About the market situation, prices of construction materials and expectations we spoke with Denis Čupić, partner in the company Redserve

After the prices of construction materials skyrocketed, there is finally a calmer situation on the horizon. For example, the price of steel on the exchanges is falling. It seems that the strong growth of construction material prices seen this year has finally come to an end on the world market, according to macroeconomist Ivica Brkljača, who recently commented on it on his Facebook page. Meanwhile, prices of materials in Croatia have risen and it would be interesting to see if and when they will correct, which will take some time. We spoke about the situation on the real estate market with Denis Čupić, a partner in the company Redserve , which deals with services in the segment of investment in real estate, as well as in F.O./Grupi integrated provider of services for managing commercial property that is involved in the situation on the real estate and construction market. We asked how the fall, for example, in the price of iron, came about. - It was mainly imported from India and some from America. Earlier, there was a surge in its price due to carbon credits, and then the pandemic led to an increase in transportation costs. However, Turkey has recognized and taken advantage of this situation. They have launched six iron wire production facilities, which is the basic construction material, and parallel to that, they have modernized three existing steel mills, which has brought and will bring about easier access to supply - says Denis Čupić, adding that the EU trend is to find suppliers as close as possible, and that IKEA has recently announced a change in the supplier of products from the distant eastern market to the Turkish one. INVESTMENT SECTOR The product itself, which can also be somewhat more expensive than a few years ago, is amortized through easier supply. Iron ore is now priced at a similar level as before the pandemic, as well as some other materials, while the price of aluminum is still high. And why Croatia didn't start a steel mill, we ask him, as there were some talks in that direction at the beginning of the summer, but they unfortunately came to nothing. - We in Croatia have a high VAT, as well as high municipal fees and contributions, and the domestic investment sector is decimated - he replies. Moreover, the launch of new production in Croatia is, adds, very difficult and demotivating, which he himself witnessed in 2012 when he tried, along with his partners, to launch iron production for an international investor in Croatia, and the project was unfortunately halted due to bureaucracy and Croatian forests. However, Denis Čupić links all this to the prices of real estate, which he believes will need to be corrected over some time, as they have reached a ceiling. - Cyclically dampened prices in construction are reflected on the whole market for us over the past 15 years, since the first disruptions construction companies greatly use the opportunity to raise prices to correct past errors, and then such a trend follow domestic raw material producers - he believes.

Predictions for next year are that the price of a square meter in Croatia will not increase. There will be no many transactions next year either because most of this year's transactions are related to projects that are still being built or will start construction next year, says Čupić

However, there will be a great demand for construction, materials and labor, but it doesn't mean that prices should go crazy. He also mentions Germany, where a lot is being built. They are undergoing reindustrialization, and now they are upgrading light industrial parks that can easily be moved to meet demand. They also have large investments in logistics parks. BACK TO 2019 LEVELS - When we talk to those who are now signing investment contracts and developers in Croatia and Europe, expectations are that prices will be stabilized by the end of next year at 2019 levels, which was a strong year - says D. Čupić. The rise in real estate prices has been recorded in many EU countries. In Croatia, this is most notable in Zagreb, where there is a much wider range between the average price of a square meter, which has exploded, and the average salary compared to the rest of the country, without considering the coast. In Zagreb, investment in rental apartments has accelerated, and buyers have exaggerated expectations of rent levels, which on medium term could lead to a bubble effect in real estate bought on credit. - Predictions for next year are that the price of a square meter in Croatia will not increase. I believe there won't be many transactions next year, either, because most of this year's transactions are related to projects that are still being built or will start construction next year, and will thus flood the market, and by mid next year there will be fewer new projects - says Čupić. However, the interest in real estate will still be there. He also notes that there is now a greater interest in buildings in Istria and in Rijeka for residential purposes, which are sought for second homes. There is interest in residential construction in that area from German pension and insurance funds with ambitions to bigger projects, aimed at selling them to their clients on foreign markets. Source: Korana Sutlić, jutarnji.hr

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