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Intellinews Romania Construction and Real Estate Report - June 2013

  • June 2013
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 14 pages

The construction works volume dropped by x.x% y/y in April, after having declined by x.x% y/y in Q1. Civil engineering works, expected to propel the whole sector this year, performed particularly weak in April, when they shrank by xx.x% y/y after the 9.7% y/y drop in Q1. Construction of buildings, on the other hand, inched up by x.x% y/y in Jan-Apr 2013. The prospects for this year are rather uncertain, as the long awaited public investments in large infrastructure projects have been postponed or delayed. Nonetheless, the situation might improve in the second half of the year, as the EU resumed this June the intermediary payments for projects in Romania under the transport sectoral operational programme. The programme was pre-suspended in December 2012, after intermediary payments were halted earlier in the year.

The real estate market maintained stable at low levels in Q1/2013. The residential market remains overall frozen, but prices decline continued to ease over the quarter. The retail and office markets were more dynamic. The new office space deliveries in Q1/2013 nearly equalled the entire supply added to the market in full year 2012. Modern retail space deliveries were abundant in H1/2013, but just as in 2012, consisted mainly of shopping galleries and extensions, for which financing is easier to secure and completion timeframe is shorter. We also note that an increasing number of retailers and developers have started to use their own resources to finance new developments. Only one shopping mall project was delivered in H1/2013, namely Uvertura Mall in Botosani (North-East), in March.

There is still enough room for growth on the retail segment and the market pipeline looks encouraging in this regard. Some eight shopping mall projects are scheduled for delivery by 2015 and many others have been announced without specific completion timeframe, yet it is difficult to predict how many of them will actually be finished.

Romania still has good growth prospects in the medium and long run also in the road construction segment (xx% of the roads are not asphalt paved) as well as in construction and rehabilitation of residential buildings (roughly xx% of the dwelling stock is older than 20 years). In 2013, the sector’s development however relies on the unblocking of major projects and public investments in infrastructure.

Table Of Contents

Intellinews Romania Construction and Real Estate Report - June 2013
Executive summary

Market overview
Construction works volume down y/y in Jan-Apr 2013
Prospects for H2 are linked to unblocking of major infrastructure projects, EU fund absorbtion
Construction sector performs above EU average in Q1/2013, yet decline in April is much steeper
Share of construction in GDP diminishes to x.x% in Q1/2013
Construction sector forecasted to rise x.x% y/y in 2013
Investments in national economy inch up 0.5% y/y in Q1, construction sector's stake diminishes
Number of finished dwellings up y/y for second consecutive quarter
Number of building permits drops x.x% y/y in Jan-May 2013
Top 5 domestic firms account for x% of construction market in 2012

Infrastructure
EU resumes payments to Romania under transport operational programme
Road infrastructure totalling 120km of highways scheduled for delivery in H2/2013
Transport ministry to announce winners of several delayed tenders by mid-April
Public roads company's arrears to construction firms to be paid by September 2013
Romania terminates contract for Brasov-Bors motorway with US firm Bechtel
Public roads company launches tender for EUR 100mn ringroad in Bihor county
Strabag-led consortium wins contract to build research centre in southern Romania
Strabag reports impressive surge in value of construction works performed last year

Real estate
Value of real estate investments advances y/y in Q1/2013, driven by office segment
Number of real estate transactions rises xx.x% y/y in Q1/2013
Residential property prices ease decline to x.x% y/y in 2012- official statistics
New office space supply delivered in Bucharest in Q1/2013, at record level
Retail space deliveries consist mainly of shopping galleries, extensions
NEPI to open shopping centre in Galati this year, plans new project in Targu Jiu
AFI Europe to build second shopping mall in Bucharest



List of Tables

Table 1 Construction sector performance in 2007-2013 (y/y)
Table 2 Construction output in 2012-2013 (y/y, in %)
Table 3 GDP and Construction output in 2011-2013 (annual, quarterly)
Table 4 Completed dwellings per type of financing in 2007-2013 (annual, 3M, y/y)
Table 5 Completed dwellings per type of financing in 2010-2013 (number, quarterly)
Table 6 Licenses for residential buildings issued in 2007-2013 (number, y/y)
Table 7 Residential property price indices in 2010-2012 (quarterly, 2009=100)



List of Figures

Figure 1 Construction works index in 2005-2012 (annual, 2010=100)
Figure 2 Construction works index in 2005-2013 (monthly, y/y)
Figure 3 Construction works index in 2006-2013 (monthly, 2010=100)
Figure 4 Construnction works volume in 2005-2013, seasonally, workday-adj. (2010=100)
Figure 5 Construction works index by structure elements in 2010-2016f (%, y/y)
Figure 6 Construction works index by type of construction in 2010-2016f (%, y/y)
Figure 7 Investments in national economy by sector in 2012-2013 (% in total)
Figure 8 Licenses for residential buildings issued in 2007-2013 (number, monthly)
Figure 9 Number of real estate transactions in 2012-2013 (thou, monthly)
Figure 10 Residential property price indices in 2009-2012 (quarterly, 2009=100)

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