Building permits point to recovery, while real construction activity remains uneven. Expo 2027 may support demand, but financing, labour and materials costs will decide profitability.
Serbia’s construction sector is sending two different signals.
The forward-looking data are encouraging. In March, Serbia issued 2,634 building permits, a 19.3 per cent increase from a year earlier. More than four-fifths of those permits related to buildings, and within that category residential projects dominated.
The activity data are weaker. In the first quarter, the value of construction works rose 1.7 per cent at current prices from a year earlier, but fell 5 per cent at constant prices. Buildings performed strongly, with works up 25.4 per cent, while other construction fell 21.5 per cent.
That split is the story of Serbia’s construction market in mid-2026. The pipeline is improving, especially in residential and mixed-use buildings. But real activity is still uneven, and not every permitted project will translate into profitable work.
Expo 2027 is the obvious upside. The National Bank of Serbia expects investment projects under the “Leap into the Future — Serbia Expo 2027” programme to support economic activity in the period ahead, with additional effects from the event itself in 2027.
Yet the construction market’s second-half forecast should be cautious. The base case is flat to low-single-digit real recovery in H2 2026, concentrated in buildings, logistics facilities, selected residential projects and Expo-linked supply chains. Civil engineering is likely to remain dependent on public-sector execution, procurement timing and budget discipline.
Financing is the first constraint. With the NBS policy rate still at 5.75 per cent, developers and contractors cannot assume cheap money. Projects that depend on short-term borrowing, slow pre-sales or optimistic refinancing are vulnerable. Households may still be earning more, but mortgage affordability remains sensitive to rates and bank conditions.
The second constraint is labour. Serbia’s average net wage reached RSD121,650 in March, while average net wages in the first quarter were 8.9 per cent higher in real terms than a year earlier. That supports housing demand, but it also raises costs for contractors, subcontractors and materials suppliers.
The third constraint is energy. Diesel, cement, steel, asphalt, transport and site logistics are all exposed to fuel volatility. The NIS issue therefore matters for construction even though it begins in the oil sector.
The sector’s better-positioned players share several features. They have pre-sales or secured tenants. They have strong supplier relationships. They have financing matched to project timelines. They can pass through some cost increases. They are exposed to buildings rather than purely to civil engineering. And they are close to public or private projects that have genuine execution momentum.
Residential construction is likely to stabilise first in Belgrade, Novi Sad and selected regional centres. The market is supported by wage growth, urbanisation and investor interest in hard assets. But affordability will become more important. Developers may find stronger demand for mid-market and smaller units than for speculative premium supply.
Commercial real estate will be more selective. Logistics and warehousing should benefit from Serbia’s export and e-commerce trends. Offices are more dependent on location and tenant quality. Retail property should hold up where catchment areas are strong, but secondary schemes face more pressure.
The margin trap is clear: permits can rise before profitability improves. Builders may see more work coming but still struggle with higher wages, materials costs, subcontractor pricing and financing expense. A busy contractor is not necessarily a profitable contractor.
For investors and operators, the key question for the second half is not whether Serbia is building. It is whether projects are financed, priced and staffed realistically.
Construction will recover. It will not recover evenly.
