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Romanian homebuilding rises 19% in quarter before EU entry

Romanian housing construction rose an annual 19% in the fourth quarter as developers increased investment before the country joined the European Union.

Apartments and houses finished in the period rose to 17,448 from 14,682 a year earlier, the National Statistics Institute said in an e-mailed news release today. About 82% were built with private funds while the rest used government money. Romanian real estate prices soared as the country prepared to join the EU on January 1, prompting foreign and domestic investors to boost construction of apartment buildings and expanses of single-family homes in suburbs of the main cities.

Still, developers including Impact SA, Romania's only publicly traded homebuilder, have said a labor shortage in the nation of 22 million prevents them from meeting rising demand. About 2 million Romanians have left to work abroad since the fall of communism in 1989, including many construction workers. The government said on February 28 it may pay some relocation costs and other bonuses to lure some of them back.

A study by newspaper Ziarul Financiar published yesterday showed apartment prices in Bucharest, the capital, rose 6% in February from January to €1,375 ($1,800) a square meter as demand outstripped construction. For all of 2006, homebuilding increased 16% to 38,178 dwellings, the institute said. (Bloomberg)