ZAGREB, March 20, 2018 – In 2017, a total of 320 million euro was invested in 22 commercial real estate projects in Croatia, and this year a similar amount is expected, however, more effort should be made in removing obstacles to investment as “money is waiting to enter Croatia”, representatives of the Croatian branch of the Colliers International consultancy said on Tuesday.
“Even though it is still too early to say how much this year’s investments in commercial real estate could amount to, we believe they will be made given the great interest of investors from around the world in Croatia, the great availability of capital as well as economic growth in the country, notably in retail commerce and tourism,” said the head of the consultancy’s Croatian branch Vedrana Likan, adding that this year new investments in warehouses and logistical facilities were expected as well.
According to Colliers, of last year’s investments in commercial real estate in Croatia, 53% was made in shopping centres, retail parks, high street shops and other commercial real estate, while 40% was made in the hotel and tourism sector. Office space accounted for 18% of total investments while there were almost no investments in logistics real estate.
Colliers director Filip Vučagić said that this year around 50 million euro could be invested in a few logistics projects in the area of Zagreb, Rijeka and Split.
Both Likan and Vučagić said that demand for and investments in top class business space in Croatia were growing but that currently there was little available office space and even lack of it. This is due to Croatia’s EU entry and the fact that a growing number of companies and business people arrive in Zagreb as well as other parts of the country, they said. They also pointed to the lack of available space for retail commerce.
Stressing that last year investors focused on retail commerce and tourism, Likan said that investment activity was the most intensive in the tourism sector, the investors being tourism companies such as Adris and Valamar, and that major changes were not expected in that sector this year.
Likan said that 50 different real estate projects were under way, of which a dozen – in Istria, Dalmatia and Dubrovnik – were ready for implementation but that it was difficult to say when their implementation would start.
“The dozen projects that are ready for investment are seeking new owners, some of them are brownfield state projects, but unfortunately none is a greenfield investment. Such investments in Croatia, similarly as public-private partnership projects and state assets management, are problematic and have been almost non-existent, even though they could kick-start economic growth. No investor wants to invest in greenfield projects if they cannot get return on investment in three to five years, and that is the amount of time required in Croatia only to prepare such a project,” said Likan.
She said that among shortcomings were the poor implementation of the national tourism and state assets management strategies, lack of transparency, corruption, lack of responsibility, the inability of state and local government units to reach agreement, and the poor state of land books and cadastres.
“Countries such as Hungary, Poland, the Czech Republic, Montenegro, Serbia, as well as emerging ‘boom’ destinations for real estate investments such as Albania, use different measures and a more favourable investment climate to attract much more investors than Croatia. Investors want to invest their money here, but they leave or possibly wait for better times when they realise that the main players in Croatia are domestic and existing investors and that there is a certain degree of animosity towards foreign investors and successful people in general,” said Likan.
She said that, along with German and Austrian investors, Croatia was increasingly attractive to investors from Canada, the USA, China and the United Arab Emirates, who in their talks with Colliers representatives have said that they wish to invest around 3 billion euro in real estate in Croatia in the period from 2018 to 2021.
“We are told by everyone that Croatia is a very interesting country in terms of investment but that realising the potential for investment requires operational work and that investors most often do not know who to contact in that regard, something they know very well in some of the neighbouring countries,” said Likan.
