Tuesday, 14 March 2023

Zagreb Rental Market Expanding as Huge Building Construction Planned

March the 14th, 2023 - The Zagreb rental market is set to get a boost as the powers that be here in the capital are planning to building some huge buildings which will then have the apartments within them rented out.

As Poslovni Dnevnik writes, the prices of new apartments in general across the country increased by more than 20 percent last year, and here in the City of Zagreb - by more than 30 percent.

Whether the same thing will happen with apartments for rent was analysed for HRT by the First Deputy Mayor of Zagreb Luka Korlaet, real estate agent Sanjin Rastovac and investment analyst Filip Vucagic.

Rastovac said that according to statistics, the average price of apartments in Zagreb per square metre now stands at around 2,700 euros, but in reality it is difficult to find an apartment below 3,000 euros per square metre.

"If we're talking about apartments spanning 40-50 square metres, then they're often over 4,000 euros. The last example, we asked for 114,000 euros for a 30-square-metre apartment, and there were about 20 inquiries within just a few days," he pointed out, emphasising that the demand is currently much greater than the supply. Here in Zagreb, as he says, there aren't enough quality properties to meet the current high demand.

He pointed out that new builds are much more in demand than older apartments are, primarily because of the earthquake being fresh in peoples' minds. "The price of new build is currently sky high due to inflation, and then older buildings follow, taking advantage of the opportunity," he said.

When asked what the City of Zagreb is doing in this regard, Korlaet replied that Zagreb has about 6,500 apartments in its portfolio, almost all of which are occupied. "We have lists for public rent and lists for social rent. We want to bring some order to that renting process, we want to increase how many apartments are for rent and we don't want to sell them, we want to increase our portfolio,'' he explained, adding that in this sense, the plan is to expand the Zagreb rental market by building a large new build in Podbrezje with 288 apartments for rent.

As he says, all of the documentation for such a construction is there, but 320 million kuna is missing. He emphasised that they have come a long way in discussions with development banks in terms of financing and are on the threshold of being granted a favourable loan with an accompanying relatively low interest rate.

Vucagic stated that he believes that the rate of growth of property prices will slow down and stabilise. "As for APN, I don't think it was the right tool to help people buy property," he stated, adding that alterations to property tax could be what helps pull more properties into circulation.

Korlaet followed up and said that the intention with APN was good in theory, but that the reality doesn't quite match up when it comes to the Zagreb rental market.

"The measures are being taken on the wrong side. We need more supply, not more demand. All subsidies affect demand and thereby increase prices," said Rastovac, adding that people invest in property as a form of safe savings. As for the most sought-after districts for buying real estate in the City of Zagreb, there's Tresnjevka, Maksimir, Jarun, Vrbani and Sredisce, said Rastovac.

For more, check out our news section.

Friday, 3 March 2023

Every 2nd Zagreb Property Purchased in Cash, Every 3rd by a Foreigner

March the 3rd, 2023 - As real estate prices rise considerably here in the city and even on the outskirts, every second Zagreb property has been purchased in cash, while every third has been bought by a foreign national.

As Poslovni Dnevnik writes, the price of Zagreb property is continuing to skyrocket. Despite this, apartments across the city are selling very well, moreover, they're often bought in cash. With Croatia's accession to the Eurozone back in January this year, the City of Zagreb, like the whole of Croatia, became more interesting for foreign buyers who want to invest their money in real estate.

Every other Zagreb property was paid for in cash, and every third buyer has been a foreign citizen. Their interest in Croatian real estate is the among the first reasons for the high prices we've seen of late, with inflation also affecting the situation.

Second come Croats living outside of Croatia who aren't considered foreigners but domestic customers, third come the people who sold them that property and then again handle the cash and again that cash flows into Zagreb. Fourth are those people who have various sources of income, about which it's better not to ask much,'' said Sanjin Rastovac, a real estate agent for HRT.

