The Romanian construction market entered 2025 under significant pressure due to rising material costs, uncertainty surrounding public investments, and new fiscal measures impacting the workforce.

Although the sector remains highly active, the 4% decline recorded in 2024 compared to the record year of 2023 signals the first signs of a slowdown, according to the annual report published by Colliers.

Construction material prices have returned to the record levels of 2022, and the nearly 9% budget deficit of GDP raises concerns about the future of major projects financed by European funds. Additionally, the removal of the tax exemption for construction workers increases pressure on companies in the sector, potentially leading to further cost increases in 2025.

In 2024, Romania delivered approximately 200 kilometers of high-speed roads, expanding the national highway network to around 1,200 kilometers, a significant advancement compared to the previous decade's annual average of 35 kilometers.

Currently, over 600 kilometers of highways are under construction, alongside major projects in the railway and healthcare sectors. The private sector also holds growth potential, as all segments of the real estate market remain less developed than in other Central and Eastern European countries, with an even greater gap compared to Western Europe.

However, the current economic context has made developers more cautious, with challenges varying by sector. In the residential sector, uncertainty and administrative bottlenecks have led to the suspension of some projects.

Industrial developers are also more reserved due to the slowdown of the European economy. In contrast, the retail segment continues to expand, with large-scale projects planned for the coming years. In fact, Colliers consultants highlight that this is the only real estate sector experiencing significant acceleration after an already strong period of growth.

Another factor that has kept construction costs high is the labor shortage. Compared to the pre-pandemic period, the total number of employees in the economy has increased by only 3%, while the construction sector has grown by 14%.

This trend has been supported by competitive wages, which, when adjusted for the cost of living, have become comparable to those in Western Europe. However, Colliers consultants anticipate that in 2025, this dynamic may change with the elimination of the income tax exemption for construction workers.

In a context where employee retention is already a challenge, companies in the sector will need to absorb additional costs, likely leading to further price increases.

Given these factors, 2025 is shaping up to be a transitional year for Romania's construction market, marked by significant adjustments in both the public and private sectors. Rising costs, uncertainties surrounding public investments, and fiscal pressures will compel industry players to adapt their plans and find solutions to maintain operational stability.