Romanian statistics

Construction market loses 58.700 employees in 11 months

The segment that lost the largest number of employees is manufacturing industry with more than 180.500 employees off. In exchange, governmental agencies continued to hire more people  even if the Government keep menacing with firing about 20.000 from state agencies.

In the first 10 months of local economic recession (October 2008-July 2009) Romania recorded 315.000 unemployed persons which indicates fast speed in labour market contraction – 1000 persons fired/day.

Top cities with greatest number of unemployed persons in September 2009:

The only construction workers that are worse paid that Romanians are the southern neighbours:

Sources: IBC Focus, INS, Eurostat

Half of the retail projects announced in 2009 are under construction

Approximately 48% out of the 350 retail projects announced since the beginning of this year are under construction or in the finishing stage. The rest are in the intention, designing or auction stage.

According to an internal study conducted in september by IBC Focus, in the 9 months of 2009 there have been announced a total of 350 retail projects - showrooms, cash&carry, hypermarkets, do-it-yourself centres, supermarkets, stores, mall/shopping centres, etc.

Last year was extreme for the local retail market – 300.000 sqm delivered in the entire country, when internal consumption dropped drastically from the highs recorded in 2007 and S1 of 2008.

Still, the retail segment is still supported by the super/hypermarkets and do-it-yourself centres which countfor 65% of the retails projects recorded in september in the greatest database with cosntruction sites in Romania: www.raportuldeinvestitii.ro

Romania ranked 8th in Europe in terms of delivered retail space in S1 2009:

Sources: IBC Focus, Cushman&Wakefield

Scarcity of labor force in the construction market

The lack of labor force in the Romanian construction sector used to be one of the biggest problems companies in the market have been confronted to since 2007, when constructions in the country boomed. Even though this economical sector has been affected by economical recession since the last quarter of 2008, Romania continues to encounter the same problem.

According to a Manpower report on the labor force market in Romania there will be 3 sectors that will boost Romanian HR sector in Q3 2009:

• Construction market
• HORECA
• Financial sector

IBC Focus conducted an internal analysis in June 2009 on the construction jobs existent on the labor market in May 2009, which bring to life the fact that there were 450 jobs available in the construction sector, which represents 30% of the total number of jobs available in that month.

 

Source: Construct Intelligence, HR companies

53% of the industrial parks in Romania in stand-by

According to an internal IBC Focus analysis carried out on based on the data from the PromoSantier agents, 53% of the industrial parks visited in May 2009 are in stand-by.  Industrial production, one of the key drivers for industrial spaces construction, dropped 11.8% in the first 5 months of 2009.


Moreover, out of the 25 industrial parks in the intention or designing stage, included in the Industrial and Logistics Parks Report, the great majority lags in the same stage as in 2008.
Another aspect registered by the IBC Focus agents is that the actual trend in the industrial spaces market is to build only at demand.

Sources: PromoSantier, Industrial and Logistics Parks Report

22 luxury hotels under construction in Romania

The luxury tourism segment was undeveloped until 2008 when investors were mostly oriented towards 3 stars hotels. In fact, by 2008 there were only sixteen 5-stars hotels in Romania and 99 4-stars hotel units. Since 2008, investors saw the potential this market offers and announced many 4 and 5 stars hotel projects, so that the highest growth rates were recorded by these 2 segments in 2008 compared to the previous year:

 

In 2009 economic crisis has affected hospitality sector in Romania, so that in January hotels take up in Bucharest was dropped to 33, 7%! Moreover, according to a study conducted by IBC Focus, at least 25% of the announced luxury projects are stopped based on lack of financing.

 

Still, at the moment there are 22 luxury hotels under construction, all included in the Luxury Hotels Report, conducted by IBC Focus.  According to the Report, there are other eighteen 4 and 5 stars units in the designing stage that will soon start construction works.

Booming infrastructure works in Romania of 2009

Over the last 3 years, the residential market in Romania exploded with new residential projects due to the high internal demand sustained by a greater permissiveness of the credit system. Many small construction companies found a good place in the market and works were rolling. Even if new projects offer more space than Romanians were used to, the livable area is still far behind Western European one.

According to the analysis on Cluj Napoca real estate market, (the second developed city in Romania in what construction sector in concerned, which attracted foreign investment worth over 1 billion Euros by 2008), conducted by Fix UP Company, the average area per dwelling in the city is only 39 m²:

Mesmerized by the residential mania, construction companies as well as customers haven’t paid attention to the necessary infrastructure, which hasn’t developed at the same pace as the new real-estate areas.

