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| The Construction Sector in Romania |
| (2012-04-03) |
| Last updated: 2012-04-03 13:06 EET |
The Romanian construction sector continues to suffer from low demand, while experts believe that the crisis of the last three years will continue in 2012. According to the Romanian Contractors’ Association, the market fell by 4% last year, down to 9.3 billion Euro, while this year it could be between 9.3 and 9.5 billion Euro at best.
The chairman of the association, Laurentiu Plosceanu, said that the market had fallen to the afore mentioned 9.3 billion Euro in 2011 from 15.3 billion Euro in 2008, and this year the situation continues to be worrying:
Laurentiu Plosceanu: “This is a wider reaching deadlock. Right now a lot of such assets are in the ownership of banks, and those assets need to be liquidated. We feel an attitude that inhibits the development of the real estate market, especially in terms of small scale projects. Until personal homes, be they finished or under construction, get sold under proper contracts, any other developments on the real estate market will most likely be very modest. And since the banking sector still has great reservations in giving housing loans, we can expect the sector to continue to be deadlocked, just as it has been in the last two and a half years”.
Speaking about the same decline in this area is the vice-chairman of the Construction Employers’ Federation, Valentin Predescu:
Valentin Predescu: track “Between 2008 and 2011, 45% of construction companies went off the market. The drop in the number of employees between 2008 and 2011 was also 45%, following closely the trend of companies. The drop in turnover, in the volume of sales in this area, was 65%”.
The chairman of the Construction Employers’ Federation, Cristian Erbasu, spelled out some other problems that the sector is facing:
Cristian Erbasu: “The arrears that the state now has towards construction companies have negatively affected state and local budget revenues. On the other hand, projects have been delayed. Since this sector employs so many people, there is a risk of a rise in unemployment, but also a risk that wages may decrease or are paid late for all those employees. That creates a general imbalance, which ripples over in areas that are linked to construction”.
According to the Romanian Contractors’ Association, the main problems the construction sector is currently facing are: unpredictable project funding, major delays in receivable payment, price evolution for energy resources or decapitalised construction firms. The Association has called on the authorities to take more measures to check the decline of the industry. The measures include the payment of receivables for the 2009-2011 period, which stand at about 650 million euros at the beginning of 2012, and the setup of a public site carrying a record of debts from state-capital purchasing entities, with the estimated payment date. The Association also requests that the promotion of investments in various infrastructure sectors continue, as well as housing construction and building renovation, the backing of long-term development programs and general information on this year’s projects, including related financial sources.
In turn, the authorities claim that the saving-crediting system for housing could translate as an opportunity to breathe new life into the sector. Governor of the National Bank of Romania Mugur Isarescu:
Mugur Isarescu: ‘’These banks that provide for housing construction bring more stability to the system, as compared to general trading banks, whose scope is much wider. The former can also run speculative operations. Trading banks give rise to real estate bubbles. But banks specializing in housing construction have restrictions, so, they cannot place their money just anywhere during the saving period. They can only be in charge of housing construction. That lends more stability to the system.’’
Government representatives claim that the 2012 budget of the Tourism and Regional Development Ministry is based on caution and it mainly aims at covering arrears amassed over the last years. The money will also be channeled into new investments and programs that the ministry began to run prior to the crisis. The latter include housing for young people, county housing, building thermal renovation, pipe and sewage upgrading, and the revamping of drinking water and waste water treatment facilities.
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2025-04-03
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