Author: Boro Vujović, Director of Opereta Year 2017 was not only interesting but also completely unpredictable for the real estate market, and we have not shown ourselves to be good predictors, as there was a "boom" that no one expected, mainly as a result of the positive economic situation, but also due to some events on the real estate market. Prices rose, the market recovered, and the number of transactions will be in an upward trend for the first time since 2009. Positive Trends, Market Recovery, and Price Growth Let's go step by step, at the end of 2016, the Minister of Finance announced the elimination of the incentive for buying the first property, but he also announced measures for 2017 by which the Government would encourage young people to stay in Croatia with ease of buying a property. This led to a "stampede" of buyers who satisfied the conditions and bought cash. Most wanted to take advantage of the bonus and buy a house cheaper. The beginning of 2017 was similar to the end of 2016, with buyers purchasing cash, and those who took out a loan were waiting for the measures announced by the Government. The start and details were changed and postponed, but what was clear and motivating for the buyers is that for the next four years, they would pay half of the credit rate. However, there were also many complications, such as searching for useful permits for buildings from 1965 from the archive where, if you do not know the exact year of construction and the investor, there is a small chance that you will get it, within a short period that we were all afraid of, since no one knew how much interest there would be, and how much credit would be approved. Events in the following year are difficult to predict with certainty. Despite no one expecting that the average price of a square meter of an apartment in Zagreb would rise by 10% in one year, it happened. It was mainly influenced by the state subsidies for buying the first apartment, which created a sense of urgency, a small bargaining space, but also a sense of euphoria that led to a 20% rise in prices for new construction in some locations, compared to the beginning of the year. What to Consider for the Movement of Prices in the Coming Period? The departure of young people, who are the largest potential buyers of real estate, is the greatest threat to the real estate market in the areas of Slavonia, Lika, and parts that are poorly urbanized. We hope that the subsidies, which have been announced for 2018, will be differently implemented than the initiative of 2017 and will have less direct impact on the movement of real estate prices. The recovery of the economy and the growth of GDP automatically create a positive climate that has a direct impact on the real estate market. The geopolitical situation is in favor of our tourism, but it is also in favor of the Adriatic real estate market. If we had been recognized as a tourist destination in the world, it is also confirmed by my recent experience in the USA, where most people know about Croatia, which was not the case five years ago. Due to low prices, but also other advantages offered by the Adriatic, a growing number of EU citizens are deciding to buy a "second home" in Croatia. In comparison with the prices of real estate in Munich or Berlin, prices on the Adriatic are low. The fact that rental income averages 5% per annum, and profits from renting a business premises average 8%, and that the interest rate for saving is 1%, is in favor of demand for real estate and its growth, and traditionally, it is known that "Hrvats (Croatians) save in bricks." The growth of Zagreb as a tourist destination has led to apartments in the Lower Town being mostly converted into apartments, and most of our buyers are buying apartments in that part of the city for short-term rental, which has led to a shortage of small apartments for sale in that area. Summarizing all of the above, we can say that 2018 will be an exceptional year for the real estate market, with a gradual rise in prices and the number of transactions. We do not expect more sudden jumps like those that occurred this year, but rather a gentle, differentiated rise. All rights reserved - opereta.hr

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