This report covers the market developments in Q1/2014 and the data available as of June 2014.

The construction works index fell by 10.2% y/y in Q1/2014, driven down by the 25.4% y/y plunge of civil engineering works, apparently caused by the 47.5% cut in the government's capital expenditures. While the activity in Q1, given the seasonal factors, might not have a major impact upon full-year performance of the construction sector, the decline in April is more relevant.

In April 2014, the construction works volume further contracted by 7% y/y, on the back of the major 24.3% y/y contraction of the civil engineering segment. The fewer public funds earmarked for investments and the delays in starting major infrastructure projects affect visibly the activity in constructions. Capital spending dropped by 30% /y in April after the 48% y/y decline in Q1.

The public roads company boasts on intentions to open tenders for other 375km of motorways in 2014, worth a cumulated amount of EUR 3.8bn, but even if these tenders are launched, effects upon the construction sector are likely to be visible only starting with 2015, when the works at the projects will probably start.

The other segments of the construction sector however performed well in Jan-Apr 2014. The activity in the residential buildings sector advanced by 14.1% y/y in Q1/2014, while non-residential construction works surged encouragingly by 18% y/y.
The commercial segment- retail and office in particular- indeed has been more dynamic in the past quarters. Activity on the market has witnessed higher dynamics and many developers announced plans to develop office and retail projects in the near future.

Key points:
• Construction works index falls 10.2% y/y in Q1/2014
• Share of construction in GDP diminishes to 3.7% in Q1/2014
• Public roads company CNADNR plans to auction highway projects worth EUR 3.8bn in total this year
• Number of real estate transactions rises 8.1% y/y in Jan-Apr 2014
• NEPI to complete two retail projects in 2014, project pipeline in Romania exceeds EUR 460mn