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The key news in Croatia in recent times has been the decision by the European Union to close negotiations on accession. The country is now scheduled to join the EU on July 1 2013. Membership is expected to have a number of positive effects on both the economy as a whole and the construction/real estate sector in particular.
The opportunities that present themselves in the real estate market are numerous. Pre-accession funding from the EU for infrastructure development should become available in the coming months (infrastructure is expected to be a key sector for investment). Significant development in tourism (which accounts for 20 percent of gross domestic product) is expected. Croatia's business environment has gained already exponentially from carrying out reforms required by the EU(for example, the country has jumped five spots on Transparency International's Corruption Perceptions Index since 2004, from 67th to 62nd out of 178 countries). And there are clear signs that rents are rising (or at least, falling less than they otherwise would) for prime retail and office properties.
Nonetheless, the commercial real estate sector in Croatia essentially remains in a stable rather than an exciting phase. That said, there is more opportunity than risk for developers and investors. The City of Zagreb at the moment offers a fairly decent supply of quality office space at base rates around EUR 12-16 per square metre per month, with negotiable rent holidays and landlords willing to share fit-out costs, according to PriceWaterhouseCoopers (PwC) in Croatia. The firm predicts that demand for such space will continue to grow to the detriment of the more widely available old-style offices. As for the retail sector, PwC reports that "the confidence of professional foreign investors in top quality properties has recently been confirmed by the investment of TriGranit together with Heitman into the Arena Centar."
It appears that the future growth of the Croatian real estate market will largely depend on the recovery of the post-crisis economy, with the country's forthcoming EU accession almost certain to have a positive impact.