Executive Summary 

• In 2019, the Romanian construction sector registered a growth of 23,3%, compared to the same period last year.
• Eurostat shows that the growth of the construction sector was the largest among EU MS.
• Construction will remain positive in 2020, but will not register a spectacular increase as in 2019.
• For 2020, the growth in the volume of construction was more moderate than last year's 28%, registering an increase of 19% year-o-year.
• For 2020, the Romanian government is forecasting a construction growth of 10.3%,  and a positive contribution to GDP growth of 0.4 percentage points. The forecast is achievable if:
  • The government would unblock the infrastructure works (engineering constructions), which would allow the infrastructure to continue to grow.
  • There will be no other closure of the economy.
• The government is counting on a 7.1% contribution by the construction sector to the GDP, and a 0.4 percentage point positive contribution to the 3.8% economic decline forecast by the government for 2020.
• Economists believe that the construction sector will slow its growth in 2020, but will remain one of the most dynamic sectors of the Romanian economy.
• The Romanian construction market will exceed the threshold of 90 billion RON in 2020.
• The local construction market is estimated at 10 Billion EUR. The share of construction materials is maintained at one third of the total.

Already have an account? Login here. 

Romania outlook prior to COVID-19 

• In 2019, the economy experienced a real GDP growth of 4.1%.
• Unemployment was at 3.9%.
• General gross debt stood at  37.4 % in 2019, up from 36.7 % previous year.

Romania construction sector outlook prior to COVID-19 

• In 2018, compared to 2017, the volume of construction works decreased in total, as a gross series, by 4.1%.
• In 2019, compared to 2018, the volume of construction works, as a gross series, increased in total by 27.6%, an increase reflected in all structural elements as follows: new construction works (+ 32.5%), maintenance works and current repairs (+ 26.3%) and capital repairs (+ 0.9%).
• By construction objects, the volume of construction works increased for non-residential buildings (+ 49.1%), residential buildings (+ 26.2%) and for engineering constructions (+ 16.6%).
• In December 2019, compared to December 2018, the volume of construction works, as a gross series, increased by a total of 24.8%, an increase reflected in new construction works (+ 32.8%) and in current maintenance and repair works (+ 20.9%).
• Construction accounted for 6.4% of GDP in 2019 and contributed to economic growth of 4,1% by 0.9 percentage points.
• In 2019, the infrastructure accounted for half of the 16 Billion EUR construction market.

Romania-current situation in construction sector 

• The Romanian construction market will exceed the threshold of 90 billion RON in 2020.
• The turnover of the local construction market increased by 17% compared to 2017 and by almost 30% compared to 2014
• In 2020 a continuation of the growth trend is expected, albeit at a slower pace, in part due to Coronavirus pandemic.
• The growth in the volume of construction was more moderate than last year's 28%, registering an increase of 19% year-o-year.

The first 5 months of 2020

• In the first half of 2020 the growth in the volume of construction was more moderate than last year's 28%, registering an increase of 19% year-o-year.
• The evolution was supported by engineering constructions (infrastructure), which advanced by 30%. However, the infrastructure slows down compared to the first 5 months of the year, when it advanced by 40% year / year.
• The advance of the volume of construction works was 23.7% compared to the same period in 2019.
• The volume of construction works (as a seasonally adjusted series) decreased in May by 2.2% compared to April 2020, but was 14.3% above the level of May 2019.
• There is an advance of engineering constructions of 39.4%, followed by the increase of residential buildings of 20% and non-residential buildings of 8.4%, compared to the same period in 2019.
• By structural elements, the volume of current maintenance and repair works increased by 64%, that of capital repair works by 50% and that of new constructions by 11%, compared to the same period in 2019.
• In May 2020, 3,062 building permits were issued for residential buildings, increasing by 34% compared to April 2020 but down by 26% compared to May 2019.
• A total of 13,997 building permits were issued for residential buildings, down by 15% from the same period in 2019.
• In April 2020, the construction sector registered a 12.2% growth, compared to the same period in 2019.
• This increase registered in the month of April 2020, compared to the same period in the previous year, is more appreciable as in the EU, construction work registered a decrease of 24%, while in the countries of the Eurogroup the annual decline was even higher, of 28.4% for the month of April.  The only EU Member States in which construction works increased in April 2020, compared to April 2019, are Romania (12.2%), Germany (0.9%) and Finland (0.8%).

