Construction sector remains highly dependent on the public investments in roads, railroads, subway, airports and environmental infrastructure, so new private sector projects that are showing signs of a slight rebound are not enough to restore growth to an industry that has a powerful economic and social impact.
“One euro spent in construction generates three euros in the economy,” said Mihai Rohan, president of the cement industry trade association CIROM.
The ZF Construction & Infrastructure Summit was organized by Ziarul Financiar in partnership with Albota Law, CBRE, CIROM, Genesis Development, Octagon, Raiffeisen Banca Pentru Locuinte, Skanska, Teraplast and Zamfirescu Racoti & Partners.
On the other hand, the main public sector suppliers of construction work, such as Romania’s national company in charge of highways and national roads CNADNR and Metrorex (Bucharest subway operator), say they have a number of projects in progress, with even more to be started. However, their projects depend on the approval of the General Transport Master Plan, which sets Romania’s transport infrastructure priorities for the next fifteen years and their financing sources.
“I couldn’t say 2015 is a better or worse year than 2014; highway contracts are in progress, each with its good and bad points,” said Narcis Neaga, general manager of CNADNR.
“With any luck, we will be able to open 84 kilometers of highway for traffic at most by the end of the year.”
Romania currently has fewer than 700 kilometers of highways and is working on another about 200 kilometers. Construction of 100 more should begin soon, as CNADNR signed contracts for them this year.
Metrorex expects to sign a 793 million lei (EUR178 million) contract to add the finishing touches to the subway line in Drumul Taberei (western Bucharest).
“The Eroilor-Drumul Taberei line (connecting the district with the city center i.e.) will be completed in the second half of 2016,” said Catalin Homor, Metrorex general manager.
Private sector projects seem to be doing better. Prospects on the office space market are optimistic.
“This is the fourth year of growth for the office space market. There s a positive sentiment, we are seeing steady growth, the market is maturing,” said Mihai Paduroiu, head of office agency with CBRE Romania.
Liviu Tudor, the businessman who owns West Gate and Novo Park business parks in Bucharest via Genesis Development, says growth of the sector only from corporate relocations is not desirable and the real sustainable demand comes when new jobs are created. As for new developments, the largest Romanian office space owner says he plans to build a new building in each of his two business parks.
“We begin construction only when we reach comfortable pre-rental figures, that is 50% for existing customers and 80% for new customers.”
Richard Burleigh, president of Skanska Construction Romania, says he believes in the development potential of the office space market in this country. “We believe in the Romanian market, we are happy, we started our first project in Bucharest (Green Court ? i.e.) and we are looking at other plots of land because we want to continue our journey.” Skanska Construction also wants to get into infrastructure building projects.
On the other hand, Alexandros Ignatiadis, co-founder of construction company Octagon, says the office space market is still fragile, with only two potential major building buyers, South-Africa’s NEPI and Ioannis Papalekas’ Globalworth.
One of the sectors showing signs of growth is the residential sector, which posted growth last year, as well. The drop in loan interests and improved consumer confidence gave a boost to housing construction.
“We are talking about a new generation that needs homes and has access to funding because it is not overindebted. I would like to think we learnt during the crisis that the best loan is the loan I can pay, not the biggest loan I can take out tomorrow,” said Aurelia Cionga, chairperson of Raiffeisen Banca pentru Locuinte.
Despite residential growth, Romania is still far from a new boom in the sector, the guest speakers at the ZF Construction & Infrastructure Summit ’15 said.
“We’d be jumping to conclusions if we said a new real estate boom started this year,” said Alexandru Stanean, general manager of construction materials manufacturer Teraplast.
(English version by Loredana Fratila-Cristescu)