The local construction market will stabilize in the near future, according to the opinions of the sector company representatives, both system suppliers, and specialized entrepreneurs estimating slight turnover increases in 2012. However, the construction sector is facing a difficult period at the beginning of this year as well, having to deal with the same issues faced during the last years, namely the low demand level, the reduction in the volume of foreign direct investments and government investments, as well as the limited access to bank loans. Thus, prospects for 2012 continue to be uncertain, a slight sector recovery being possible only against the background of a residential market stabilization and an intensification of investments projects in infrastructure and thermal rehabilitation, sustained from budget funds. The sector will benefit from a stimulus in the near future through the projects implemented with European funds, which will continue to represent in 2012 the sector’s main funding source. The construction sector stabilization, at least in the following months, is also confirmed by the conjuncture studies published by the National Institute of Statistics (INS) and the National Bank of Romania (BNR), according to which the sector production will stagnate, along with a slight drop of contracts and orders stocks. At the same time, construction companies’ general managers interrogated by the two institutions forecast a moderate drop in the number of sector employees and a slight price rise. Overall, the construction sector activity varies according to the crisis impact on the economy and is influenced by any decision made by the government or set at a European level. Thus, the fragile and variable economic climate, corroborated with the national legislation modifications, the European regulations, the fluctuations of demand and raw material prices explain the increasing number of market incidents in the last three years. Moreover, macroeconomic problem specialists consider that the Romanian economy has minimum chances of reaching 4%-5% growth rates in the following years, and against this background the government will have to adopt measures able to support local companies. Also, economics experts recommends central authorities to offer facilities to the business environment (mainly for exporter companies) and create a stronger commercial bank, with exclusively local capital, at the same time encouraging a slightly nationalist economy, applied at all levels.
1.1% construction work volume growth
The year 2011 represented a difficult period for the construction sector companies, considering that annual statistic data indicates a slight 1.1% growth in the volume of specific works, as adjusted series - according to the number of working days and the seasonal factor. Companies’ financial problems are significant if we consider that at the end of last year 3,548 sector companies were in various stages of the insolvency procedure, according to some information published by the risk management company - Coface Romania. Thus, the construction sector, along with trade, is in the top chart of sectors facing serious financial difficulties, representing overall more than half of the total insolvencies recorded in 2011. During the last years, the sector market was defined by a constant increase in the number of companies facing payment incapacity, their number being twice as high in 2011 as the level recorded in 2008, with 1,666 insolvency cases.
Optimal evolution of the construction material national production
The national production of construction materials grew by 12% in the first 11 months of last year, as against the similar period of 2010, according to some information provided by the Association of Producers of Construction Materials in Romania (APMCR). At the same time, the indicator related to November 2011 reveals a 14.8% growth as against the level recorded in the same period of the previous year and a 12.9% drop as against the previous months, following the start of the cold season. Also, the value indicators of the total turnover of construction material producers in our country grew between January - November 2011 by 16.6% as against the first 11 months of 2010. At the end of November 2011, the construction sector benefited from 325,900 workers, out of which 34,200 were employed in the construction material sector. As regards the specific products export, in the first ten months of last year, international deliveries of EUR 245.4 million were recorded, while imports totalled EUR 670.2 million. If we analyze the main product groups, plaster, concrete and lime exports totalled EUR 33.2 million in the reference timeframe, and imports totalled EUR 124.9 million. The value of plates of clay sold abroad amounted to EUR 95.1 million in the reference period, and the value of imported plates of clay totalled EUR 191 million. According to the APMCR information, in November the market average wages were RON 1,224 (respectively, RON 1,573 in the material manufacturers sector). Overall, this year the Romanian construction material market will maintain the level recorded in 2011, namely approximately EUR 3.5 billion, according to the same source. "The specific sector will rank at most at the level of last year, considering that the economic growth forecasts are negatively reviewed each month by the international financial institutions", as stated by Claudiu Georgescu, the APMCR President. The main sector trend for 2012 will be represented by the promotion initiatives for the use of ecological construction products.
9.2% growth of local economy investments
Investments in the national economy grew by 9.2% last year as against 2010, totalling over RON 64.5 billion, reaching RON 24.8 billion in the fourth quarter, 22.1% higher than the level recorded in the similar period of the previous year, according to the INS data. Last year, investments materialized in new construction works totalled RON 31.9 billion, representing 49.5% of the total, as against 51.2% in 2010, while funds earmarked to transport means and equipment reached RON 26.3 billion, representing 40.8% of the total, as against 38.4% in the previous 12 months. Furthermore, the total volume of investments in real-estate properties transacted last year was approximately EUR 400 million, the most significant being the acquisition of the Europolis fund entire regional portfolio by CA IMMO, according to the quarterly report "Bucharest City Report", provided by the consultancy company Jones Lang LaSalle (JLL) for the last quarter of 2011. "At the same time, we also witnessed the second forced execution, after that of the commercial centre Tiago Mall Oradea in 2010; City Mall was taken off the market by UniCredit Bank and purchased by a local developer, one of the former unit owners. On the office space transaction market, Bluehouse Capital concluded the transaction for purchasing the Astoria Center building, based on an EUR 10 million investment", as shown in the mentioned document. For the current year, JLL analysts estimate that the total value of real-estate transactions will exceed that recorded last year. It is important to mention that specialists noticed a return of the interest in acquisitions in the project stage («forward» type), but the demand is only related to exceptional units, whose development is sustained by the market offer drop.
Article published in the March 2012 issue of the TOP-AGENDA CONSTRUCTIILOR Magazine. For detailed information click here!
