This report profiles the trends and market outlook of the construction industry in Romania from January to October 2013. It further contains corporate news for sectoral players including South African retail real-estate investor NEPI, Romanian construction consortiums Astaldi-Max Boegl and Vinci-Strabag-Aktor, an Italian consortium formed of Tirrena Scavi SpA and Societa Italiana per Condotte D’Acqua SpA, and Romanian construction firm Colini Lavori Spa.

Romania’s construction works index inched up by 0.9% year on year in January–October 2013, propped up by the good performance of the sector between July and October, as in Q1 and Q2 the construction works volume had declined by 4.4% year on year and 6.7% year on year respectively. The index hovered above the lowest post-crisis level reached in 2010 (up by 9.9% in January 2013 – October 2013 compared to January 2010 – October 2010), yet it remained notably behind the unsustainable pre-crisis levels (lower by 24.2% compared to January 2008 – October 2008).

The prospects for the construction sector rely on civil engineering works financed from national and EU budgets, but so far there are no grounds to support a growth pattern in such a direction. Nonetheless, in the medium and long run, there is substantial room for development not only in the road infrastructure segment (42% of the roads in Romania are not asphalt-paved), but also in the on the residential and commercial segments, considering that 80% of the residential stock is older than 20 years and the retail space per capita lags behind the European average.

Key Points:

• In corporate developments, South African retail real-estate investor New Europe Property Investments (NEPI) has raised EUR 50mn to fund three commercial developments in Romania.

• In infrastructure, Romanian consortium Astaldi-Max Boegl has won a tender to construct a section of the Nadlac-Arad motorway, and Vinci-Strabag-Aktor will build the Comarnic-Brasov motorway section. An Italian consortium will construct the new Timisoara-Lugoj motorway section, and Romanian company Colini Lavori Spa is to build the Targu Jiu ring road.

• The real estate market has stabilized and the 15.6% year on year rise in the number of transactions in January to November 2013 reflects more dynamic activity in the sector.

• In the residential segment, prices further eased their decline to minus 0.2% year on year in Q2/2013, the lowest year on year decrease recorded in the past three years. While apartment prices continued to drop, house prices increased on an annual basis for the third consecutive quarter, driven by increasing house prices in urban areas.

• In the commercial segment, the value of transactions remained stagnant year on year between January and September 2013, at around EUR 250mn, yet players note a rising interest from investors seeking opportunities on the Romanian market.