Europe Biannual Construction Market Report 3Q/4Q 2024
Romania
Top opportunities:
- Strong activity in the data centres, defence and infrastructure sectors.
Top risks:
- Resources
- Infrastructure capabilities
- Movement of materials/labour to Ukraine.
Local economic indicators
Gross domestic product (GDP)
In 1Q 2024, the Romanian National Institute of Statistics (INSSE) reported a 1.8% rise in GDP on a year-over-year (YoY) basis, along with a 0.5% increase when compared to the preceding quarter, 4Q 2023. Eurostat's data aligns with these figures, confirming a 2.2% YoY GDP increase and a 0.7% quarter-over-quarter (QoQ) rise. Furthermore, gross value added (GVA) saw noticeable decreases, falling by 4.8% YoY and 6.3% over the previous period, as reported by Eurostat.
The Organisation for Economic Co-operation and Development (OECD) maintains its GDP growth forecast for Romania at 2.8% for 2024 and predicts a growth of 3.1% in 2025.
Inflation
According to the latest data from INSSE, local inflation in June 2024 was reported at 4.9% YoY, with a month-on-month (MoM) decrease of 0.2% compared to May 2024. Eurostat’s harmonised index of consumer prices (HICP) confirms this YoY figure, reporting inflation in May 2024 at 5.8%.
Construction materials
The local industrial producer price index, with data available until May 2024, shows MoM price stability across all Romanian industrial producers, with notable changes in the price of structural metal products and bricks.
Significantly, tubes exhibited a price recovery of over 20% YoY, while bricks recorded a smaller yet still notable recovery of 10.4%.
When comparing current prices to pre-pandemic levels, electronic and electric wires and cables has seen the highest price recovery, while steam and air conditioning supply remains relatively sticky at over 125% higher. It is paramount to regularly update project allowances as market pricing and conditions change weekly.
See the following table for MoM, YoY and indexed pricing inflation:
Market outlook
The construction confidence indicator showed continual improvement in 2024, rising from its January low of -12.8 to -0.7 in May; it experienced a slight negative movement in June to -1.9. This positive trend was driven by improving employment expectations and overall order book evolutions, with employment expectations increasing to 10.6 in May from a January low of -18.6 and the latter improving to -12.0 from -17.1 over the same period. The fall in June was driven mainly by employment expectations over the next three months, which fell from 10.6 to 8.4 and was further strengthened by a smaller negative movement in the evolution of current overall order books from -12.0 to -12.2. Among the factors influencing confidence in the Romanian construction market, a notable negative trend has been labour shortage, which steadily worsened from 12.5 in February 2024 to 19.5 in May before a slight improvement to 16.1 in June. Unlike with many other countries Gleeds tracks, Romania is still submitting high figures for price expectations over the next three months, with a figure of 26.1 in June. However, this measurement exhibits a decreasing trend, as seen by the most recent high of 32.1, reported in both February and March 2024. According to experts in our local office, during the first half of 2024, the Romanian construction market saw a modest rise in tender prices, ranging from 3% to 5%, while reinforcement/steel prices remained stable. Indicators suggest that labour costs are expected to increase by 5% to 8%, which will have knock-on consequences for the cost of construction projects. While there are many positives regarding the Romanian construction industry in 2024, there are still challenges to overcome; however, with careful management and strategic planning, these challenges can be navigated effectively. Gleeds recommends revising previously set project budgets to present-day figures based on local statistical information, our own internal data and forecasts. Additionally, we advise investors to consider inflation contingencies in their budgets as materials and labour shortages remain unpredictable.
Bellevue Residence, Romania — Gleeds provided Project Management and Quantity Surveying/Cost Management services.
