Prime Costs per Construction Project in Bulgaria To Fall by 20% in 2009 - Industry Official

“New projects that will be started now will see this decrease. They will be more competitive than projects that have already started but are yet to be finished,” Nikolay Pehlivanov, CEO of Bulgaria’s real estate company Green Life Property Development, told a news conference.

Prime costs are the sum of direct wages and the costs of direct materials used in a project.

Total investments in Bulgaria's construction sector are expected to fall next year by between 2.0 and 2.5 billion levs ($1.44-1.8 billion/1.02-1.3 billion euro)due to the global crisis and the withdrawal of foreign investors, mainly from Ireland and England, the executive director of the Bulgarian Construction Chamber, Ivan Boikov, said earlier in December.

Pehlivanov added that prices could fall on the average in Bulgaria's main cities and resorts to between 400 euro and 800 euro ($564.32-$1,128) per square metre, land plot price excluded. Currently the average price per square metre in a residential building in capital Sofia is between 900 euro and 1,500 euro.

“I expect investors who have recently started construction works to renegotiate the datelines and prices with their subcontractors, so that they could lower the final price per square metre and be competitive [...],” Pehlivanov said.

He expects the investors to shift their focus next year from the construction of gated-community projects to smaller blocks of flats with no more then 300 apartments.

“The monthly payments required from each family for gated community maintenance are high and I believe that there would be a reflux of clients for this kind of apartments,” Pehlivanov said.

“The demand in the construction sector will reach again the 2007-2008 level in the most pessimistic case scenario in two to three years,” he added.

Green Life intends to start the construction of all the planned projects next year and to implement all its investment plans but over a longer period of time. "We may say that next year we will have a 40% decrease in investments in new projects,” Pehlivanov told SeeNews on the sidelines of the news conference, but did not elaborate on the value of the planned investment.

($=0.7088 euro)