Apartment prices across Zagreb have by risen by more than 15 percent in the last year. Residents of Germany, Austria and Slovenia buy the most Zagreb property of all, and these increased prices are also acceptable for them.

"Within Zagreb itself, finding a new build for three thousand euros has become a difficult task. The demand is still huge, but the supply is weak,'' emphasised Rastovac. This is why there are more and more young people who, even with APN subsidies, cannot buy their first property. This new situation forced them to turn more and more to the outskirts of the city, where prices are now also rising steadily.

"Smaller towns dotted around Zagreb, for example Dugo Selo, Sesvete, Velika Gorica, and Zapresic, have now become very interesting for young families who can still manage to afford property in these areas," said Jelena Kravoscanec Todorovic, a real estate agent.

In the City of Zagreb, they have a plan for so-called affordable housing where rent will be proportional to income, and quality apartments will be built and rented throughout the city. The first such apartment building will be built next year.

"It's a new building, the fifth multi-apartment building in Podbrezje with 288 apartments that costs 320 million kuna, and we're negotiating with development banks," explained Luka Korlaet, Zagreb's deputy mayor. This is exactly the model supported by the European Investment Bank at a recent meeting with the mayor, confirming that such a model is widely accepted across the rest of the European Union, where people across many member states are obviously struggling with the same problems.

For more, check out our news section.

Monday, 12 April 2021

Earthquake Worries Fail to Deter Market as Zagreb Property Prices Rise

April the 12th, 2021 - The earthquake and the ongoing coronavirus crisis have both failed to slow down the property market as Zagreb property prices appear to be on the increase.

As Poslovni Dnevnik writes, with greater or lesser intensity, the whole of Europe was under a number of restrictions and limitations throughout 2020, leading to a dramatic drop in economic activity, but regardless, property prices were the only ones that continued to rise as if they were in the best of times.

The jump in property prices back in pandemic-dominated 2020 was the largest in the last fourteen years, with countries such as Luxembourg, Poland, Denmark, the Czech Republic, Portugal and Germany rebounding in price increases in the year the coronavirus pandemic, where square metres in houses were more expensive, seeing a jump of between 8 and 17 percent, and only Ireland, Spain, Italy and Malta at the end of last year had an increase of less than two percent when compared to the last quarter of 2019, writes Vecernji list.

Here in Croatia, things in this regard stood above the European Union average with an annual price increase of just over six percent. In addition to the coronavirus pandemic, we also had two strong earthquakes in a year, but this impact mainly affected the sales volume: apartments and houses were being ''traded'' less than they were before, but real estate that found its way to new owners was sold more expensively.

Zagreb property prices in the actual city itself rose by an impressive 41 percent over the last five years, along the Adriatic coast, the five-year jump was somewhat more modest - standing at 27 percent, and in the rest of the country the square footage of an apartment or house was on average 13 percent higher.

According to the Croatian Statistical Office, the prices of new square metres of properties, from 2015 to the end of 2020, grew by an average of ten percent, and existing properties on sale saw their prices go up by as much as a third.

Zagreb property prices aside, when it comes to Croatia as a whole, the beginning of a more significant rise in prices coincided with the state programme of offering subsidised housing, through which 17.5 thousand apartments have been sold so far, for which the state has allocated a massive 1.2 billion kuna.

The plan is to continue this form of subsidy until the end of 2023, so that state subsidies covering 30 to 51 percent of the monthly loan installment could be given to at least ten thousand new customers nationwide. The first to take out such loans back in 2017 did best, as they received both subsidies and cheap square metres, and all those who later decided to buy faced significant price increases.

For them, it still represents a somewhat favourable investment due to low interest rates and a five-year state subsidy. Each child born extends the subsidy for an additional two years. The jump in prices was naturally more pronounced in larger cities, with many smaller towns and villages mostly coming up empty. Europe doesn't tend to have similar subsidies, but their prices are rising for various reasons, which raises concerns that the market will overheat and then end up falling again rather sharply.

After the stock market, the real estate market is perceived as a litmus paper in which direction the whole economy could go.

