Despite its proximity and connectivity to Central Europe, Colliers assesses that the industrial-logistic market remains the least developed property market in Croatia

The average monthly rent per square meter in Zagreb in June was 2,200 euros, 3.6 percent more than in the same month last year. In Split, it increased 1.9 percent to 3,020 euros, shows the mid-year review of the property market in Croatia, Slovenia, and Bosnia and Herzegovina by Colliers Croatia, Slovenia, and BiH. The volume of apartment transactions in recent years has also been growing, particularly in Zagreb, which accounts for 40 percent of all apartment transactions in Croatia in the first six months, according to the transaction data base enekretnine. "Due to the earthquakes that destroyed a large part of the old town center of Zagreb, demand has increased, which mainly comes from local residents looking for permanent housing, and this primarily for newly built construction that meets the highest safety standards," the review states, adding that it has been recorded a higher demand for houses during lockdown times. The offer of new construction in Zagreb, it is estimated, will contribute to the project VMD Quarter Heinzelova - Darwinova, for which the first stage is planned to be completed by the end of 2021, and the second stage by 2022 and 2023. Prices for more than 400 apartments in the residential complex range from 2,600 to 3,000 euros per square meter.

Shopping Centers

Like the pandemic has accelerated trends such as working from home, some companies, particularly in the IT sector, are considering some version of a hybrid business model. There is a greater demand for flexible office spaces and coworking. When it comes to rental prices, the average net effective rent for class A office space in Zagreb remained at 12.5 euros per square meter. The vacancy rate is around 5 percent. The trend of online shopping and e-commerce has increased, but it is still expected that leading shopping centers on good locations will continue to have good results. Food retailers (Lidl, Kaufland, Plodine, Tommy) have continued to expand, led by the Italian discounter Eurospin, the last retail chain to enter the Croatian market. Despite a favorable geographical position, proximity, and connectivity to Central Europe, Colliers states that the industrial-logistic market remains the least developed property market in Croatia. Demand in recent years has been continuously rising, especially for modern logistics space. With increased interest and activity from developers, an increase in supply is expected in the coming years, particularly with new build-to-suit (BTS) projects. The main drivers of demand are retail, distributors, 3PL operators, and e-commerce. "Local developers dominate a market characterized by limited supply of modern spaces that cannot meet international standards. However, the pandemic has further accelerated strong demand and brought an opportunity for developers to secure new, modern, and significant properties on the market for respectable tenants," the Colliers review states. On that track, Log-Expert emphasizes the developer of the class A logistics park in the Meridian 16 business zone near Velika Gorica and the Zagreb ring road.

Second Home Property

In comparison to other Mediterranean countries and neighboring Montenegro, Colliers assesses that Croatia has an underdeveloped market for second home property. Despite great interest from foreign investors and developers, such as Austrians, Slovenes, Slovaks, Czechs, and Russians, there are very few large greenfield investments in this sector. Key obstacles for new projects are administrative problems (prolonged and complicated bureaucracy), inefficient judiciary, fiscal policy, seasonality of destinations, and accessibility of the location. However, they highlight the Lukoran project, which includes a luxury resort on the island of Ugljan, and is planned to start in 2022, and will consist of 126 residential units, including villas, urban houses, apartments, beach club, and marina.

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