When the earthquake recovery is completed, the renovation of the housing stock should begin

Public investments, especially those that are part of earthquake recovery projects, as well as private investments based on recovery, will last until 2028. After this period, the funds coming from the EU will significantly decrease, which means that the earthquake recovery will be completed, as well as part of the infrastructural capital investments. After that period, it is difficult to predict what the pace of the construction industry will be, and this only means that a new five-year investment plan should be made, says Dubravko Ćorić, president of HUP-Association of Management and Real Estate Business, whose focus should be on the renovation of the outdated housing stock.

– As a consequence, some investments will decrease, some will fall out of focus, but a strategy for capital development needs to be made at the local and state level – emphasizes Ćorić, adding that this does not mean that private investments will cease, noting that this segment should not be in question in the future. There will be opportunities for residential construction, the construction of tourist facilities, shopping centers, and similar.

Historical funds

Public investments currently taking place in the construction sector are mostly of minor financial significance and are limited to the construction of kindergartens, museums, rarely schools, hospitals, and faculties, as such institutions mostly already exist and are usually reconstructed or expanded. Currently, the situation is such, explains Ćorić, that there is an inversion, as the funds that have arrived for recovery and through the NPOO are enormous and probably will never again in history be available in such amounts that need to be spent in such a short time. However, this does not mean that public works in the construction business should be completely overlooked.

– So far, recovery has been carried out due to the earthquake, but now recovery could start in another direction due to the obsolescence of the housing stock – predicts Ćorić, adding that the problem with old buildings and their maintenance is nothing new and the issue is always the same, too little funding for adequate remediation or renovation. In this segment, more states will need to be activated to find additional funds for the remediation of buildings, whether through local units or directly from some European funds, and the obligation to install elevators in buildings without them is also a particular issue.

No strategy

Ćorić also reminds that there is a continuous thesis in Croatia that there are about 600,000 empty apartments, which he does not consider entirely accurate, especially when we take into account the fact that the presentation of the National Housing Policy Plan highlighted the data that we lack 232,750 housing units.

– There is constant talk about the construction of new apartments, but the question is how many are needed in certain areas. Let’s take the City of Zagreb, where there is certainly no strategy for apartment construction, where and in which neighborhoods there is a need for apartments, for whom the apartments are needed, what kind of apartments are needed, etc. Generally, residential construction in Croatia takes place with the engagement of private investors, and the little so-called POS construction is financed from public funds.

The accommodation of young families according to the program that was first APN did not show a complete effect, and ultimately this measure was abolished in a way that we did not have a replacement measure in preparation, but young people waited and postponed as long as they could the investment in purchasing an apartment. Unfortunately, the new Housing Policy program, which has been partially presented, still has many unknowns and has not yet been fully implemented, and it is likely to be at the beginning of April, as a public discussion is currently underway – said Ćorić.

When it comes to private investments, the problem for investors and the construction sector is, he adds, that there is no real strategy for tourism development. To this day, unfortunately, we do not know at which locations and how many high-category hotels we need, for example. Ćorić points out that the figure of approximately 10-15 percent of beds in hotel accommodation compared to total capacities is often mentioned.

– It is logical to then ask why more new hotels are not being built, why only about ten greenfield tourist investments have been built since the establishment of Croatia, while most are reconstructions or extensions. According to us, the reason is primarily overregulation and strict enforcement of spatial planning policy, which does not recognize deviations that certain hotel chains require to decide to invest in Croatia, so after years of attempts, such opportunities become too complicated and they turn to other markets – warned Ćorić.

Tourism without development

According to him, everything that is currently being built in tourism is related either to the renovation of existing facilities and raising the quality of accommodation. All of this is, of course, related to the quality of guests who gravitate towards our part of the Mediterranean. Competition in tourism is extremely high, and in recent years we have been constantly losing quality guests who are going to other destinations. In this regard, the entire strategy of approach has failed, which is, in his words, concerning because we know that tourism constitutes a large part of the state’s revenue.

– Likewise, the tourism season, especially for us, is very short, not even four full months, with very few accompanying facilities that would raise the level of service to a higher quality. We certainly cannot expect any major trends in development in the next few years until a concrete development strategy is agreed upon that will include transport connectivity, primarily air transport, competitive prices outside the season, incentive tax policy towards the tourism sector, construction of infrastructure in the obligation of local self-government units, and similar – believes Ćorić.