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Managing challenges and opportunities
The construction market is currently at close to all-time high levels, with robust public sector backed investments happening alongside decent capex by private sector developers. The volume of construction works, as measured by the statistical institute, expanded by close to 8% through the January-November 2025 period relative to the previous year, closing just shy of the 2023 record high.
On a sectoral distribution, we can see that engineering works – which includes mostly state funded projects such as infrastructure or major public hospitals – were at record highs throughout 2025, while construction works related to non-residential buildings, after expanding by over 11% over 2024, were also near the 2023 peak. Meanwhile, construction of residential buildings, despite also growing quite robustly (in excess of 12%) remained a bit farther from the recently reached historic peak, but were consistently higher than pre-pandemic levels. All in all, the sector closed 2025 at almost double the level seen in the period before the pandemic, highlighting the significant shift in the market’s pace. It is also worth noting that the data we are referring to here are volume-based indicators, so rather reflecting hours of work than the value of investments.
Constructions sector comfortably above pre-pandemic average, driven largely by infrastructure investments
Source: NIS, Colliers
That said, beyond the impressive headlines, there are some potentially troubling developments on the horizon. For instance, as of 2026, a new carbon tax for construction materials imported from non-EU states came into effect, which will lead to significant pressures as Romania depends heavily on importing certain products, particularly steel, aluminum and other metals. Initial estimates placed cost increases in the 10-15% range, but this remains to be confirmed throughout 2026. Regardless, construction companies are unlikely to absorb some, if any, of the newly incurred costs, meaning that such developments will pressure prices, potentially leading to a smaller appetite for investments down the road.
It is noteworthy that prices have already been pressured quite significantly by geopolitical tensions globally, which are making it more costly and uncertain to get certain goods across different markets. Both in the US and in Europe, for example, indexes which track construction material prices have reached record levels throughout 2025. Even if the pace of increase is nowhere near as intense as it was a few years ago, it nevertheless points to a new reality in the market and at much higher levels than before the pandemic. Copper prices, a key element in construction, increased more than 40% in 2025 reaching historic peaks; while for other base metals, the prices were not necessarily at record highs seen a few years prior, the direction was, nevertheless, a similar one.
These developments are already coming at a somewhat challenging time for the industry, which faced different hurdles last year, after some tax facilities for construction workers’ wages were cancelled by the government last year. Statistical wage data suggest that the vast majority of employers did not shoulder the loss in net wages with their employees, highlighting the competitive landscape and also the fact that it is unlikely that the companies will have room to absorb the higher construction costs.
On the labour side of things, we can also mention the fact that the overall number of employees in the construction sector reached a record high of 462,000 people in July 2025, a 1% increase over the previous year. While employment dropped ever so slightly in the subsequent months, we would not read too much into this, as it could be due to a multitude of factors (including seasonality). In a more positive light, despite the pressures on wages that employers face amid a still fairly tight labour market, Romania’s wages in the construction sector are still well lower than in other CEE countries, meaning that companies still have some room to maneuver.
We can also note that Romania’s construction sector displays some of the biggest operational margins in the European Union – well above the EU average, which should be expected given the country’s sovereign risks and subdued capital availability in this space.
Construction sector flying high in Romania
Source: Eurostat, Colliers
Given the surge of the construction sector in Romania over the past years, this sector has become increasingly important for the local economy. In the Q1 – Q3 2025 period, construction represented 8.7% of Romania’s GDP, the highest share in the European Union and well above the 5% average among member states. With this in mind, it is important to note that the sector is prone to potential sudden changes. For example, over half of the output is generated by engineering works which, in turn, depend greatly on EU fund inflows. And given the somewhat fluid political scene and potential risks of political instability, we can see a scenario where the reform process is impacted and hence, inflows of EU funds grind to a halt leading also to a sudden stop of the construction sector. While not our base scenario by far, we do see growing risks and given the relevance of this sector, the impact on the local economy would be wide reaching.
That said, our outlook for the construction sector in 2026 looks for a more nuanced market amid increased pressures on costs. Assuming we avoid a negative political scenario, public investments should keep the market fairly close to record high levels, particularly as private sector investors are trying to ramp up their projects to take advantage of an anticipated upward cycle starting in the medium term.