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Construction Boom In Apartments Continues

A total of 4878 new construction permits were issued throughout Bulgaria in September 2007, 3110 of them for residential buildings, according to data from the National Statistical Institute.

The construction boom in the residential sector continues to lag slightly behind demand for these properties, according to Monitor, the Bulgarian-language daily newspaper.

Bourgas again 'defeated' Varna during the third quarter of the year, winning first place.  The city issued 635 permits, 534 of which were for residential buildings. Varna ranks second with 568 permits, including 442 for residential units.

Plovdiv is third (498 permits) and Sofia comes fourth for new construction (406). Vidin came last with only four new residential buildings and six homes.

Unlike Bulgaria, leading residential builders in Europe will experience a tough New Year, according to specialists from Standard and Poor’s, the credit evaluation specialists. This past year has already seen a slowdown in construction of new housing developments. This trend will continue in 2008, analysts predict.

“Following a few years of dynamic development in the residential sector, markets have recorded a decline in commercial activity in 2007. This is likely to continue in 2008 and will probably reverberate on the whole construction sector, despite the expectations of building engineering’s strong performance,” said the agency.

The market recovery will be delayed by a number of factors: The rising number of unsold homes in many European regions, increased mortgage rates, tightened lending conditions and expectations of a squeeze in economic activity.

Spain, Italy, Denmark and Ireland, which experienced a residential construction boom over recent years, are most susceptible to market fluctuations. This is despite the fact that many companies have diversified their portfolios to lessen the impact of the crunch.

The US residential market slump unleashed speculation about its effect on Europe. International Monetary Fund analysts warned that some of Europe’s leading economies (Spain, United Kingdom and Ireland) could experience a significant 'correction' –  falling prices - in their housing sectors. Other experts, however, were less pessimistic about prospects for European economies.