Forecast for 2020-2021

• For 2020, the Romanian government is forecasting a construction growth of 10.3%,  and a positive contribution to GDP growth of 0.4 percentage points.
• A 10% growth is expected if the infrastructure continues to grow and if there are no blockages, such as a new quarantine.
• The government is counting on a 7.1% contribution by the construction sector to the GDP, and a 0.4 percentage point positive contribution to the 3.8% economic decline forecast by the government for 2020.
• The government sees a 16.4% increase in infrastructure in 2020, an evolution similar to that of 2019.
• Construction will be the only economic sector that will remain in surplus this year.
• Economists believe that the construction sector will slow its growth in 2020, but will remain one of the most dynamic sectors of the Romanian economy.
• In the residential area, one of the causes of the slowdown of the construction works are the remittances, expected to decrease this year by 15-20% compared to last year.
• For the Bucharest-Ilfov area, the number of building permits for residential buildings decreased by 29% in June 2020 compared to June 2019.
• Although throughout Romania the number of building permits is in slight growth, the data for Bucharest-Ilfov is more relevant in terms of large investments in apartment buildings. The current decline shows that the residential segment will slow down in 2021 in terms of construction work.
• The construction sector could suffer a contraction in 2021, given that 2021 will not benefit from the inertia of 2020, as was the case this year, when the projects started in 2019 and in the first part of 2020 were continued.
• For 2021, a potential decrease of 4-5% in construction is forecasted, although the construction sector is strongly influenced by the performance of infrastructure works.

Actors leading the growth in the Romanian construction sector 

• Romanian construction company BOG’ART SRL is the leader of the construction market, with a turnover of 925.5 million lei in 2018 (1.1% of the total), followed by STRABAG SRL (687.8 million lei and 0.8% of the total) and PORR CONSTRUCT SRL (551 million lei and 0.7% of the total).
• The top 10 companies generated only 6% of total turnover, which makes the construction sector one of the most balanced local industries.
• Although the biggest companies in terms of turnover from the construction industry are contracting large infrastructure projects, medium and small companies dealing with construction of residential assemblies, office buildings or other civil construction, add up to an important value of the total.
• In terms of the turnover of construction businesses, among the country’s counties, Bucharest ranks first, totalling 26 Billion RON, accounting for almost 31% of the total national in 2018.
• The capital is followed in the ranking by Cluj (7.4% of the total), Ilfov (6.9%), Prahova (4%) and Timiş (3.8%). Companies registered in the five counties account for almost 53% of the total local turnover of this sector.
• The Romanian Government is another key actor that plays a major role in the growth trend of the construction sector. Through the social and economic measure applied, the Government can stimulate the population to buy new homes and companies to continue to invest in new spaces.

Source:https://www.zf.ro/business-construct/constructiile-vor-ramane-pe-plus-in-2020-dar-nu-vor-mai-inregistra-19514057

Largest undergoing road construction projects (excluding highways) 

• The top ten road construction sites, except for highways, currently under construction in Romania have a total investment value of approximately 540 million RON.
• There are approximately 70 large infrastructure construction sites - excluding highways - in various stages, to which are added other projects carried out through programs such as POIM (Large Infrastructure Operational Program) or PNDL (National Local Development Program).
• However, of all the 70, only 11 are in progress, the others being in different stages, assigned or even canceled.
• In Romania, most construction sites remained active even in the new conditions brought by the Covid-19 pandemic, because the companies insisted on continuing their works, respecting the sanitary conditions imposed by the coronavirus.
• The local construction market is estimated at 10 Billion EUR.The share of construction materials is maintained at one third of the total.

Source:https://www.zf.ro/trebuiesarepornimbusinessul/topul-judetelor-cele-mari-santiere-principalele-zece-proiecte-19183467

[rtbs name="romania-an-outlook-of-the-construction-sector"]