For more on Zagreb property prices and indeed other properties in Croatia, from renting to purchasing, check out Property in Croatia.

Friday, 20 November 2020

After Tumultuous 2020, Investors Think Twice About Zagreb Property

November the 20th, 2020 - Trends in life outside of big cities triggered by the pandemic had a greater impact on the decline in the sale of Zagreb property than the consequences of the earthquake did, according to the author of an expert article published on HNBlog on Monday.

As Poslovni Dnevnik writes, the authors of the expert article "The impact of the pandemic and the earthquake on the property market in Zagreb in the first half of 2020" saw the CNB's Davor Kunovac and Karlo Kotarac analyse the simultaneous impact of the earthquake which occurred back in March this year and the pandemic declared on March the 11th.

The two experts looked into the formation of real estate prices in Zagreb and have constructed a number of specific indicators of the Zagreb property market using data from the Tax Administration on the sale of said property.

A reduction of 10 percent

"The analysis showed that during May and June, the prices of Zagreb property being sold in the very centre and in Donji Grad, where buildings seriously damaged during the earthquake was the most densely distributed, decreased by 10 percent compared to the same period last year," the authors say.

According to that same data, "the number of properties sold in Zagreb in the first half of 2020 is approximately 22 percent lower when compared to what was sold in the same period last year and for now, it doesn't seem dramatic if we take into account the usual trends in transactions in previous years.

Namely, Kunovac and Kotarac note that the intra-annual dynamics of the number of sold properties changed back in 2017 with the introduction of the housing loan subsidy programme and a large number of transactions are now concentrated within a short time interval in which subsidy applications are opened.

However, unlike the previous two years, the decline in the number of transactions this time has lasted significantly longer, until May 2020, when, in parallel with the easing of epidemiological measures and a new round of housing subsidies, the number of transactions again approached the average recorded over the previous two years.

"The number of properties sold within the city and especially in Donji Grad, where the properties damaged in the earthquake was most densely distributed, has halved in recent months," said Kunovac and Kotarac. However, they also pointed out that the reduced tendency to buy Zagreb property in the very heart of the city center should not be entirely attributed to the earthquake.

"The indicators illustrate that the number and share of transactions related to the earthquake-damaged zone begins to decline a few weeks before the earthquake actually struck. This decline in activity in the real estate market coincides with the beginning of the pandemic when the process of buying and selling real estate was significantly hampered by the introduction of epidemiological measures.

The reduced activity in this area is in line with the increased attractiveness of living outside of the city centre and new trends in people's lifestyles which were triggered by the pandemic, such as social distancing or working from home,'' the authors of the article emphasised.

Not only newer apartments are desired...

The pandemic, as they further state, is closely related to the reduced demand for tourism in Zagreb. As a result, there is less demand for Zagreb property in the heart of the city that would otherwise have had a tourism-related purpose, while, at the same time, the supply of apartments for long-term rent or purchase in that part of the city is indeed growing.

Their analysis also suggests that a change in buyer ''preferences'' for living outside the city centre after the earthquake is not, as is sometimes claimed, largely determined by increased demand for newer properies built after 1964 when the first earthquake-building regulations were enacted in the city.

Namely, a comparison of the price index of older properies in Zagreb showed that the price of these buildings located in the old part of the city fell in the analysed time, while the price of propertoes built before 1964 in other parts of the city rose in that period.

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Tuesday, 22 September 2020

Post-Earthquake Worries See Zagreb Residents Move Out of Centre

September the 22nd, 2020 - The Zagreb earthquake is still very fresh in the memories of those of us who woke up to the deafening sound of it and our buildings shaking. It has been half a year since it occurred, but it is unlikely to leave our minds anytime soon. For some Zagreb residents, that and a few other factors has seen them seek land and property outside of the centre of the city.

As Poslovni Dnevnik writes on the 21st of September, 2020, back during quarantine, when the economy was locked down, the real estate market almost stopped in its tracks. After the re-opening of the economy - interest in real estate in Croatia is growing once again.

