Construction sector remains in crisis

TIRANA, August 9 – The drop in the volume of construction was mainly caused by the contraction of private constructions, said the Bank of Albania in a recently published report. As a result, cement consumption and the number of construction permits dropped by 3.3 and 15.7 percent year-on-year, respectively in the first quarter of 2010.
The value of construction permits for the “buildings” category, which has been on decline since the third quarter of 2009, fell by 49.8 percent at the end of March.
The report says the crisis in the construction sector reflects business and consumer hesitation to invest because of tight lending standards and the low level of programmed public investments.
Public sector accounted for 35.2 percent of approved construction permits in the first quarter including transport infrastructure, water supply, electricity and telecommunication systems.
The construction sector continued its poor performance even in the first three months of this year, dropping by 21.1 percent year-on-year and 4.3 compared to the last quarter of 2009, according to INSTAT.
The construction sector was also the hardest hit in the last quarter of 2009, recording a 14.4 per cent drop compared with same period of 2008 and an 11.8 per cent decrease from the third quarter of 2009.
Construction has been one of the most dynamic sectors in the country contributing to more than 10 percent of the GDP in the past years and employing 18 percent of people working in the private sector.
Reports show citizens are becoming more reluctant to buy new apartments because of falling revenues and especially a sharp decrease in immigrant remittances. This is confirmed even by data of the Albanian Association of Constructors which says some 4,000 apartments remain unsold because of falling purchasing power.