April 27, 2022 - Last year, foreign citizens bought 9,514 properties of real estate in Croatia, which is a high increase of 50 percent compared to 2020.

According to research done by Jutarnji List with information from the Croatian Tax Administration, the highest year-on-year growth in the purchase of real estate in Croatia among foreigners was achieved by citizens of Germany, Austria, and Slovenia, reports tportal.hr.

Last year, German citizens bought 2,637 properties in Croatia, which is an increase of 1,089 sales or even 70 percent compared to 2020, Austrians made 1,109 purchases (472 more properties or an increase of 74 percent compared to 2020), while Slovenians last year became the owners of 2309 properties in our country, achieving an increase in purchases compared to the previous year by 32 percent or 550 more properties.

"The data do not show the total purchase and sale of real estate in 2020 and 2021, but only the sale of real estate for which the Tax Administration conducted the procedure of determining the tax base. In addition, data on real estate sales are still being updated ", they note in the Tax Administration and suggest that, in the end, the growth in the number of real estate sales made by foreigners with sellers in Croatia could be even higher.

In any case, the registered growth of foreigners' demand for domestic real estate confirms the recent allegations of entrepreneurs and real estate market experts who told Jutarnji list that the increased interest of foreigners in domestic real estate is one of the reasons for unprecedented growth in new apartment prices in the last quarter of last year.

Namely, according to the Central Bureau of Statistics, the purchase prices of new dwellings in the last quarter of last year were 15 percent higher than the prices realized in the last quarter of 2020: such growth has not been recorded in the last decade. In addition, the average prices of all residential real estate purchases in 2021 were 7.3 percent higher than in 2020.

For more, check out our business section.

In addition to real estate prices, rental properties have also risen sharply, especially expensive properties such as villas and luxury hotels.

ZAGREB, 8 April (2022) - BAT Group is continuing its investment cycle in the Kanfanar factory with an additional HRK 400 million (€53 million) to be invested in new categories of tobacco products, which confirms its status of a leading private foreign investor in Croatia, company officials said on Friday.

BAT Adria director-general Zvonko Kolobara said the new investment built on last year's HRK 200 million (€27 million) investment in new production lines for heated tobacco products.

Kolobara said the new investment would require new hiring but he could not specify how many new workers would be employed.

Speaking of the black market, he said it was still rather big but that it had been on the decline in the past two years owing to the efforts by the customs service and border police.

Kolobara said that BAT executives had met with Prime Minister Andrej Plenković on Thursday to inform him and the government of the company's investment plans.

Asked about the issue of increasing excise taxes, of which the company had warned, Kolobara said that excise taxes were within the remit of the government but that they would prefer if there existed an excise tax calendar to enable better business predictability and sustainability.

Speaking of inflation, he said that it would definitely have a negative impact on the company's results.

BAT South Europe Director Roberta Palazzetti said that the total investment of HRK 600 million in new production lines had additionally strengthened Croatia's position on BAT's global production map, with the Kanfanar factory being one of the few in the world to produce, apart from cigarettes, heated tobacco products, which have the potential of significant risk reduction for adult smokers.

BAT acquired the cigarette factory Kanfanar, Istria, in 2015 when it took over local tobacco producer Tvornica Duhana Rovinj (TDR).

In the coming years BAT plans to increase the production of heated tobacco products in Croatia in light of growing demand.

BAT said that since the 2015 acquisition it had invested nearly HRK 1.1 billion (€135 million) and continued to increase production, employment and exports.

BAT pays HRK 3.5 billion in taxes and contributions annually and employs 1,500 workers in Croatia. Every year the company contributes more than HRK 1.4 billion in added value to GDP, and the biggest increase in contributions to GDP has been generated by the Kanfanar factory, which has continually increased production and exports, BAT said.

For more, check out our business section.

July the 19th, 2021 - The wildly successful British-Iranian entrepreneur Ali Parsa is the face behind an enormous Prukljan investment, which the Croatian Government has, at its usual snail's pace, finally given the green light.

