“The residential segment depends more on private investment than anything else and there were positive signals for the segment at the end of 2013. Banks, too, have made efforts to relax lending and significant support also came from the First Home scheme, for multifamily homes,” Dragne says.
“The infrastructure segment did not see a similar enthusiasm.”
A faster absorption of EU funds, the support for infrastructure investments, as well as the continuation of the First Home program can be growth drivers for the construction sector, after its more than 40% decline due to the crisis, he added.
“Construction sector should contribute 10% of the GDP, maybe even 11%. This is a healthy area and the area the construction sector deserves. “
Construction sector contributed 7.9% of the gross domestic product last year, while in 2008, it contributed 11% thereof and one third of the over 7% economic growth, according to ZF’s calculations based on National Statistics Institute data.
The price battle continues on the construction materials market in 2014, Dragne says, because of the rather big differences between supply and demand on the market.
“Production capacity is higher than demand, and this is the main reason why this price battle that has no winner. Everyone stands to lose, a very low price does not mean good quality,” Dragne says.
Xella Ro, the local branch of Germany’s Xella, which owns an autoclaved aerated concrete plant in Paulesti, Prahova County, posted almost EUR10 million revenue in 2013, according to Finance Ministry data, and Dragne says the revenue is slightly up this year. He estimates the local AAC market will grow by 10% in volume in 2014, but not as much in value. The local AAC sector stands at EUR80 million to EUR82 million, he added.
“If we look at what happened after the onset of the crisis, this is the first year of significant growth (of the AAC sector).”
He believes the residential and commercial sectors should see growth again in 2015, but the infrastructure segment needs some support from the government. Romania’s economy might grow at a rate of 5% a year if there is predictability on the market, a stable fiscal environment and government takes business sector-minded steps, Dragne added.
The projects to which Xella has recently supplied products include the residential complexes City Point in Bucharest and Vadul Bistritei in Bacau, the AFI Park office buildings, Mega Mall and the Auchan under construction in Bucharest’s Drumul Taberei district.
The company has about 100 employees and sells its products both via traditional and modern retail, so they are available in most do-it-yourself stores, among which Praktiker, Hornbach, Dedeman and Brico Depot. Various projects it supplies to generate more than 50% of Xella Ro’s sales.
Its rivals on the AAC segment are Macon, Elpreco and Celco.
(English version by Loredana Fratila-Cristescu)