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Romania Construction and Real Estate Report - Q3, 2014

  • September 2014
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 13 pages

This report covers the market developments in Q2/2014 and the data available as of September 2014.



The construction works index dropped by 10.6% y/y in Q2/2014, after having declined by 10.2% y/y in the previous quarter. The decline in Q2 was mainly on the back of the poor performance of the civil engineering segment, which plunged by 25.4% y/y, affected by the government's cutting capital expenditures and sluggish advance of EU-financed projects.



Non-residential constructions shrank by 2.6% y/y in Q2, after an encouraging double-digit y/y growth in Q1. Non-residential constructions include retail parks, office buildings but also public buildings, so the performance in Q2 might reflect a combination of the stagnation in the public part of the segment and a reported acceleration in the private part of the segment.



Residential constructions continued upwards and surged by 76.5% y/y over the quarter. The notable expansion of the residential constructions is mostly explained by low base comparison and however did not manage to offset the negative performance of the two other market segments, non-residential and civil engineering.

The construction sector was negatively affected this year by a combination of factors, among which scarce financing, adverse taxation regime and slow absorption of EU funds. On the upside, each of these factors are expected to be partly settled in the coming quarters, as government promised to boost investments by end-2014 and to cut the tax on special assets. On the other hand, the government plans to cut some RON 1bn infrastructure investment spending under the draft of the second budget revision this year, released at end-Sep.



Accordingly, the sector is unlikely to see a significant recovery by the end of the year, but rather start recovering slowly beginning with 2015.



Key points:



oConstruction works index further declines in Q2/2014, bringing H1 drop at 10.4% y/y

oNumber of residential permits rises for fourth consecutive quarter in Q2

oCNADNR launches tender for EUR 125mn road contract in Satu Mare

oValue of real estate investments may reach EUR 500mn this year, several large transactions expected to be completed in Q4

oNEPI raises EUR 100mn in capital for projects in Romania

Table Of Contents

Romania Construction and Real Estate Report - Q3, 2014
Executive summary4

Market overview5

Construction works index further declines in Q2, bringing H1 drop at 10.4% y/y5

Romania records steepest y/y drop in construction output in EU in Q2/2014, further in July7

Investments in national economy decline y/y in H1/2014, construction's stake rises7

Number of residential permits rises for fourth consecutive quarter in Q2/20148

Number of finished dwellings continues growing in Q2/20149

EC approves Romania's General Master Plan for Transport draft9

Infrastructure9

Public roads company CNADNR spends only EUR 79mn for motorway construction in Jan-Aug 201410

CNADNR launches tender for EUR 125mn road contract in Satu Mare10

Astaldi-Max Boegl consortium to finalise section of Nadlac-Arad highway10

Bucharest metro network operator seeks EU financing for restoration works at lines10

Real estate11

Value of real estate investments may reach EUR 500mn this year, several large transactions are expected to be completed in Q411

Number of real estate transactions up 6.8% y/y in H1/201411

Residential prices drop 3.3% y/y in Q1/2014, after two stable quarters11

BCR bank extends EUR 32mn loan to AFI for office building developments12

NEPI raises EUR 100mn in capital for projects in Romania13

Policolor plant site in Bucharest to be sold to Romanian real estate developer13

Romanian real estate developer to invest EUR 60mn in building new shopping mall in Bucharest13

PointPark Properties reportedly in advanced negotiations to buy large logistic park from CA Immo13



Table 1 Construction works index in 2011-2014- Quarterly performance by structure (y/y)6

Table 2 Construction works index in 2011-2014 - Quarterly performance by destination (y/y)6

Table 3 Construction sector performance in 2007-2014 (y/y)7

Table 4 Construction output in 2013-2014 - Romania, EU28 (y/y, in %)7

Table 5 Licenses for residential buildings issued quarterly in 2011-2014 (quarterly, number, y/y)9

Table 6 Completed dwellings per type of financing in 2011-2014 (number, y/y, quarterly)9

Table 7 Motorway projects under construction in Romania in Aug 201410

Table 8 Residential property price indices in 2010-2014 (2009=100)12

Table 9 Residential property price indices in 2011-2014 (quarterly, y/y)12



Figure 1 Construction works index in 2005-2014 (monthly, 2010=100)6

Figure 2 Construction works index in 2005-2014 (monthly, y/y)6

Figure 3 Construction gross output in 2003-2017f (bn 1995 USD, y/y)7

Figure 4 Investments in national economy by sector in 2013-2014 (% in total)8

Figure 5 Licenses for residential buildings issued in 2007-2014 (number, monthly)8

Figure 6 Number of real estate transactions in 2012-2014 (thou, monthly)11


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