Romania Constructions and Real Estate Report - Q4, 2014

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Romania Constructions and Real Estate Report - Q4, 2014

This report covers the market developments in Q3/2014 and the data available as of December 2014
The construction works index accelerated its decline and dropped by 11.7% y/y in Q3/2014, after having decreased at double-digit annual pace in the previous two quarters. The decline in Q3 was mainly driven by the poor performance of the civil engineering segment, which diminished by 26.7% y/y over the quarter and by 24.7% y/y in January-September 2014.
The buildings segment recorded better y/y evolution in Q3, yet its performance has been uneven during the first three quarters of the year. Both the residential and non-residential sub-segments demonstrated temporary, seemingly unsustainable periods of expansion. On the residential segment, demand remains subdued -- but real estate developers have redesigned their projects to adjust to market reality, while banks are also extending mortgage loans under a state-guaranteed programme, likely to encourage the construction of new buildings.
The real estate market was more dynamic in terms of investments and transactions, particularly on the commercial segment. According to market data, the value of real estate investments in 2014 increased four times compared to 2013. Of the total, deals involving retail and office properties accounted for a cumulated 75% share. Investment activity on the commercial real estate market is expected to continue growing in 2015, with the office segment projected to record the most dynamic pace.
Key points:
• Construction works index plunges 11.2% y/y in Q3/2014
• Government scales down road infrastructure plan, to concentrate on lower grade roads
• Number of real estate transactions up 2.5% y/y in January-October 2014
• Value of real estate investments quadruples to €1.2bn in 2014
• NEPI pays €148mn for Promenada shopping mall in Bucharest
• Immofinanz to invest €85mn in expansion, upgrade of business park in Bucharest


Table of Contents

Executive summary 4
Market overview 5
Construction works index plunges 11.2% y/y in Q3/2014 5
Romania records steepest y/y drop in construction output in EU in Q3/2014, further in October 6
Investments in national economy decline y/y in Jan-Sep 2014, construction’s stake rises 7
Number of residential permits drops 3.5% y/y in Q3/2014 7
Number of finished dwellings up y/y for third consecutive quarter 8
Value added by construction forecasted to decline 1.7% y/y in 2014, to resume growth next year 8
Infrastructure 9
Government scales down road infrastructure plan, to concentrate on lower grade roads 9
Construction of motorways remains sluggish in 2014 9
EU increases financing of two Romanian motorway projects by €262mn 10
Greece's Aktor and its local partner are awarded €100mn motorway section contract 10
CNADNR opens €100mn tender for modernization, rehabilitation of Moisei-Iacobeni road 10
Real estate 10
Number of real estate transactions up 2.5% y/y in Jan-Oct 2014 10
Residential prices drop for second consecutive quarter in Q2/2014 11
Real estate investments value quadruples to €1.2bn in 2014 12
NEPI pays €148mn for Promenada shopping mall in Bucharest 12
Tiriac Imobiliare to invest €30mn in office building in Bucharest 12
Immofinanz to invest €85mn in expansion, upgrade of business park in Bucharest 13

Table 1 Construction sector performance in 2007-2014 (y/y) 6
Table 2 Construction works index in 2011-2014- Quarterly performance by structure (y/y) 6
Table 3 Construction works index in 2011-2014 - Quarterly performance by destination (y/y) 6
Table 4 Construction output in 2013-2014 - Romania, EU28 (y/y, in %) 6
Table 5 Licenses for residential buildings issued quarterly in 2012-2014 (quarterly, number, y/y) 7
Table 6 Completed dwellings per type of financing in 2012-2014 (number, y/y, quarterly) 8
Table 7 GDP and Construction output in 2012-2017f (y/y) 8
Table 8 Residential property price indices in 2010-2014 (2009=100) 11

Figure 1 Construction works index in 2005-2014 (monthly, y/y) 5
Figure 2 Construction works index in 2005-2014 (monthly, 2010=100) 5
Figure 3 Investments in national economy by sector in 2013-2014 (% in total) 7
Figure 4 Licenses for residential buildings issued in 2007-2014 (number, monthly) 7
Figure 5 Construction gross output in 2003-2017f (bn 1995 $, y/y) 9
Figure 6 Number of real estate transactions in 2012-2014 (thou, monthly) 11
Figure 7 Residential property price indices in 2011-2014 (quarterly, y/y) 12

Number of pages: 13
Release Date: Tue, 06 Jan 2015