Serbian construction companies expect a pronounced improvement in turnover and employment during the second quarter, but official data show that the sector remains divided between strong building activity in Belgrade and weak civil engineering across much of the country.
Only 11% of construction companies increased turnover in Q1 compared with the final quarter of 2025, while approximately 45% recorded a decline. For Q2, 46% expected higher turnover and only 10% anticipated contraction.
Hiring intentions were even stronger. Around 33% of construction respondents planned to increase employment, the highest proportion of any sector. This points to a growing project pipeline and a need to mobilise labour before activity accelerates.
Official construction statistics show a mixed starting point. The nominal value of works completed in Serbia during Q1 increased by 1.7% year on year, but fell by 5.0% at constant prices. Building construction increased by 25.4% in real terms, while other construction, principally civil engineering, declined by 21.5%.
The regional pattern was sharply uneven. Construction activity increased by 35.0% in real terms in the Belgrade region but declined by 13.7% in southern and eastern Serbia, 17.2% in Vojvodina and 31.7% in Šumadija and western Serbia.
The order pipeline nevertheless points to recovery. The value of contracted works rose by approximately 73.9% in real terms compared with Q1 2025. In May, Serbia issued 2,329 building permits, an increase of 4.6% year on year. Around 81.9% related to buildings, while pipelines, communications and electricity lines represented 77.2% of civil-engineering permits.
Belgrade’s building cycle is being supported by residential demand, commercial projects and preparations connected with Expo 2027. Nationally, the investment programme includes roads, rail, utilities, energy networks and public facilities. These projects create strong order visibility for major contractors.
The risk sits further down the contractual chain. Main contractors can access bank guarantees, advance payments and larger credit facilities. Subcontractors often finance labour, equipment and materials before works are measured and certified. A rise in activity can therefore increase liquidity pressure before it produces cash.
Labour availability is becoming a direct delivery constraint. Steel fixers, bricklayers, machinery operators, electricians, engineers and drivers are all among Serbia’s most difficult occupations to recruit. Foreign workers can fill part of the gap, but supervision, safety, licensing and productivity remain project-level concerns.
Cost escalation must also be managed contractually. Fixed-price agreements without effective indexation leave contractors exposed to changes in materials, wages, fuel and imported equipment. On large public or FIDIC-based projects, timely notices, contemporaneous records and clear variation procedures determine whether increased costs can be recovered.
The Q2 construction rebound is therefore credible, supported by contracted works, permits and planned investment. Its financial quality will depend on payment discipline, labour availability and the allocation of price and delay risk between investors, principal contractors and subcontractors.
