"The residential construction market is decreasing"

Reporter:: How did the construction sector perform in the first semester of 2024? Is there a greater appetite for investment in the industrial area? Has the residential market contracted or stagnated compared to the first half of 2023?

Enikõ Peter: Last year, the construction and installation market was dominated by unpredictability, which led to a decrease in investment appetite and the halting or postponement of several projects, a situation that persists in 2024. In the first half of the year, the total volume of works of construction decreased. According to the INS, in the first quarter the decrease was 7.9%, a trend that continues. The number of building permits stopped in the first half of the year at the level of 17,000 permits, similar to the year 2023, and the permits for non-residential buildings had a decline in area of 5%. From the analyzes we have, the non-residential market has nevertheless had a good evolution this year, most likely due to the impact of the state's decisions - 2024 is an election year and that implies a greater effervescence and involvement than in usually from the state, but also thanks to projects financed by PNRR or from other sources. In the industrial area, there has been a greater appetite for investors so far, compared to the previous year. The growth of e-commerce and the need for new warehouse and logistics space has led to increased demand for industrial developments. Investments in the modernization and expansion of private industrial parks are also on an upward trend, influenced by the need to improve operational efficiency and meet sustainability requirements. In terms of residential construction, the market is declining. It is actually falling from 2022 onwards, even though we still need new housing and are among the most overcrowded countries in Europe. Romania records gaps in terms of the number of overcrowded homes - 40.5%, compared to the European average of 16.8%. Among the factors that generated this decrease are: inflation and high interest rates (which decrease the number of transactions), unpredictability (which postpones investment decisions), reduction of budgets (which decreases the quality demanded in the market), lack of state subsidies for innovative products and efficient.

Reporter:: What are the trends for the second half of the year? What are Uniprest Instal's challenges for the end of this year?

Enikõ Peter: Based on our projects and activity in the market, we estimate that the industrial sector will continue to develop. We expect investments in industrial infrastructure to continue the growth process, supported by the expansion of e-commerce and the need for modern logistics facilities. Industrial development projects will also emphasize sustainability and energy efficiency, with increased demand for green buildings and renewable energy solutions. The market and economic conditions have changed a lot, and competition is no longer based on the lowest price, availability or commercial terms, but on the totality of these factors. For a company to remain among the first choices of professionals in the field, it needs to focus on identifying and solving market needs, while constantly monitoring and refining collaborations. Among the most important challenges are: finding and retaining specialized human resources (which we try to solve through continuous training and professional development programs), the need to streamline internal processes and throughout the supply and distribution chain (which we can solve by digitizing and simplifying processes), controlling costs and maintaining profitability, finding and the choice of effective solutions in execution (unfortunately, this aspect is still seen as a luxury, not a necessity) and the need for know-how and expertise. We also see the last year and this year, in the context of the problems or crises from 2020 onwards. At the moment there is a feeling of a decline or rearrangement of the market, but we have to keep in mind that in 2020, 2021 and even in the first part of 2022 there were some significant increases. Sales and investments were generated ahead of the original plan for those investments. What we're seeing right now is a market correction, not necessarily a long-term decline. Next, there are very big differences, from all points of view, of constructions, installations, between Romania and Western Europe, so there is room for development. Now, indeed, it is a less favorable context, following the multiple crises of recent years, but Romania still has to develop in construction and installations, and it will certainly return to an upward trend.

• "Current economic and financial factors may make home buying more affordable for some buyers"

Reporter:: What are the risks that could influence the construction market in the next period?

Enikõ Peter: The risks are of several categories and can negatively influence the performance in the next period. I am referring here to economic risks - rising inflation (which can lead to higher costs of construction materials and labor, affecting the profitability of projects) and interest rates; political instability and legislative changes; supply chain failures; the shortage of skilled labor and, last but not least, financial risks (project financing and real estate market volatility).

Reporter:: Recently in the media it has been said that the price of residential housing is on a downward trend. Some specialists in the market claim that this is not really the case, because prices are not falling, but it has become more affordable to purchase an apartment. What is your opinion?

Enikõ Peter: From my point of view, residential housing prices have not fallen significantly in nominal terms, but current economic and financial factors may make housing more affordable for some buyers. The perception that housing is more affordable, despite seemingly stable prices, reflects a complex reality in which multiple economic factors interact to influence both demand and supply in the housing market.

Reporter:: What projects does your company have in progress? Have you ever experienced supply chain syncopation?

Enikõ Peter: We continue to invest in the development of infrastructure, in logistics, fleet, transparency and digitalization of processes, but also in the development of the ecosystem that we make available to our customers and partners. At the level of know-how and new information, we go further with EXPO Uniprest, the series of events dedicated exclusively to professionals in the field, through which we bring know-how and expertise in areas of interest complementary to the businesses that our partners develop: marketing&communication, sales and legal. We also continue the Uniletter project, a monthly newsletter with up-to-date information about the construction industry, the real estate market, Romania's economy and know-how to help our partners and collaborators make better informed and reasoned business decisions. There are no more noticeable problems in supply chains, just spotty problems. Given the downward trend of the market, we can rather talk about overstocking on certain products.

Reporter:: Sustainability and environmental protection in construction is a must for the entire activity sector. What does your company bring to the market in this regard?

Enikõ Peter: Sustainability and environmental protection have been part of our brand philosophy since the beginning. The concrete actions we take in this regard are: the implementation of energy-efficient technologies (advanced insulation systems or energy-saving technologies), water resource management (water collection and reuse systems, efficient sanitary equipment), sustainable design, reduction waste, continuous education and constant innovation.

Reporter:: What projects do you have for the beginning of 2025?

Enikõ Peter: The priorities remain the same as before. We have three big pillars in which we invest. The first is internal, we invest in people, in our team, so that we are ready to face the challenges. Here I mean both the technical part, but also the software and managerial part. The second pillar is dedicated to services, which we develop so that our customers, our partners, have a mix of products and services that make their work and daily activity easier. And the third pillar is digitization. It is a challenge that we accepted and which we have been working on for several years already. These investments in digitization and in all our IT systems will also be reflected in the medium and long term in better services for our customers and partners.

Reporter:: Thank you.