As Poslovni Dnevnik/Marija Brnic writes, one whole year after submitting the bid in the public tender of the Ministry of Physical Planning, Construction and State Property, and as many as seven years after being included in the list of strategic projects, the Croatian Government finally gave the thumbs up to a bid from the only bidder who applied for the Prukljan project in Skradin. According to numerous announcements, the move should result in more than 300 million euros of investment.

The aforementioned tender is for the sale and concession of land near Prukljan Lake and the company Dalmatia sport and health resort, based in Split, whose first founder in 2007 was the Dutch company Wittens Praktijk. The former left the company to a new owner a year ago, and The Dalmatian Resort Croatia was also registered in that same country.

In the background of the Prukljan investment project, as a guarantor through his companies, stands Ali Parsa, a British-Iranian entrepreneur with a rich career as an investment banker, who took his place in this challenging scene as the founder of Babylon Health, a system that provides 24-hour healthcare and video messaging via a mobile app.

Parsa founded Babylon Health Ali Parsa back in 2013, and with a system used in more than 60 countries, it has enabled him to rank among the most influential and wealthy people in all of Britain, and that Northern European island nation isn't short when it comes to rich individuals.

Ali Parsa doesn't actually appear directly in the offer for the project of building a golf course, hotels and tourist villas, nor is he mentioned in the plans for the nautical port and wharf in Prukljan, but his name does come up for the Split company Dalmatia sport and health resort. This verification is one of the main reasons why the process of assessing the acceptability of a bid that met all the required conditions took so long.

It turned out to be a problem that instead of a letter of intent from a bank that had to meet exactly the prescribed criteria, a certificate from Nedbank Private World from the island of Jersey was submitted in regard to the existence of money for the project in the amount of 100 million kuna.

As stated in the explanation of the government's decision, the money is owned by a legal entity that is in some indefinite relationship with the investor, who can obtain the said financing.

“In addition to not being familiar with the regulations governing banking on the island of Jersey, and due to the importance of the project for both the local community and the Croatian economy as a whole, the State Attorney's Office of the Republic of Croatia was asked to comment on whether we can invite investors to submit letter of intent.

The State Attorney's Office responded positively and continued to act, and at the request of the Ministry, the investor submitted the requested letter of intent, by which the bank confirmed that it will issue a bank guarantee in the amount of 14 million euros, which is more than the requested 100 million kuna. Noting that the bidder submitted a valid bank guarantee for the seriousness of the bid, also in excess of the required amount, by more than 20 million kuna, it ended up being practically uncollectible due to the swift address of the Croatian National Bank, which doesn't deal with payment traffic from private persons.

The problem was solved by changing the swift address and switching to Hrvatska poštanska banka, thus eliminating the last problem of accepting an offer for one of the largest investments in Croatian tourism.

Along the shores of Prukljan Lake, on an area covering nearly 200 hectares, the Prukljan investment project foresees the building of a golf course with 18 holes, hotels and urban villas with a capacity of up to 1500 beds and at least four stars, as well as a nautical tourism port.

For this purpose, the state is selling a total of 54 hectares of and, for which the investor will pay 46 million kuna, of which 29 million kuna for 30 hectares of land is intended for the construction of a hotel with 1,500 beds, and 17 million for land for the construction of tourist villas.

For the construction of a golf course (18 + 9 holes) with all of the accompanying infrastructure, the Croatian Government has approved the establishment of building rights for a period of 99 years on 136 hectares of land, which the investor will pay 2.6 million kuna per year.

The investor was also granted a 50-year concession on the maritime domain for the purpose of the economic use of two beaches and the construction and use of a nautical tourism port, for which a fixed fee was determined per concessioned area, and variable at 2 percent of annual revenue and a gradual increase of 0.5 percent every five years.

The contract for the Prukljan investment project will be signed within three months at the latest, and the realisation will follow in the next five years.

