, on the fingers of one hand we can count the investments we will give up. All other investments, especially those that have been started, will be brought to an end – said Mirovic.
What is important now is that the state should provide as much support as possible to the construction industry, small and medium-sized enterprises, by simplifying the procedures for obtaining special permits, the quarantine measures for drivers bringing goods from abroad, as well as the possibility of extending working hours at the construction site and simplicity in the procurement of materials and mandatory protective equipment. Banks should be encouraged in some way to continue smoothly with project financing and lending, so that we do not feel this fall even more difficult over the next year, when the real consequences will indeed be seen. The idea should be that the workforce who returned to their home country by circumstance be strengthened and attracted to remain in the domestic market. It would also be useful to allow deferred payment for the procurement of materials, protective equipment and energy products, as well as regular execution of payment transactions for all those in the chain of current construction projects.
The economic damage to construction segments will crucially depend on the duration of the crisis and the uncertainty it brings. According to some estimates, the short-term crisis is expected to result in a GDP decline of 5%. The first indications that the return to normal operation of the Slovenian economy was approaching were announcements that by the end of April 2020 several mitigation measures should be mitigated. However, the real decline in economic activity will depend on the effectiveness of the country of action in which Slovenian politicians have promised one of the largest stimulus packages in the EU – estimated at more than 6% of its GDP, but they will need to be implemented effectively.
In addition to potential measures that would mitigate the effects of a pandemic, it is difficult to make a long-term prognosis. It remains to be seen how the new challenges will be overcome in the future with the state and investors, so that the impact of the pandemic on the construction industry in Serbia will be much milder, eKapija reports.