According to insiders, the situation on the market across the country could now be described as almost normal, given that the demand is considerable, while at the same time there is significantly less quality real estate on offer than is required. Along with Zagreb, Rijeka, Osijek, Split, Pula and Zadar are the cities where the offer of apartments for sale has been the most searched lately.

Borislav Vujovic, vice-president of the Real Estate Association at the Croatian Chamber of Commerce, told HRT that real estate in the centre of Zagreb had become unattractive to Zagreb residents currently living there and for those considering a move from elsewhere due to the recent earthquake.

He pointed out that the location of the buildings is attractive, but not the buildings themselves. Vujovic said the asking price was about 500 euros lower than before March the 15th, 2020.

"It should be taken into account that the prices of newer buildings in the centre are stable and they are more attractive than they were before. Their prices are rising, but since there are fewer of them, they don't affect the prices in the city centre,'' he emphasised.

Vujovic added that the Zagreb residents who went through the earthquake want to go outside the city and are looking for land to build quality and safe houses themselves. He emphasised that the coronavirus also influenced the departure of Zagreb residents from the centre of Zagreb. "There is an increased interest in more peripheral locations and in houses and land in such locations," said Borislav Vujovic.

He pointed out that the prices at these locations hadn't risen as much as land and houses are now being sold on them. "The turnover of houses was much lower than it is today. However, today the situation has changed,'' he said.

As for the coast, he said there is great interest from foreigners in buying real estate. "This year there was absolutely demand, our traditional buyers, Slovenians, Austrians and Germans are coming and looking for real estate," he said.

Vujovic added that foreigners aren't only looking for apartments located along the first row to the sea, but also houses which are more isolated. Vujovic said that while the collapse of the market didn't happen, no growth is expected.

He added that those who can take advantage of loan subsidies through APN should absolutely take advantage of it. He emphasised that the situation is different now than it was back in 2008 because we have historically low interest rates on savings and loans. ''It's difficult to compare the situation then and now," he said.

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Sunday, 22 December 2019

Croatian State Leasing Business Premises and Garages in Zagreb

As Poslovni Dnevnik writes on the 22nd of December, 2019, on Saturday, December the 21st, 2019, the Croatian state announced a tender for the lease of state-owned business premises, in addition to the 24 business premises, two garage spaces in attractive locations in the Croatian capital city of Zagreb are on offer.

State property (Državne nekretnine) d.o.o., which deals with property owned by the Croatian state has announced its eighth tender for the lease of business premises, with which they have concluded this year's tenders. The specificity of this year's tender is that two garage places in the Zagreb city districts of Trešnjevka Jug and Stenjevec are being offered, for which offers from interested parties can be submitted by individuals, and the rent of garage spaces can be arranged for a period of 10 years.

With this latest tender, the Croatian state announced a total of 26 business premises for lease in Zagreb, Split, Karlovac, Pula, Varaždin and Sisak, and the location in Zagreb is in a highly attractive area right in the heard of the tourist zone, more precisely in Radićeva and Tkalčićeva - two very central locations.

When it comes to the garage places advertised in this tender, in addition to legal entities and natural persons who have a registered obrt or who perform an independent professional activity, all natural persons can compete.

The garages on offer for lease belong to the category of business premises in accordance with the appropriate law which governs such processes.

The business premises are to be leased out as seen, and the leases are to be concluded with the best bidder for a period of ten years. Bids are to be submitted to: Državne nekretnine d.o.o., Planinska 1, 10000, Zagreb by noon on January the 29th, 2020, and an hour later there will be a public opening of the bids at the Ministry of State Property in Zagreb, at 10 Ivan Dežman street.

Over the last two years, Državne nekretnine d.o.o. has offered 250 business premises as an indirect stimulus to entrepreneurship in local communities on the Croatian market, and in those same two years, 160 business premises have been leased.

Make sure to follow our dedicated business page for much more.

Monday, 19 December 2016