Expert for real estate Boro Vujović explained how multiple factors affect the price of new constructions in Croatia, and that real demand will see with the entry into the Schengen area

Boro Vujović, real estate expert, appeared on N1 television where he commented on the situation on the Croatian real estate market.

When the pandemic started, it was thought that there would be a great fall in the prices of real estate, but it did not happen in the end.

"When looking at who's buying, 50% of buyers buy with credits, and the other 50% with money from their accounts. So, 50% of them buy real estate with their own money, a good part of buyers use this way to preserve the value of money due to everything that happens and invest in real estate, while others buy with credits because of low interest rates. Prices did rise and that is a fact, but at the moment, there are a lot more buyers than there are real estate," said Vujović.

On the prices of real estate in the center of Zagreb, the earthquake had the most impact, he explains.

"The first earthquake had the effect that it did, it was seen on the traffic which was 43% less than in 2019. Then the earthquake a year ago further encouraged fear. The center of the city, or old buildings, lost attractiveness and regardless of being in the center, they became uninteresting to 80% of buyers," said Vujović.

What affects the price of new constructions?

He adds that in the first six months in Zagreb County, a 50% increase in the number of construction plots for sale was recorded.

He explains that inflation, the price of construction materials, the lack of labor force, and that construction plots are also very expensive, significantly affect the price of new constructions.

"In the other hand, there are low-interest rates on credit and people buy real estate. Moreover, 30% of buyers are foreign buyers, it's mostly called second homes. The most are Slovenes, Austrians, Germans, and lately, more and more Hungarians, Czechs, and Poles are coming. It's attractive for people who are on home office," he adds.

More buyers than real estate

Despite the impression that there is a lot of real estate, there are currently more buyers on the market than there is real estate.

"It should be taken into account that we're entering the Schengen area and that will have a strong impact on the real estate market. People today can live in France and work in Switzerland. The same applies to us, people can live in Croatia and work in Italy or Slovenia. Our coast is very attractive. One doesn't have to think about the purchasing power of Croatian citizens," said Vujović.

He points out that there are several apartments in the best locations and top-quality construction in Zagreb, and that the average quality of new constructions in the center is around 5000 euros per square meter.

"You always have people with money, that's exclusive. The average price of new constructions in Zagreb is around 3000 euros per square meter and lower in peripheral locations. There are serious investors on the market who follow banks and I think they're not exposed to the risk of staying without money," Vujović says.

As for Donji grad, he adds that there wasn't much demand for real estate in the area before the earthquake.

"Now there is interest in moving. If people are motivated to stay, the real estate market will develop," he concludes.

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