Colliers: The Croatian Market Among the Most Desirable Investment Destinations in Europe

Geo-political changes, challenges posed by investment market cycles, and the weight of capital create new rules of attraction and investment in European countries. By thoroughly investigating and assessing the fundamentals of the commercial real estate market in Europe and their categorization and position in relation to investor strategies, risk attitudes, desire for stability, growth, or yield, Colliers identified the Nordic countries, the Netherlands, leading European markets, and certain markets in Central and Eastern Europe (CEE), including the Croatian real estate market, as the most favorable countries for real estate investments in 2017.

Vedrana Likan, the director of Colliers in Croatia, upon returning from the EXPO REAL fair, one of the largest international events in the field of real estate and investments, stated: “Investments in the real estate market continue to grow as investments in commercial real estate remain a very attractive option in the macro environment according to the principle of ‘lower for longer’. As we approach 2017, all markets continue to offer investment opportunities, depending on how far investors are willing to go on the geopolitical risk curve.”

In a study conducted by Colliers titled “European Investment Market Outlook: A Matter of Perspective“, three groups of investors were identified who rank countries based on categories they consider for investment.

The first are risk-averse investors for whom transparency and liquidity are key, giving the highest rank to the Nordic countries, which are almost a European synonym for stability. They often include Switzerland, the Netherlands, and Austria. However, lower risk comes at a price. There is a clear inversion of the relationship between real estate prices, based on the weighted returns of all sectors relative to the country risk. On that scale, Finland, the Netherlands, and Belgium have the best balance between risk and return of all European countries.

Next are investors motivated by stability and growth who do not only consider political and operational risk. Looking long-term at the factors that will affect demand, factors such as the outlook for short-term and long-term interest rates, GDP, employment growth, and demographic changes have led to a significant shift in the overall ranking of markets by their attractiveness for investment. Leading European markets lead in this category with Germany at the forefront, followed by the United Kingdom and France. The Netherlands also has a very good ranking here in terms of yield prices compared to other larger and leading countries.

Finally, there are investors with a higher risk appetite who choose countries where liquidity may be lower, but yields are higher, turning to the markets of Central and Eastern Europe (CEE), stimulating their activity. Looking at yields, the most interesting markets are those of Bulgaria, Croatia, Slovakia, as well as the Baltic markets. They are followed by Belgium, the Netherlands, the Czech Republic, Finland, and Denmark.

Croatia, Latvia, Lithuania, Finland, and the Netherlands are at the very top of the market for investors with different preferences and styles and have proven to be the strongest growing markets in terms of investment growth year on year.