Joining the EU Will Not Bring Us a Real Estate ‘Boom’

The state of the market and real estate business has been steadily poor for the last two years, and this year as well, with sales continuing to decline by an average of about 10 percent annually.

It is difficult to expect positive changes without new state measures and without economic recovery, emphasized Dubravko Ranilović, president of the Croatian Chamber of Economy’s Real Estate Business Association, today at the 18th forum on real estate business. The forum, organized by this Association, gathered nearly 400 participants from across Croatia who could hear firsthand about the latest news regarding the proposed law on cash transaction fiscalization, the issue of illegally constructed buildings, the possibilities of using EU funds, and other current topics. Ranilović points out that the market decline over the last three years has also reflected in the decrease in the number of agencies-companies engaged in real estate business, by about 100 to 200, and that there are now around 300 entities in Croatia involved in this sector.

Regarding the number of unsold properties in Croatia, he stated that it does not correspond to the state of supply and demand in the market, and that some ‘bubbles’ about this are communicated by those who do not have a place in the market. Because there are always, as he says, people who want to buy some apartment, but cannot find such a property on the market. There is also the problem of financing from banks, which want to finance some projects but not others, so, Ranilović believes, unsold properties speak more about the properties themselves than about the market.

He does not expect any major changes in legal regulations because the law regulating real estate business has been in place for three to four years, but it is being aligned with EU directives, primarily in the part regulating the status of foreign intermediaries who will perform this activity. We want to maintain certain control here, not to restrict the market but simply to know that this entity operates here and to register it, says Ranilović.

Noting that we had defined commissions of a maximum of 6 percent, he states that this will no longer be the case under the new law, as the EU directive states that the market must determine what two people agree upon, so the commission will not be expressed in any percentage ratio.

Since Croatia’s accession to the EU, Ranilović does not expect any significant ‘boom’ in transactions or sales of real estate, as foreigners who wanted to do so in Croatia have been able to for several years. He believes that other elements, such as local and state measures for the construction industry, will be more important for the market and could long-term stimulate and sustain it.

Commenting on the announcement of introducing a property tax and its impact on real estate business, Ranilović says that more harm comes from the “stories and balloon releases” about this law than from the law itself, as it creates depression and uncertainty among people. If there will be a law, he hopes that the Association will receive its proposal and will respond to it. Property prices will both depend and not depend on this law, as they are currently formed based on demand, so in Zagreb, there is also an increase in prices for a small number of new quality properties that are otherwise rarely built but are in high demand.