Market Report, "Croatia Real Estate Report Q4 2014", published

From: Fast Market Research, Inc.
Published: Thu Sep 25 2014

One year into EU membership the hoped for economic boost has failed to materialise, coinciding with severe floods in Croatia's south earlier this year. We therefore expect the country's economy to contract by 0.7% this year with poor private consumption and export levels as well as a stagnating industry sector. All these factors have regressive implications for the commercial real estate market in 2014. Despite few developments in the pipeline and consequent limited supply, demand continued to fall in the early months of 2014 exerting further downward pressure on rental yields .

Although a member of the EU for more than a year, the expected and hoped for advantage for the Croatian economy has not materialised. Greater access to EU funds (estimated at EUR1.5bn per year) have so far not been translated into growth. The Croatian Central Bank has hence considered the business environment second lowest in the EU - only superior to Greece. The two countries have been the only EU member states with continuous shrinking economies since 2008.

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Consumer spending continues to fall as uncertainty over the economic situation prevails. The real estate sector has hence suffered from stagnation. With few projects in the pipeline and little demand for office and industrial spaces due to the downturn in the economy and financial services sectors, supply and demand are relatively balanced with stabilising implications for commercial space prices. Due to the current problematic economic situation, however, overall real estate asking prices have continued to fall in the past months: by almost 10% in the first quarter of this year compared to the same time last year.

With lower demand for office space in Zagreb, our in-country sources note that old office spaces are increasingly turned into retail space due to respective higher demand. This has helped stabilising office rental rates as vacancy rates are gradually reduced. Falling retail sales over the past month could...

The Croatia Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's Croatia Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Croatia.

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