Elements like Eurozone, Schengen and a very stable financial system are key for the market and provide us with an excellent foundation for future development, and that is precisely why we are very optimistic about the period ahead.
At the end of last year, the global company Cushman & Wakefield CBS International, which stands out for its professionalism and dedication to clients, marked half a decade of work in Croatia. In a business environment that dictates new trends, they have proven to be resistant to all changes, and they announce new projects and plans. As a top expert, Predrag Tutić, Director of Cushman & Wakefield CBS International Croatia, also talks for Diplomacy&Commerce about the real estate market from their portfolio.
- You celebrated 5 years of doing business at the end of last year. How would you describe the company you lead? What sets it apart from the competition and what makes you different?
Above all, we can be proud of our team of more than 20 young professionals who bring a freshness and versatility in approach to our real estate industry, and they are most responsible for our rapid growth and development of all real estate services we offer to clients in Croatia. We stand out with a strong focus on our clients’ needs and are dedicated to providing personalized services and solutions for each of our clients, which resulted in high client satisfaction and trust. Likewise, we use and develop new tools and platforms in order to improve the efficiency of business and provide superior service to each segment, thus maintaining a competitive advantage. We also plan to offer our clients very useful digital tools in certain segments of property management which they will be able to use very easily.
- How would you rate the real estate market (commercial and residential) in those 5 years? Where is Croatia compared to countries of similar size and standards in the EU?
In general, Croatia is at a great advantage compared to the countries in the region and has an excellent position on the investment map due to a very stable economy and market, joining the Eurozone and Schengen, which only additionally established a good geopolitical position and gives us great potential to make even stronger use of our position in terms of developing new projects. We see every year that the real estate market in Croatia is generally increasing and that it maintains a very good volume of transactions, however, we develop new projects a little slower than the surrounding countries. We have great potential in sectors such as tourism, logistics, office space and housing, where we lack new projects, which is a consequence of short-term planning and unresolved urbanism. Despite everything, the interest of investors from countries such as Poland, the Czech Republic and Hungary is increasing and they see Croatia as a very potent market for the development of both commercial and even more residential projects that have increasingly better returns compared to their markets.
- From your many years of professional experience, what can we expect when it comes to the real estate market in the coming period (growth, stagnation, decline)?
We think that every segment of the real estate market has great potential in terms of developing future projects because, first of all, we have project deficiencies, we have excellent demand from both domestic and foreign buyers, especially on the coast, and we have a very stable financial sector and economic environment. So we can safely say that we do not see any reason for the price drop in the market because there is absolutely no single factor that would affect it. The future development of projects, in addition to the construction of new ones, has enormous potential in all major cities and in the brownfield area, which is almost unused for us, and in addition, Croatia will have to prepare in terms of increasing energy efficiency, of which we are obliged in accordance with European regulations, and this will further stimulate the construction sector.
- You also deal with tourism, hotel premises, land, logistics real estate… What is the situation in these segments of the market?
Yes, the largest investment in the hotel market will be completed this year. Our team participated in the project as a sales consultant and we see that investors are ready to pay for portfolios in Croatia at a higher price than in some other countries in the surrounding area, which makes sense, considering the excellent tourism results every year. In the office space market, there has been no significant progress in the development of new projects for years, which resulted in a historically low vacancy rate of only 2% and a 10% increase in office space rental prices. Despite this, the tenants remained very dynamic in 2023, and the total take up is estimated to reach around 60,000 sqm again, while our rental prices for modern and first-class office spaces are 14.5 – 16.5 EUR/m². On the logistics market, finally, after an entire decade, we have approximately 470,000 m² of warehouse and production space under construction, of which 80% of the projects, i.e. about 370,000 m², are under construction in the vicinity of Zagreb. However, there is only 30%, i.e. 115,000 m² of top quality warehouse space in 2 projects – one outside Samobor and the other in Velika Gorica, which are being constructed for the market, and where potential users who have a need for new spaces can expand their warehouse and logistics capacities at this moment. The remaining 256,000 m² of space are predominantly projects that large retail chains and certain domestic logistics companies are building for their needs.
- You are a global company, operating in the region. Can you compare the markets of the region where you operate, what are the similarities and what are the differences?
Almost every market is only superficially similar, but in fact it can differ quite a lot due to a number of factors in terms of geopolitics, economic stability and not the strength of the market, different development stages of the market itself, and therefore a certain segment of real estate and financial opportunities. In these proportions, Croatia is in every sense at an advantage over countries like Hungary, the Czech Republic or Poland, where we have witnessed a huge increase in interest rates, or let’s say Serbia, which is not part of the European Union and the Schengen zone.
- Where do you see your company in 5 years, and in that regard, how do you see the real estate market and your industry in general during that period?
We continue to see ourselves as a leader in the real estate market, as one of the key advisors in the preparations for future projects, because it has happened in our region as well that investors are no longer confident entering into projects without the strong support of a consultant. We can announce with great pleasure that our company, together with our global partner Cushman&Wakefield, is entering the Austrian market this year, which is big step forward for us and shows that we are very optimistic regarding the future of the markets in this entire region. This obliges us to continue further development in terms of our capacities, to invest in our employees in order to secure and justify the future trust of our clients in all segments of the market.