From available sources in government circles, it has been unofficially learned that health tourism will be developed in Prukljan, which correlates with the background in this investment, as it regards the founder of Babylon Heath, but it is interesting that the Prukljan investment isn't being strongly promoted, which indicates the Government's caution regarding, among other things, the Croatian public's sensitivities about golf courses and the issues that have surrounded them thus far.

For more, follow our business section.

June the 12th, 2021 - It might come as an enormous surprise to many who are used to reading about Croatia's troubles when attracting and indeed keeping hold of foreign investments, but it seems that the German investor impression of Croatia has dramatically improved of late. Many would choose to invest in Croatia once again.

As Poslovni Dnevnik/Marija Brnic writes, as written above, the perception of Croatia in the eyes of German investors has improved significantly - unlike two years ago, when almost half of them were absolutely sure they wouldn't decide to invest in Croatia again. According to the latest research conducted by the German-Croatian Chamber of Industry (AHK) now almost three quarters (74%) would choose to invest in Croatia.

However, the improvement compared to previous years (last year the traditional survey wasn't conducted due to the pandemic), still lags behind the assessments of German businessmen from other Central and Eastern European countries surveyed, in which as many as 85% of German investors responded very positively to.

The improvement in the assessment of business and investment is also noticeable in other countries, where two years ago, 79% of German business owners were ready to potentially risk an investment (54% in the Republic of Croatia). In terms of the quality of the location for investments, Croatia is still in 8th place among the 16 observed countries, with Estonia, the Czech Republic, Poland and neighbouring Slovenia at the very top.

According to Thomas Sichl, President of the AHK Management Board, these results about the feelings German investors have about Croatia are better than expected, and what is especially significant in the scope of the AHK survey is the assessment of the current situation and business recovery in conditions disrupted by the ongoing coronavirus pandemic.

It's absolutely true that there are no major changes in business expectations compared to the 2019 survey in Croatia or in other countries - 50% expect that the situation will remain unchanged compared to the previous year, and 43% that it will be better, with a mere 7% expecting that it will be less favourable.

But about a third of German companies surveyed said they had already reached pre-pandemic levels, while 12% expected to return to then-levels by the end of this year, and 38% said it would not be realistic in their case before 2022, 14% expect recovery only in 2023 and 2% do not expect recovery whatsoever.

This year’s standard annual AHK survey also included the question of government measures to help businesses mitigate the effects of lockdowns and pandemic-induced disruption on their businesses.

The biggest weaknesses in the Croatian investment and business case are usually dominated by corruption, the sheer non-transparency of public procurement procedures and legal uncertainty in the AHK survey, which is still the case, and the biggest advantages are EU membership, quality skilled labour and the level of productivity.

However, AHK representatives also point out the potential which could result from Croatia's entry into Schengen and the Eurozone. They claim that in their view, Croatia is making good progress in both of those respects.

Another positive point from this survey that the share of companies that assess the current economic situation as negative has fallen compared to 2019 from 61% to 49%, and overall, companies are much more optimistic about their own business situation compared to how they felt two years ago.

Then, 27% rated their business situation as good, and now 44% of them give it that rating. When looking at about 20 aspects of doing business in Croatia, AHK respondents give an average score of 3.29, which is better than 3.55 from 2019, since one was the best and five was the worst.

For more, follow our dedicated business section.

As Poslovni Dnevnik writes on the 2nd of August, 2020, while it is always good - and especially in this strange age dominated by the ongoing coronavirus pandemic - to be careful in planning and predicting the future, it is hard to disagree with the claim that the future of Delnice looks very interesting, promising and we might even dare to say impressive at the moment, much more than it has for many years.

This way of thinking has been encouraged by the recently published news about the serious interest of foreign investors, particularly American ones, thanks to which a hotel that will be part of the world-famous American hotel chain Marriott should appear in no less than Delnice next year, according to a report from Novi list.

But even if it doesn't end up showcasing the internationally respected name of Marriott, it will be a hotel, and that, in itself, is an enormous plus for the typically overlooked Delnice, especially considering the way in which serious investors were initially reached.

