Construction, one of two economic sectors in Romania that made a positive contribution to GDP growth in Q2, maintained a robust, double-digit annual growth rate in July of 12.2%, according to the statistics office (INS). The growth rate in January-July was 18.2% y/y.
Civil engineering works rose the most (+25.5% y/y) in the seven-month period. The residential buildings segment also posted impressive growth (+17.2%). Meanwhile, works on non-residential buildings (including offices, commercial spaces, and logistics and industrial spaces) saw an 8.4% advance.
The residential sector thus remains the most dynamic in the local economy. The demand for housing units is particularly strong in the first-tier cities and residential projects are generating high yields to investors.
Seasonally and workday adjusted activity in this sector reached an all-time high just before the coronavirus pandemic.
All the construction segments suffered during the lockdown, but the activity level remained significantly above that seen in the same period last year.
The volume of civil engineering works will mark the third year of positive growth after reaching a bottom in 2017. There is plenty of room for further increases. The motorway projects announced by the government should support double-digit growth rates for several years.
The non-residential building sector reflects opposite drivers and needs more clarity regarding sanitary circumstances before returning to growth. While the office and commercial sectors face uncertainty and need more clarity, the logistics and industrial sector posts high growth rates.