Construction to drive GDP growth until 2010, BCR chief economist says

Responding to the latest alarming studies predicting an inevitable drop in real estate and construction, Anghel dismissed as “groundless” fears that the construction market will suddenly fall in 2009, hitting economic growth. According to a study conducted by the BCR economist, the construction market still has great potential. On the residential segment, Romania has 2.2 new units for 1,000 inhabitants, while in Europe, the average is 5.5 new residential units. Compared with other markets, local office developments are also below the European average, both in terms of the construction pace and rents. According to Anghel's study, only the industrial segment is registering a positive trend, with Romania being one of the cheapest markets in the region for such developments.
Anghel also thinks that mortgages have growth potential due to the visible gap between the volumes of such financing granted on the local market compared with the European region. He says that mortgages (not including consumer loans guaranteed against property) totaled EUR 4.4 billion in Romania last year, while the Czech Republic posted a volume of EUR 13.6 billion, and Hungary EUR 10.7 billion.
Magda Purice