This is why, on the Romanian Government priority list of this year is the development of infrastructure in the entire country. Government declarations are sustained by the huge increase of infrastructure projects recorded in the IBC Focus Investment Report in the first quarter of this year as compared to the last three months of 2008, of 31%. Moreover of the total number of construction projects recorded in the first quarter by the IBC Focus specialists, infrastructure projects weigh the most:

The IBC Focus consultants forecast that, for the entire year of 2009, infrastructure works will increase even more than in the first quarter due to the European funds granted for this segment. Authorities estimate that Romania will attract 25% of the total European budget granted for infrastructure projects this year. Alongside highway construction works which will account for 2 billion Euros this year, the Government will budget the rehabilitation and modernization of all 16 international airports in the country as well as the construction of 5 new airports, according to the Romanian Airports Report.

Still, even if the infrastructure sector will record growth rates of 30% for the next 4-5 years, it still lags much behind Western Europe, therefore Romania being one of the European countries with the highest potential for investors with activities in this field!

 

Source: Fix UP, IBC Focus

Romania’s infrastructure is 130 years behind the WE one

According to a study conducted by Mercer, Bucharest infrastructure ranks 114^th among 215 cities, on infrastructure development.

With an annual growth rate of investments foreseen for infrastructure at 30%, until 2012, Romania has the most dynamic road construction market in the region, followed by Russia and Slovakia, based on the study carried out by A. T. Kearney:

We confirm the fact that this year, the infrastructure sector will be the star of the construction market in Romania as, in Q1 2009 this segment grew by 31% against the last quarter of the previous year, the IBC Focus database including more than 1300 infrastructure projects for the first 3 months of the year.

Still, Romania needs between 130 and 150 years to bridge the gap in relation to the road infrastructure in Western Europe, according to the A. T. Kearney consultants. Road density in Romania is 14 times lower as against the density in developed countries from Western Europe.

But this only points out the potential that Romania offers to investors on this segment. And the potential is sustained by the investments planned for 2009 by the Romanian Government – 10 billion Euros. Moreover, the EU is ready to offer 3.4 billion Euros, which, of course, can only be purchased through development projects.

Source: Press and IBC Focus

5 reasons to be optimistic in the construction market

1. The total number of construction projects in the IBC Focus database increased in Q1 2009 as compared to the last quarter of 2008 by 24%. Have a look at the growth rates recorded by each construction segment:

             

2.   According to the IBC Focus database, the  investments realized in the projects under construction in the first quarter of the “crisis” year exceeded 2.6 billion Euros, the industrial segment being the most valuable at the moment:

3.      3.  In the same period, IBC Focus offered contact information to 646 active construction sites in Romania.

4.       4. Some of the biggest commercial banks in the country have already announced that in the next 3 months they will start relaxing loan conditions in order to enhance lending to the population. Reducing the interest rates that are practiced at present depends largely on the National Central Bank’s decision to reduce the key interest rate (of 10%) in the session that will take place on the 6^th of May.  Financial analysts forecast that this key interest will be reduced at least 0.25% at that date.

5.      5.  In April 2009 the economic sentiment in Romania, as well as in the EU rebounded after a down confidence degree in March, with 1.2 points. Out of the 5 indices that form this indicator construction rose by 4 points, consumer by 2 points and retail-trade by 10 points, while services and industry decreased by 3 points each. 

Source: Eurostat, banks, IBC Focus

Construction works at the 16 international airports in Romania

Romania needs to expand and rehabilitate all its operational airports as the number of passengers is constantly growing, recording annual rates of 20% while the European average is 5% per year.

According to Valentin Iordache, PR manager at the Henri Coanda Airport, “an airport must have traffic of at least 700.000 passengers in order to be profitable.” Therefore, only 4 Romanian international airports are profitable at the moment:

Government and other administrative institutions in the country will invest massively in the next years in order to transform all international airports in Romania into profitable, European airports.

Moreover at least 5 new airports will be built in the next years according to the Airports Report. All construction works that are taking place at the 16 airports in Romania plus 1 airport in the designing stage and 4 in the intention stage are detailed in the IBC Focus Airports Report with contact data of the persons involved! For more information please visit www.iresearch.ro

The ever growing interest in the Romanian construction market

The fact that more and more construction companies are interested in investing in Romania is shown by their ever growing presence at one of the greatest construction fairs in Romania which took place during 3-7 of March. The weight of foreign exhibitors was 41% of the total number of companies. This is the number of international exhibitors by country, figures released by the organizer:

And how could they not be interested in the Romanian construction market when there were over 170 residential and non-residential active construction sites recorded by IBC Focus only in February 2009. This under the circumstance that February is dead month for construction works point of view.

Moreover, the IBC Focus Investment Report included no less than 1030 construction projects at national level only in February.

The National Statistics Institute announced recently that construction works recorded an 8.8% growth rate in January 2009 as compared to the same month of 2008. By types of construction works these are the growth rates recorded:

Why are we so convinced that foreign companies are still very interested in the Romanian construction market? Simply because the number of IBC Focus foreign clients recorded in February 2009 is 7 times higher than in the same month of 2008.