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Real Estate: Romanian real estate market is showing signs of revival
The Romanian real estate market is showing signs of revival, with the volume of construction works up by 12percent year-on-year in the first quarter of 2015, and 3pct more building permits, according to an analysis issued by the Tradeville brokerage house.
Producers of building materials listed at the Bucharest Stock Exchange (BVB) are well positioned to respond to the much-anticipated revival of demand. In the past two years, some companies have restructured their bank loans and increased their social capital, thus improving their financial structure. Additionally, certain companies have recently resumed investments both in production facilities with state-of-the-art technology and in boosting staff numbers.
The results of these efforts are starting to become apparent, as many managers deemed the first semester of 2015 the best since 2008. Moreover, the managers are expecting the growth to continue throughout the year. According to Tradeville, the 2015 budgets forecast an ambitious turnover, of 20-50pct.
It is the first time significant growth is registered since the local real estate bubble burst in 2008-2009.
During the first quarter of 2015, Romania enjoyed one of the biggest economic growth rates in the European Union, when compared to the previous trimester as well as year-on-year, something that favors cyclical industries.
The analysis furthermore identified two positive factors. Firstly, the Romanian National Bank's monetary easing policy, which brought the key rate to a historic low, made loans in lei more affordable. Secondly, The 'First Home' program me implemented by the Romanian government, which facilitates the access to mortgage loans for first-time buyers, assured at least a minimum level of demand.
The positive outlook on the real estate market is reflected already by investors in stock quotations of building materials producers. The growth of the shares has not taken off yet, on the back of several years of slow development and the fundamental potential for revival.