Evolution of the construction sector in Romania
Corneliu Fecioru – Managing Director, Wienerberger
CONTENT
1. Romania Macroeconomics
2. The overall market – the big picture 3. Office market
4. Retail commercial developments 5. Industrial market
6. Land market
7. Residential developments
8. Some conclusions & comments
1. Romania Macroeconomics
Based on increased consumer confidence and domestic consumption
Increased minimum wage
Reduction of VAT from 24% to 20%
Increased RON-denominated lending (+44% YoY)
RON denominated mortgages doubled in 2015
2. The overall market – the big picture
2015: +10,4% overall vs. 2014 (all data, gross series, monetary value) Structure of industry
New buildings +5%
Capital repairs +32%
Usual maintenance +13%
Structure by objects
Engineering works +20% (includes roads, railways, bridges, airports, stadiums etc.)
Non-residential works +1% (include offices, shops, warehouses etc.)
Residential works - 6% (spaces for residential use of min. 50%
surface)
Source: INSSE – the Romanian Statistics Institute
3. Office market
Bucharest main office market in RO with more than 360,000 sqm to be delivered in 2016, some 800,000 sqm until 2018
The bulk of projects goes to Floreasca-Barbu Vacarescu, Center West and Dimitrie Pompeiu
Outsourcing expected to generate most of the demand in the coming years
Sources: Colliers 2015 Report, JLL analysis
4. Retail commercial developments
Encouraged by household consumption (+5,7% vs. 2014): food +16%, non- food +1%
Most retailers expanded their presence in 2015
New international brands entered RO in 2015
Forecast to increase with additional 500,000 sqm by 2020
Source: Colliers 2015 Report , JLL analysis
5. Industrial market
• Some 900,000 sqm GLA announced for 2016-2017
Sources: Colliers 2015 Report , JLL analysis
6. Land market
Source: Colliers 2015 Report
7. Residential developments (1)
2008 2009 2010 2011 2012 2013 2014 2015 Jan-Feb '15 Jan-Feb '16
58 47
41 38 36 36 36 37
4 4
60
19
15 11 14 15 25 31
2 3
Permits split Houses vs. Apartments, '000 units
Apartments in MFH Single family houses, SFH
Source: INSSE – the Romanian Statistics Institute, Wienerberger analysis
7. Residential developments (2)
2008 2009 2010 2011 2012 2013 2014 2015 Jan-Feb '15 Jan-Feb '16
49%
72% 74% 77% 73% 71%
59% 54% 61%
53%
51%
28% 26% 23% 27% 29%
41% 46% 39%
47%
Dwelling Permits Split Single Family H. vs. Apartments, % Share in Total
Multi Family H. (apartments) Single Family H.
Source: INSSE – the Romanian Statistics Institute, Wienerberger analysis
7. Residential developments (3)
2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan-Feb '15 Jan-Feb '16
154 150 150 153 153 154 149 148 149
0
151 149
97 92
86 87
78 84
74
79 80
0
72
80 Average Surface/dwelling, m²
Single Family H. Multi Family H. (apartments)
Source: INSSE – the Romanian Statistics Institute, Wienerberger analysis
7. Residential developments (4)
38
51
67
88
119
66
55 49 50 51
60 67
0 6 7
30 33 40 47
64 63
49 44 43 44 43 47
0
0 0
Dwelling Permits vs. Completed Dwellings, '000 units
Dwelling permits (houses & apartments) Completed dwellings (houses & apartments)
Source: INSSE – the Romanian Statistics Institute, Wienerberger analysis
8. Some conclusions & comments
Fiscal aspects
VAT at 20% (from 24%) in 2016, to be reduced to 19% after 01.01.2017
5% VAT for social housing (up to 450 TRON with 01’16, vs. 380 TRON till 12’15)
Residential financing
More RON denominated loans
New law: “legea darii in plata”
Overview mortgage credits
Acc. to BNR there are some 474,000 mortgage credits in RO (worth 17,2 bn. €), out of which some 17,500 credits are non performing loans (delays > 90 days)
Prima Casa covers some 180,000 credits (worth 6,7 bn. €)
The new law applies to 99,5% from standard credits (293,000 contracts)
Annex: First House - summary
Launched in 07’2009
Prima Casa covers some 180,000 credits (worth 6,7 bn. €)
Open to first time house buyers or owners of dwellings < 50 sqm Buying an existing dwelling worth up to 57 T€
For dwelling with permits issued after 22.02.2010:
New dwelling worth up to 66,5 T€
For building a SFH
New house worth up to 70 T€
Duration of credit – from 120 to 360 months
