Boston, MA -- (ReleaseWire) -- 01/07/2014 -- 2014 see Croatia's economy expand for the first time in five years while the country will also begin its first full year as an EU member state. The Croatia real estate report examines the effect which these developments will have on the commercial office, retail, industrial and construction sectors and considers the impact of a gloomy outlook for the economy.
On July 1 2013, Croatia became the EU's 28th member state. Not only will this have a positive impact upon stability in the region, ascension to the EU is also set to unlock billions of euros for investment in better connecting the bloc's newest member to the single market. Deputy Prime Minister Vesna Pusic has stated that Croatia will be the recipient of EUR10bn (US$13bn) up to 2020 to be spent on infrastructure and construction projects. In turn, this should start to re-invigorate the static real estate and construction pipeline that Croatia - as a reflection of the wider Central and Eastern Europe (CEE) as a region - has seen over recent years, although this process will be slow.
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In spite of this relative optimism, the short-term outlook for commercial real estate looks moderate with rental rates expected to continue to underperform as they did for much of 2012-2013. EU membership aside, the real estate sector will find itself shackled by the same global problems which have hampered growth over the past two years: weak growth in China and the eurozone, an ongoing euro debt crisis and geo-political risk.
We expect rental rates to remain largely stagnant across office, retail and industrial real estate during Q114, though the retail segment appears best place to record growth over the year as a whole, driven by a strong tourism sector and improving consumer confidence. Nevertheless, all three segments will continue to have to contend with increases in supply which, when coupled with weak demand, will prevent significant increases in rental rates. The Croatia real estate report examines the commercial office, retail, industrial and construction sectors and considers the impact of a dour outlook for the economy. With a focus on the three principal cities of Split, Zagreb and Zadar, the report covers the rental market's performance in terms of both rates and yields and supply and demand activity.
- Croatia's accession to the EU in July 2013 has so far failed to translate into increased optimism surrounding the country's real estate sector as a whole. According to 65% of local property firms surveyed by the Croatian Times, EU entry will have no immediate effect on the country's real estate prices.
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