In all, Austrian companies have invested about EUR4 billion in the local construction business, in either real estate (Immofinanz, CA Immo, Raiffeisen Evolution, S Immo and others), wood processing plants (Kronospan, Holzindustrie, Egger) construction supplies (Wienerberger, Lasselsberger, Baumit and Austrotherm) or do-it-yourself stores (BauMax), a BUSINESS CONSTRUCT magazine analysis shows.
Strabag, which has built highways, shopping centers and office buildings in Romania posted EUR370 million revenue last year, thus taking the lead of the local construction market. Austria is also in the lead in the oil and natural gas drilling business through OMV Petrom, in the wood processing industry via Holzindustrie Schweighofer and Agrana in food industry. The largest bank of the system by assets (EUR15.6 billion in the first half of 2013), BCR, is Austrian-owned, too.
Statistics show Austria is the second largest foreign investor in Romania, having spent almost EUR11 billion in the last two decades, according to the data provided by Romania’s central bank at the end of last year. Austrian investors account for 18.5% of the more than EUR59 billion invested in Romania, where more than 6,600 Austrian-owned companies operate, according to the Trade Registry.
Why did Austria construction sector investors choose to focus in Romania despite of the crisis?
“We see potential on the Romanian market,” says Paula Rys, Strabag representative.
If the state budget is satisfactory, the company is confident the country will invest in infrastructure. Moreover, the European Union continues to invest in the development of the Pan-European corridors, Rys added.
The latest contract the Austrian company got is the construction of the Extreme Light Infrastructure – Nuclear Physics (ELI-NP) scientific research center in Magurele, near Bucharest. Strabag will work with Germany’s ED Zublin on the contract worth EUR65 million.
The company also bid for Bucharest southern beltway and the Comarnic-
Brasov highway construction, after having worked on some of the most important public and private construction projects in Romania such as the Deva-Orastie-Sibiu highway, and Floreasca City in Bucharest, which includes the country’s tallest office building, Sky Tower, Floreasca Office and the recently inaugurated Promenada mall.
Floreasca City was an Austrian investment, as well, made by Raiffeisen Evolution, which spent EUR300 million on this project in northern Bucharest during the crisis.
“If we were to start again, we’d still be making this investment,” said Markus Neurauter, managing director of Raiffeisen Evolution. The company is confident in the position of the project and the demand for retail space in Bucharest, he added.
The most active real estate investor in Romania until the crisis used to be Austria’s Immofinanz fund, whose portfolio in this country is worth about EUR1 billion, while CA Immo is one of the biggest owners of office space in Bucharest. Sun Plaza mall in the south of the city was developed by yet another Austrian investor, S Immo. In all, Austrian real estate investments are estimated at more than EUR2 billion and the companies that made them generally did not run away when the crisis started but shifted from expansion to management mode.
Another construction-related business dominated by Austrian investors is the wood processing industry, with Kronospan, Holzindustrie and Egger having spent about EUR1.5 billion on production facilities in Radauti, Sebes and Brasov, which turn several million cubic meters of wood into particleboard, oriented strand board and medium density fiberboard every year.
Austrian plant investments in Romania also include the local facilities of extruded polystyrene (styrofoam) maker Austrotherm, part of the Schmid Industrie Holding.
Austrotherm, which posted about EUR20 million revenue last year, has invested some EUR20 million in the three polystyrene plants it has in Romania, two in Horia, Neamt County and one in Bucharest.
The local market holds a lot of promise, says Laurentiu Istrate, general manager of Austrotherm Romania, because there are still buildings that have not been weatherized and Romania has to comply with a EU directive on energy efficiency by 2020.
“Fifteen years ago, when work on the first extruded polystyrene plant in Romania started, the reason was the high absorption capacity of the market. Austrotherm’s development strategy has been to expand in Central and Eastern European countries, from Austria to Turkey,” Istrate says.
Brick manufacturer Wienerberger decided to build three brick plants in Romania, too, all of which opened in the last ten years. Wienerberger has invested about EUR75 million in its fifteen years in this country.
“Romania is a market with significant development potential (…) One of the problems it is faced with is the old housing stock. The current stock is 8.5 million housing units, a mix of apartments and houses. Most of the homes were built fast in the ‘60s, ‘70s and ‘80s, with quantity as the driving factor,” says Corneliu Fecioru, member of the managing, sales and marketing board of brick maker Wienerberger Romania, which posted EUR26.3 million revenue in 2012.
“Romania needs about 1 million housing units to match the new housing standard of the developed countries in Europe.”
This need of housing is precisely why Wienerberger announced early last year it was planning to build another brick plant, this time in Iasi County, a EUR22 million investment. Construction will most likely begin in 2014.
Other important Austrian companies on the construction market are Baumit with its two dry mortar and one renders and plasters plant and Lasselsberger, which owns a ceramic tiling plant in Cluj.
Austrian builders also include Porr, which worked on the highway-grade beltway of Arad and Swietelsky, which is working on the rehabilitation of the Frontiera Curtici-Arad railway section in the west of the country. Insolvent Alpine came from Austria, too, even though its majority shareholder is Spain’s FCC.
(English version by Loredana Fratila-Cristescu)