With the aforementioned hotel, the vision of the City of Delnice in the next year, year and a half, will be further changed for the better.

In September, a business and shopping centre should appear on the site of Delnice's former mill and bakery. The construction of its elements are finished and their installation will begin in September, which means that this year Delnice will have an even better trade offer than it does currently.

Furthermore, for mid-October, the opening of the newly renovated Delnice City Library has been announced, which is already finished and which will be not only aesthetically pleasing but an excellent functional unit. In addition to book lovers, there will be places for everyone who enjoys different forms of culture there.

Additionally, if the promises of the Government of the Republic of Croatia are to be believed at all, the large Retirement Home will certainly finally be completed next year, for which part of the funds were provided from the legacy of Janet Majnarich. All in all, Delnice - despite the coronavirus pandemic, the crisis that has ensued as a result of it and a number of other details which plague the area - is becoming an increasingly interesting and high-quality living environment.

For more, follow our lifestyle page.

As Poslovni Dnevnik/Lucija Spiljak writes on the 12th of December, 2019, the Republic of Croatia loses more than ten percent of its GDP annually due to corruption, fraud and financial crime, and last year, according to the Corruption Perceptions Index, Croatia ranked a somewhat unimpressive 60th out of 180. Corruption in Croatia is rife, but what can we do to stop it, and what is being put in place to help?

Foreign investment should be (and indeed could be) a happy story indeed. This country boasts a wealth of opportunity and potential, but red tape, draconian laws and corruption in Croatia tend to put them off.

Yuri Sidorovich, Deloitte's foremost partner for forensics in the Adriatic region discussed the challenges of corruption in Croatia shortly after the International Fraud Awareness Week, which was rather symbolically held for the very first time in Croatia.

What are the main causes of and reasons for corruption and fraud?

Corruption and fraud are a social phenomenon triggered by a number of factors; from achieving sales goals and a lack of control, to factors that are more psychological in their nature, with the attitude of "why wouldn't I take what belongs to me?" In an environment with high levels of tolerance for corruption, these factors are of course heightened. Poorly developed corporate governance mechanisms, the ineffective prosecution of perpetrators, and large social disparities create a ground for corruption that gradually enters all pores of society.

Then where do we go from there, and how can we restore confidence in the system?

We must first admit that we have a problem. It's human nature to close our eyes to problems and to look for solutions when they are already "burning" away. This is also true of corruption, and despite its long history, only 25 years ago did any serious analysis really begin. What are the solutions? All models of theoretical fraud risk management emphasise the role of those at the top and management in this process, which must be driven by positive examples and dedicated to problem solving. It’s a key factor in starting something, moving forward and getting the right resources. There are no quick fixes with a magic effect. We must firmly decide that we want to change things and insist on investing in instruments to raise awareness and combat corruption. We all know that trust is something we can lose quickly and that it's hard to regain. Unfortunately, we're currently in a situation where confidence is at a very low level and it will take a lot of effort to repair this image.

What about the judiciary?

Penalties and sanctions are certainly an important deterrent to corruption, but only if they're implemented systematically. Unlike in countries with Anglo-Saxon law, a major problem in our environment is that we don't enforce laws effectively. If we just look at the numbers and amount of settlements that companies pay for open cases of violations of the American anti-corruption FCPA law, we can see that these are multimillion dollar amounts, they even go into the billions, and they're a sore spot for even the world's largest corporations. The resources that these companies invest in preventing corruption and ensuring business coherence are, of course, at a completely different level than what we're used to. We need to prosecute individuals, but the responsibility of legal entities for crimes is also important, which we must begin to recognise and sanction. Unfortunately, there is still the impression that the courts don't have sufficient power to deal with financial crime professionally and apolitically.

Where does Croatia rank on Transparency International's corruption perceptions index?

