Over the 2010-2020 period, Romania’s GDP increased by 35.3%, reaching RON 836.7 billion (EUR 167.3 billion) in 2020. Compared to 2019, however, GDP declined by 3.9% in 2020. In 2021, the country’s GDP is expected to grow by 7.0%.
The number of enterprises in the broad construction sector in Romania experienced an increase of 28.1% between 2010 and 2020, totalling 107,020 in 2020. This growth was mainly driven by the increase in the number of enterprises in the architectural and engineering activities (+47.3%), followed by the real estate activities (+38.1%), and the narrow construction sub‑sector (+26.2%) sub‑sectors.
The volume index of production in the broad construction sector saw an increase of 28.8% between 2015 and 2020. This growth was driven by the increases recorded in the volume index of production for the construction of buildings (+64.0%) and the construction of civil engineering (+4.9%) during the same reference period.
Total turnover of the broad construction sector amounted to EUR 30.9 billion in 2018, marking a 20.9% increase compared to the 2010 level (EUR 25.5 billion). It further increased to EUR 37.6 billion in 2020, corresponding to a 47.1% increase since 2010. Growth was mainly driven by increases in the sub‑sectors, including the real estate activities (+92.6%), the architectural and engineering activities (+82.6%), the narrow construction (+41.9%) and the manufacturing (+32.0%) sub‑sectors between 2010 and 2020.
The gross operating rate of the broad construction sector, which is used to assess the profitability of the sector, stood at 19.8% in 2019, lower than the 2010 level of 19.1%. The real estate activities sub‑sector remained the most profitable (52.6%) in 2019, followed by the architectural and engineering activities (21.2%), the narrow construction (15.7%) and the manufacturing (13.9%) sub-sectors.
In terms of employment, there were 611,748 persons employed in the Romanian broad construction sector in 2020, 3.5% above the 2010 level (591,275 persons). This growth was primarily due to 22.6%, 15.0% and 4.5% growth registered in the number of persons employed in the architectural and engineering activities, the real estate activities, and the narrow construction sub‑sectors, respectively, between 2010 and 2020.
In the context of the housing market, residential construction remained strong and house prices were quite stable. In order to facilitate access to housing loans and stimulate the construction sector, the Romanian government has taken several initiatives, notably the First Home Programme. By the end of 2019, under the First Home Programme, more than 260,000 first time buyers were granted financial assistance worth a total of RON 24.9 billion (EUR 5.2 billion) for the purchase or construction of housing.
As a part of its EUR 29.2 billion Recovery and Resilience Plan (RRP), the Romanian government has allocated EUR 2.6 billion for building infrastructures such as the construction of new social housing and retirement homes, hospitals and healthcare facilities, and pre-school programmes.
In terms of the civil engineering market, the EU has been supporting investments in Romania through the European Fund for Strategic Investments (EFSI). Total financing under EFSI amounted to EUR 1.0 billion by December 2020 and is set to trigger EUR 5.0 billion in additional investments in the country. Under the infrastructure and innovation window, 27 projects have been financed by the European Investment Bank (EIB) with EFSI backing. These projects amount to around EUR 823.0 million and are set to trigger EUR 2.7 million in total investments.
Furthermore, in March 2021 the EU announced the investment of EUR 726.0 million for the construction of the new 121 km road between the Romanian cities of Craiova and Piteşti.
The Romanian RRP includes significant reforms and investments in sustainable transport. The government has allocated EUR 3.9 billion towards the modernisation of railway infrastructure, including electrification or zero emission railways and rolling stock. It will also invest EUR 1.8 billion on green and secure urban mobility transport.
As part of the RRP, the government has planned to invest EUR 2.7 billion for the energy‑efficient renovation and seismic renovation of multi-family buildings and public buildings. In the context of digitalisation, the government has allocated around EUR 1.5 billion for the digitalisation of public administration in key areas such as public procurement, skills development, employment and social protection etc.
Romania currently faces challenges in the form of high labour shortages in the construction sector. This is mainly due to low wages, migration to western European countries and the absence of vocational schools that could form the new generation of construction workers. This could limit the recovery and growth of the sector.
The outlook for the Romanian construction sector is positive in the medium to long term. EU led investments in infrastructure projects are expected to contribute to the growth of the construction sector.