Serbia’s construction pipeline improved in early 2026, while activity indicators pointed to uneven execution. In March, the country issued 2,634 building permits, up 19.3% year on year. More than four-fifths of the permits were for buildings, with residential projects the dominant category.
Permits increase while construction values diverge
Activity data for the first quarter were weaker when adjusted for inflation. The value of construction works increased 1.7% at current prices compared with a year earlier, but declined 5% at constant prices. Work on buildings rose 25.4%, while other construction fell 21.5%.
The permit and activity split shapes the market picture for mid-2026. The pipeline is improving, particularly for residential and mixed-use buildings. At the same time, real construction activity remains uneven, and not all permitted projects are expected to convert into profitable work.
Expo 2027 programme expected to support demand
The National Bank of Serbia expects investment projects under the “Leap into the Future — Serbia Expo 2027” programme to support economic activity ahead of the event. It also points to additional effects from the event itself in 2027. This is cited as an upside for the construction pipeline.
For the second half of 2026, the outlook is described as flat to low-single-digit real recovery in H2 2026. The expected concentration is in buildings, logistics facilities, selected residential projects and Expo-linked supply chains. Civil engineering is expected to remain dependent on public-sector execution, procurement timing and budget discipline.
Financing, labour and energy costs remain key constraints
NBS policy rate conditions are highlighted as a constraint on project economics. With the policy rate still at 5.75%, developers and contractors cannot assume cheap financing. Projects relying on short-term borrowing, slow pre-sales or optimistic refinancing are described as vulnerable.
Labour costs are also a factor for contractors and suppliers. Serbia’s average net wage reached RSD121,650 in March, while average net wages in the first quarter were 8.9% higher in real terms than a year earlier. The same wage growth that supports housing demand is also linked to higher costs across contracting and materials supply chains.
A third constraint relates to energy and fuel-linked inputs used across construction activities. Diesel, cement, steel, asphalt, transport and site logistics are described as exposed to fuel volatility. The NIS issue is noted as relevant for construction even though it begins in the oil sector.
Where demand may stabilise and how property segments differ
The better-positioned segment is described through operational characteristics rather than specific firms or projects. These players are said to have pre-sales or secured tenants, strong supplier relationships and financing aligned with project timelines. They are also described as able to pass through some cost increases and as more exposed to buildings than purely civil engineering work.
Residential construction is expected to stabilise first in Belgrade, Novi Sad and selected regional centres. Wage growth, urbanisation and investor interest in hard assets are cited as supporting factors, alongside a shift toward affordability considerations. Developers may see stronger demand for mid-market and smaller units rather than speculative premium supply.
Commercial real estate is expected to be more selective across categories. Logistics and warehousing are linked to Serbia’s export and e-commerce trends, while offices are described as dependent on location and tenant quality. Retail property is expected to hold up where catchment areas are strong, with secondary schemes facing more pressure.
The margin trap between permits and profitability
The risk highlighted for builders is that permits can rise before profitability improves. Higher wages, materials costs, subcontractor pricing and financing expense are cited as pressures that can prevent margins from expanding even when workloads increase.
For investors and operators assessing the second half, the focus is described around whether projects are financed, priced and staffed realistically rather than whether Serbia is building overall. Construction recovery is expected but not evenly across segments or geographies within the market.
