Real Estate – Another 3-5 Years Until Market Recovery

In an informal conversation, one interlocutor stated that investment in real estate will start to be profitable when the 26,000 square meters of the Hoto Tower in Zagreb’s Savska Street begins to fill up.

There is some truth to this, as since Croatian Telecom vacated that space, it has remained empty and will continue to do so until economic activity picks up. However, something seems to be brewing, as our exports, industrial production, and similar metrics are on the rise, but we must arm ourselves with patience.

Real estate prices and the overall chance for the domestic construction industry to pull itself out of the quicksand it has been struggling in for a long time depend on economic activity. Dragutin Kamenski, the owner of Kamgrad, says it will take another two to three years for real estate prices to stabilize or start rising, while one of the two co-owners of VMD Transport, Antun Mikec, believes it may take up to five years. These two companies are among the few that have not fallen into quicksand, and their experience is one of the key indicators of how to survive in tough times.

Kamenski saw an opportunity in tourism, directing his construction capacities there. He has also worked on other projects, residential and commercial, but he saw potential in the renovation and construction of hotels and villas on the Adriatic. That he was right is confirmed by Siniša Topalović, director of Horwath HTL, a consulting firm for hospitality, tourism, and, as they state, the leisure industry. Topalović says that this year has seen a significant boom in new hotel projects or very extensive renovations of existing properties.

Hotelier Optimism

– This is the result, on one hand, of the previously reduced VAT rate, which has since been raised again, and on the other hand, of the optimism of hoteliers and good business results, along with, to a lesser extent, funds from the EU – he says.

The entire text can be read in the new issue of Lider.