According to the Corruption Perceptions Index 2018 survey, Croatia ranks 60th out of 180, it's in the company of countries such as Saudi Arabia, Cuba and Romania.

This index measures the perception of corruption in the public sector by experts and businessmen, therefore it doesn't reflect the general state of this problem in the country. More than the general index, we should be interested in the health situation, on how much we invest in public infrastructure and how we can solve specific problems in the most neglected industries. Some serious analyses are lacking here that would provide a foundation and focus on narrower areas.

What is Deloitte's involvement in fighting corruption, fraud and financial crime in the region, and what are the results?

As the world's largest consulting firm, we're privileged to be able to observe good practices in a wide variety of environments. In doing so, we can see that awareness-raising measures are one of the priorities in the fight against corruption. It was in this area that Deloitte was particularly engaged. As part of International Fraud Awareness Week, we've taken the initiative and created a forum for relevant stakeholders looking to contribute to something positive in the process. We're all aware that the result of our work will not be visible tomorrow, maybe it won't be visible even in another five years, but we do hope that one day we'll be able to look back and see that we've done something right. As for the attitude of companies towards this problem, we're seeing progress today. More and more companies are looking to set up anonymous reporting lines for irregularities, increase employee awareness and get early detection capabilities with advanced analytics tools and the like. These measures will certainly contribute to raising awareness in corporate governance.

How do the challenges you cite affect the system, the economy and the confidence of foreign investors?

There are various estimates of the effects of corruption, including those that say that we're losing more than 10 percent of our GDP annually owing to corruption in Croatia. These macro estimates make it clear that we all pay the price of corruption.

What we see on a daily basis are cases where foreign investors withdraw from the purchase process because of the risk of business compliance and financial consequences, and for the same reasons, foreign companies terminate product distribution agreements. Foreign investors and business partners are extremely sensitive to any regulatory compliance issue and just aren't prepared to compromise there. I don't think it's a question of whether or not there will be investment, but what is the price we have to pay for it.

How to identify corruption coming from outside on time?

Corruption always has two sides; someone who offers something valuable and someone who will accept it and make biased decisions. No matter who from the outside is trying to influence, we can build a culture that will refuse such offers, but we can't expect such a mechanism to always work. The potential of technology must also be taken into account. The advancements in advanced analytics tools are truly remarkable, and we can expect to utilise solutions that offer criminal profiling of company-risk events here. This, in turn, will deter individuals from any wrongdoing and increase the integrity of the business.

Make sure to follow our dedicated business page for much more on what's being done to put a stop to corruption in Croatia.

As Croatia's presidency of the EU quickly rolls around, AmCham, the US Chamber of Commerce in Zagreb, held a conference on the opportunities that the six-month rotation brings to the Croatian economy.

As Poslovni Dnevnik/Ana Blaskovic writes on the 7th of November, 2019, a whole six and a half years after its accession to the EU, Croatia is soon set to take over the EU Presidency from January the 1st, 2020. During these six months, Croatia will represent the common interests of all EU countries in addressing pressing issues such as Brexit and harmonising the European budget.

On top of all that, the rotating presidency is also an opportunity for the EU's newest member state to come into the international focus of the investment public, when it manages to make a positive shift on the competitiveness ladder.

The American Chamber of Commerce, AmCham, organised the aforementioned conference which discussed the opportunities that lie before Croatia to encourage it to boost its competitiveness and growth in order to embrace the positive changes the presidency of the Union could bring to the domestic economy.

''In January 2020, Croatia assumes the important role of representing the common interests of the member states. Given the fact that Croatia receives more than 60 percent of its foreign trade from the EU, the Croatian presidency represents a unique opportunity not only to show what we have, but also to learn from others, because a competitive Croatia means a more competitive Europe,'' said AmCham's executive director, Andrea Doko Jelušić.

In these circumstances, American Chamber of Commerce members, such as Google, Coca-Cola, Uber and Merck, who participated in the panel discussion of the conference, expect the Croatian Government to hear their voices during this period.

