Construction sites in Croatia were not closed due to the pandemic, and the incentive for the growth of construction activities is given by infrastructure projects financed by funds from the European Union's budget and subsidized housing credits. In 2021, there will be no absence of a positive impact from the renewal of the City of Zagreb.

According to the latest data from the State Bureau of Statistics, the volume of construction activities has continued with annual growth rates in September, or for the fourth month in a row. According to seasonally and calendar-adjusted indices, the volume of construction activities grew by 3.5% on a monthly basis. The growth in the monthly rate was contributed by a larger volume of construction of buildings (+3.3%) and other structures (+4.9%).

On the other hand, the continuation of annual growth rates in the volume of construction activities was also contributed by a larger construction of buildings (4.3%) with a stronger positive contribution of the volume of construction of other structures (6.3%).

In the first nine months, according to the structure of completed hours at construction sites, 56.7% of the completed hours were on buildings, while 43.3% were completed on other structures.

Looking cumulatively, according to the original indices, in the first nine months of the year compared to the same period last year, the volume of construction activities is larger by 3.9%. At the same time, the volume of construction activities on buildings is larger by 3.3% and on other structures by 4.9%.

Over a thousand permits issued in September

Croatia is still recording a stronger annual growth rate in the volume of construction activities compared to the EU average. Furthermore, according to Eurostat data (calendar-adjusted indices) in September, the EU recorded an average decline of 2.7% in the volume of construction activities.

Except in Croatia (5.0%), annual growth is visible in Romania (17.3%) and Slovenia (7.9%), while annual decline is recorded in Hungary (-14.7%), Slovakia (-22.8%), Poland (-11.8%), the Czech Republic (-8.2%) and Bulgaria (-1.7%).

For the first time since October 2018, over a thousand permits for construction were issued in September. A total of 1,031 construction permits were issued, which represents a 39.7% increase compared to August. Compared to the same month last year, the growth rate is 13.4%. The mentioned annual growth rate is the highest since July last year.

Looking at types of structures, most permits for construction were issued for the construction of buildings (85.2%), while looking at types of works, most permits were issued for new construction (75.8%).

The construction sector resistant to the pandemic

The RBA analysts, who predict the start of economic recovery in 2021, emphasize that the construction sector will be one of the few activities that will not be significantly affected by the current crisis caused by the COVID-19 pandemic. In addition to the growth of permits for construction, RBA analysts expect a positive contribution from investments in the private and public sector, with large infrastructure projects being mostly financed by European funds.

Croatia, as part of the multi-annual European Financial Framework 2021-2027, has the opportunity to withdraw 12.7 billion euros from the EU funds, and an additional 9.4 billion euros is available through the Next Generation EU recovery instrument.

RBA analysts also expect the continuation of favorable trends in the residential construction segment. The high level of liquidity in the system, accompanied by low interest rates, and taking into account the pronounced rentier mentality, in the absence of alternative investment opportunities, the purchase of additional real estate seems to be a desirable investment for a certain part of the population.

Finally, it should not be overlooked that the positive expectations of the contribution of the renewal of the City of Zagreb to the growth of activities on the real estate market, as well as the construction sector as a whole, will have a positive impact. In addition to the direct effects on the growth of activities in the construction sector, the renewal of the City of Zagreb will have a positive impact on the growth of activities in a number of other sectors.

Furthermore, increased demand for real estate, which supports trends in construction, is also partly generated by subsidized housing credits.

Source: tockanai.hr

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