The volume of construction works in Romania increased by 5.7% y/y in January-April, pushed up by the volume of construction works on residential buildings projects that expanded by 18% y/y in the four month-period and soared by over 50% y/y in April, according to data published by the statistics office, INS, on June 16.

Notably, the non-residential buildings segment (aggregating the logistics, industrial, offices and commercial sub-segments) remained flat compared to the same period last year.

By type of constructions, the works on new constructions (+12.4% y/y) outperformed the other segments of capital repairs and maintenance that contracted by over 10% and 5% respectively.

The residential market segment alone — supported by new projects and marginally helped by the 2.3% advance in the civil engineering works (public investments) — supported the overall 5.7% y/y advance  (+15.4% y/y in April) of the construction market in the first four months of the year.

The combination of low interest rates, accumulation of reserves in households’ accounts and rising demand for housing units (broadly neglected before the lockdown) resulted in a booming housing market not only in Romania but globally.

Real estate investors, in their turn, focused on this safer market segment as the office and even retail segments faced rising risks and the industrial/logistics segment is not particularly capital-intensive.

The lagged effects of the crisis — inflation mainly, including higher prices of the construction materials), as well as the end of the QE policies (higher interest rates) and the phasing-out of the public COVID-19 support packages — may not put an end to the housing boom, but bring it to a more normal scale.

On the other hand, the real estate investments (particularly, but not limited to, housing) will remain a low-risk area in an increasingly volatile and inflationary environment.