2008, first year of slowdown in growth of market for construction materials

The H1 2008 results show stagnation or even reduction in the growth pace of some segments of the markets for construction materials.
At the start of the year, the estimates of the producers of PVC windows, paints and ceramic tiles were extremely optimistic, anticipating an ascending trend, similar to the one recorded in 2007.
But the effects of the problems in the real estate sector have dampened the enthusiasm of the players, who forecast a decline in the market, despite the 35% growth in the construction sector in H1.
Marin Crutescu, the honorary president of the Double-Glazing Joinery Employers’ Association (PPTT) says that although the relevant players expected, at the start of the year, the sales to go up and the performance in 2007 to be repeated (1bn euro), this year’s stagnation of the real estate market and the tougher conditions imposed by banks for extending mortgage loans have made the market decline, especially on the segment of final consumers. However, he believes this drop will be compensated for the real estate projects already started: offices, hotels or shopping centres. Thus, the market will remain at the level of 1bn euro, recorded in 2007.

The producers of expanded polystyrene are among the most affected by the slowdown in the real estate market, especially since this market grew 80-90% in 2007 and was expected to grow by more than 50% this year.
Radu Ionescu, sales manager of Europlast Industries, considers the market will stagnate this year and this year’s growth will stand at only 2-3%. The reasons for this are the postponement of several real estate projects, the lack of finance and the workforce deficit.
The local market for ceramic tiles will be another victim of the decline in real estate. Thus, it will advance in 2008 by only 5-10%, five times below the estimates of the relevant players at the start of 2008. They forecast 20-25% growth of the market. Catalin Rotaru, the marketing manager of
Delta Distribution, says the main reasons for this year’s drop were the standstill of the real estate market and the toughening of the retail crediting conditions.
The fewer sales of apartments and the postponement or delaying of the projects will affect also the business of the local dye producers this year. The relevant market will grow this year by only 5% although at the start of 2008 the relevant players were forecasting similar growth to the 2007 one, namely 10-20%. The boom in the construction sector in the past years has stimulated also the growth of this market, which recorded annual growth of 10-20%.
The sales of new apartments fell 50% in H1 versus H1 2007, and the transactions with the old apartments were postponed for H2, as the homeowners preferred to wait for the prices to get stabilized.
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