In the Croatian real estate market, at the national level, a slight positive trend is visible, especially in the hotel segment and the business space market segment.
The development of the business space market will correlate with the economic situation and the operations of companies, as well as the increasing demand for BPO (business process outsourcing). New business buildings (greenfield investments) will be constructed to a greater extent, with the exception of buildings in old city cores where internal renovations will take place while retaining the external appearance (yellowfield investments).
A slight increase in rents and prices of business spaces is also expected, considering the limited number of projects announced and the gradual recovery of the economy and companies. The recovery of demand will, in addition to the increase in rental prices, also affect better occupancy rates, especially in Class A offices. Such a development will stimulate the creation of new projects, rounding off this market cycle and starting a new one.
Expected projects in 2016 include the Conditum business project (9,500m²) in Zagreb, and among larger projects, the Westgate project in Split worth €65 million (50,000m² GFA) is announced. The Adris business center (10,700m²), which is also the first office building in the Croatian market with a LEED green certificate, will acquire its tenants and users.
Regarding new investments, Vedrana Likan, director of Colliers for Croatia, Slovenia, and BiH, emphasized: “The main shopping centers and office buildings in the Croatian market will continue to represent a good investment opportunity and an alternative to other asset classes, considering the advantages of such investments such as stable cash flow, inflation protection, reduced risk, and guaranteed cash flows through lease agreements, as well as satisfactory financial returns. Therefore, we expect that there will be acquisitions of these commercial properties.” – Likan pointed out.
In the Croatian retail space market, a primary adjustment to demand is expected in the form of specialization of neighborhood shopping centers and the emergence and development of modern outlet centers. New shopping centers will be built in unsaturated markets whose areas are enhanced by the number of tourist visits, including in smaller towns. The Zagreb shopping center market remains saturated, and there are no major projects announced. The main shopping centers in Zagreb will continue to perform well, while those less successful will have to change their concept.
At the national level, the trend of redirecting investors to the HTL sector (hospitality, tourism, and leisure industry) from other sectors of commercial real estate continues. Croatian tourism has experienced another record year in terms of tourist arrivals and overnight stays, and this summer, as many as 25 new hotels were opened on the Adriatic coast, mostly as brownfield investments. Given the continuous growth in tourist arrivals and overnight stays, available financing resources, and attractive brownfield investment opportunities available through the privatization of state-owned enterprises, this sector continues to attract the attention of investors, and further arrivals of international hotel brands that are not yet present in the Croatian market are expected.
The largest investment this year, worth €80 million, was the HUP Zagreb project, owned by the company Hoteli Dubrovačka rivijera d.d., which included the construction of the new Sheraton Dubrovnik Riviera Hotel and accompanying villas and facilities in Srebreno, the construction of the new Hotel Mlini and Villa Mlini in Mlini, as well as a thorough adaptation of the Astarea hotel. The Dogus Group continues to invest in the Croatian coast with the latest greenfield investment of €25 million in D-Resort Šibenik, a 4+ star hotel with 69 luxury rooms and apartments, and three exclusive villas.
