Serbia’s construction sector recorded a divergence between activity volumes and investment value in the first quarter of 2026, as the number of issued permits increased while the estimated value of approved works declined significantly.
A total of 6,043 construction permits were issued in Q1 2026, marking an 8.9% year-on-year increase, according to construction market data. Despite the rise in permit issuance, the estimated value of works covered by those permits fell by 47.3% to RSD 237.3 billion. The data indicate a shift in project structure, with more permitted developments but a significantly lower aggregate value of approved construction activity.
Project value contraction reflects smaller-scale pipeline
The sharp decline in total project value suggests a change in the composition of Serbia’s construction pipeline, with fewer large-scale developments included among newly approved works.
While permit volumes expanded, the reduction in overall estimated value points to a market increasingly dominated by smaller projects rather than high-value infrastructure or major real estate developments.
Construction output declines amid sector volatility
Broader sector performance confirms continued weakness in construction activity. In Q1 2026, construction output contracted by 5.1% year-on-year, following periods of volatility throughout 2025. Measures including effective working hours and the value of executed construction works remained under pressure during the quarter.
The figures reflect ongoing adjustments within the sector, including delays, cost revisions, financing constraints and uncertainty surrounding the timing of major infrastructure and real estate projects.
Regional distribution remains concentrated in key areas
Planned construction activity continues to show strong geographic concentration. Belgrade accounted for 37.1% of the estimated value of works, followed by Vojvodina with 29.8%, Southern and Eastern Serbia with 17.2%, and Šumadija and Western Serbia with 16.0%.
The distribution confirms that construction investment remains uneven, with Belgrade and Vojvodina continuing to dominate the pipeline of planned works.
Outlook tied to infrastructure and financing conditions
Projections indicate that construction output is likely to remain weak in the first half of 2026, with a gradual recovery expected later in the year. Full-year real growth is forecast in the range of 0% to 2%, depending on execution dynamics across public and private projects.
A stronger recovery of around 4% growth would require accelerated delivery of public infrastructure, EXPO-related construction, logistics developments, energy projects and utility modernization programs.
A downside scenario includes another year of contraction if financing conditions remain tight, permitting delays persist or public investment execution is further postponed.
Financing priorities shift toward bankable projects
For lenders and investors, the data highlight a shift in project selection criteria within the construction sector. The volume of permits is becoming less relevant than the quality and financial structure of approved projects. Priority is expected to shift toward developments with secured demand, public-sector backing, energy or logistics relevance, and established contractors capable of execution.
Large-scale infrastructure and industrial projects remain central to future construction growth, while smaller residential and mixed-use developments continue to contribute to baseline activity levels.
