Romania’s construction market remains close to record highs and continues to be one of the few sectors supporting economic growth. The volume of construction works increased by approximately 12% in the first five months of 2026 compared with the same period last year, according to Colliers’ report on the real estate market in the first half of 2026. The market continues to be driven largely by public investment, but the second half of the year brings greater risks, ranging from rising costs and increasing pressure on contractors’ cash flows to political uncertainty and concerns over the absorption of European funds.
The strongest growth came from the residential sector, where the volume of construction works increased by approximately 16%, and from infrastructure projects, which rose by around 14%. These include works on roads, railways and hospitals and continue to account for more than half of total activity in the sector. The non-residential segment grew more slowly, by approximately 6%, against a backdrop of persistently expensive financing and greater caution among private investors. Even so, the construction market is currently operating at almost twice the level seen before the pandemic. The Colliers report stresses that these increases measure the actual volume of works and the intensity of activity on construction sites, rather than the financial value of investments. In other words, the 12% increase shows that significantly more construction work is being carried out, rather than merely reflecting higher project costs.
”This year’s pace of activity shows that the construction market remains very active, but its reliance on public investment is becoming increasingly significant. More than half of activity comes from state-funded projects, and the key question for the months ahead is whether these investments can continue at the same pace. The stakes are even higher for projects dependent on European funding, where any delays can quickly be felt across the market. At the same time, value is increasingly shifting away from execution alone towards cost and risk control. In an environment characterised by volatile material prices, additional costs generated by the Carbon Border Adjustment Mechanism or CBAM, high interest rates and projects that are harder to finance, investors need cost management, procurement, value management & engineering and project governance more than ever, so that complex projects can be delivered with the greatest possible predictability in terms of costs, timelines and risks”, explains Alexandru Atanasiu, Partner | Head of Construction Services.
The difference compared with the rest of Europe is visible over a longer time span. Over the past decade, the volume of construction works in Romania has almost doubled, while the European Union average has increased only marginally. Infrastructure investment explains a significant part of this performance. Romania has gone from approximately 900 kilometres of high-speed roads before the pandemic to more than 1,400 kilometres at the beginning of 2026, while over 1,000 kilometres are in various stages of construction and a further approximately 300 kilometres are in the planning phase.
At the same time, costs are beginning to put renewed pressure on construction companies. Prices for several materials have started rising again, while some raw materials are approaching record levels. Copper, for example, became more than 40% more expensive in 2025, and this year exceeded 14,000 US dollars per tonne, reaching new highs during the summer. The increase reflects both supply constraints and rising demand generated by the energy transition and the development of data centres for artificial intelligence.
Adding to the existing pressure are the new costs generated by the European Union’s Carbon Border Adjustment Mechanism, or CBAM, which has applied since 2026 to certain materials imported from outside the EU. Initial estimates indicate a cost impact of 10-15%. For Romania, which imports significant volumes of steel, aluminium and other metals, some of these increases will inevitably be passed on into final prices and may reduce both company margins and appetite for new private projects.
Cost pressures are also becoming increasingly visible in construction companies’ cash flows. Long payment terms, particularly for certain public projects, tie up significant liquidity at a time when contractors are also having to absorb high material and labour costs. At the same time, high interest rates make access to the financing needed for working capital more difficult and more expensive. Under these conditions, even companies with a high volume of projects can come under pressure if payments are delayed, making cash-flow management essential to sustaining day-to-day operations.
The labour market also remains under pressure. Employment in construction is close to an all-time high, at around 460,000 people, while labour costs continue to rise, including following the removal of tax incentives for the sector as of January 2025. Nevertheless, wages in Romania remain below those in other Central and Eastern European markets, while local companies generally have stronger margins than the European average. This still gives them some room to absorb part of the cost increases.
”The construction market is still performing very well, but uncertainty is increasing. Contractors have projects and activity, but costs are rising, financing remains expensive, and some public investments are becoming more difficult to predict. In addition, when payments are delayed, the pressure is immediately transferred to companies’ liquidity and their ability to support several projects simultaneously. The healthy margins achieved in recent years provide companies with a degree of protection, but this is not unlimited. If material and labour costs continue to rise, while public projects slow significantly or payments are postponed, the effects will be felt not only in construction, but also across other sectors of the economy”, adds Alexandru Atanasiu.
The stakes are also significant for the economy as a whole, as construction accounts for an increasingly large share of GDP. In 2025, construction represented approximately 8.6% of Romania’s GDP, the highest share in the European Union, where the average is around 5%. At the same time, banks’ exposure to the sector continued to increase, and by the end of the first quarter of 2026, loans to construction companies had exceeded 54 billion lei, approximately 16% above the previous year’s level and almost double that of 2019. This is precisely why any sharp slowdown, particularly in infrastructure projects financed through European funds, could quickly spill over into other sectors, from building materials production and transport to logistics and services, intensifying pressure on the wider economy.
In the coming months, one of the biggest challenges will be the continuation of projects financed through European funds. The deadline for spending funds under Romania’s National Recovery and Resilience Plan is at the end of August, and some road, rail and urban transport infrastructure projects risk losing European funding. According to estimates cited by Colliers, road infrastructure alone could face an additional financing requirement of approximately 10-15 billion euros, which would need to be covered, where possible, from the state budget or other programmes. The pressure is all the greater given that the 2026 budget includes record public investment of more than 160 billion lei, itself largely supported by European funds.
There is, however, also a sign of stability, Colliers consultants point out. At the end of July, Fitch maintained Romania’s rating at BBB-, within investment-grade territory, and estimated a budget deficit of approximately 5.9% of GDP in 2026, slightly below the government’s target. The agency nevertheless maintained a negative outlook amid political uncertainty and delays in reforms linked to European funding.
For private investment, the outlook remains more cautious, according to Colliers consultants. Inflation remains close to 10%, while any interest-rate cuts are expected only from 2027, keeping financing costs high for projects reliant on debt. At the same time, Colliers’ forecast for the Romanian economy has deteriorated significantly compared with the beginning of the year, from growth of almost 1% to a contraction of approximately 0.7% in 2026, against the backdrop of a more difficult external environment and domestic uncertainty. Under these conditions, non-residential developments and speculative projects are likely to remain in cautious territory, while a clearer economic recovery is expected in 2027, with no prospect of a rapid rebound in the absence of political stabilisation and continued European investment.
In the second half of the year, public investment could keep the construction market close to record levels, provided the political situation stabilises and European funds continue to be absorbed. The greatest risk remains a sudden slowdown in state-funded projects, which would also have repercussions across other sectors of the economy. At the same time, private developers are planning projects over a longer horizon and adjusting their investment strategies in anticipation of a possible market recovery over the next two to three years, in an environment where predictability around costs, timelines and risks is becoming an increasingly important investment criterion.