"Dialogue is really important to us and is a sign for the future. What we would like to see at the end of the six months of the EU presidency is an active Croatia in Europe. Ultimately, we're all interested in seeing a more competitive Croatia and a more competitive Europe,'' said Doko Jelušić.

The United States and Europe are each other's major trading partners, generating a massive 5.5 trillion US dollars in trade annually and employing nearly sixteen million workers on both sides of the Atlantic. There is a lot of room for much more foreign direct investment.

The strength of America-Europe ties is illustrated by figures alone: in 2017, 54 percent of US foreign direct investment came from Europe, while 55 percent of global US investment was invested here in Europe.

Commenting on Croatia's presidency as "historically important", Minister of Foreign Affairs and EU Affairs Gordan Grlić Radman stressed that the government wants to bring the six-month presidency closer to everyone.

"We want to involve all citizens, the academic and business community, local units, so that citizens understand what the overall interest of Croatia is, and not just that it's just the changing of the rotating presidency," the minister emphasised, noting that Croatia is technically ready, at least when is the completion of the buildings in question.

Opportunities for boosting competitiveness and growth were discussed at a panel discussion attended by Ministers Grlić Radman and Josip Aladrović, in addition to giants like Coca-Cola, Uber, Google, Merck and AmCham.

The Minister of Labour, Josip Aladrović, highlighted the development of skills in the context of lifelong education and active adaptation to the labour markets in all sectors and across the EU as a priority for Croatia.

Joško Mrndže, Google's director for the Adriatic region, said that Croatia is not far behind in terms of adopting artificial intelligence and new technologies, but that their development is another issue. He welcomed the adoption of a national digitalisation strategy that would include artificial intelligence. The importance of digitisation is borne out by the estimate that 20 million jobs will be created in Europe by 2030, 90 to 95 percent of which will require basic or advanced digital skills.

"This represents an opportunity for growth on the one hand, and a challenge on the other," Mrndže said, emphasising more education, since quite a few people in Croatia don't possess this skill. Ruža Tomić Fontana, CEO of Coca-Cola HBC for Croatia, Bosnia and Herzegovina and Slovenia, emphasised the importance of really listening to the industry during Croatia's presidency, as companies have specific knowledge.

According to the foreign minister, taking over the EU presidency represents a historic moment for Croatia to gain in both rating and reputation, but would-be foreign investors will nevertheless base their decisions on concrete figures on cost-effectiveness and feasibility, something that Croatia struggles painfully with.

According to the World Bank's latest Doing Business report, Croatia has advanced seven places when compared to last year, ranking 51st out of 190 countries in the world.

This confirms that things are changing for the better, although AmCham's members would like it to be much faster.

"Others are changing too, but they're doing it even faster. We can definitely see the effects of the tax relifs, it has given momentum to the economy and we shouldn't just stop there. What we see as one of the key things is the digitalisation of the private sector and of public administration. New technologies give us the opportunity to be more transparent, faster and more efficient and to skip and catch up with everything,” the foreign minister explained

''I'm sure that successful completion of this process will greatly help the Croatian administration to strengthen its voice in the European club, but also to be more effective and more willing to engage in dialogue with all the stakeholders in Croatia. This dialogue is something we need to work on much more, the economy can offer a number of good practices, many opportunities for cooperation, and I'd like the government to hear that and be able to use those opportunities,'' said Doko Jelušić.

The conference was closed by President Kolinda Grabar-Kitarović, who talked about a growing Europe - the first pillar within which focuses on equally sustainable and inclusive growth, which also includes efforts to address the problem of poor demographics, another burning issue for Croatia.

The second pillar is a Europe which connects, which will promote initiatives that contribute to transport, energy and digital connectivity. These include the promotion and completion of trans-European transport networks, maritime affairs and the development of competitive and sustainable shipping, creating the conditions and removing barriers to the full functioning of 5G networks, the continued establishment of a functional digital single market and the continuation of the establishment and implementation of the Energy Union as the backbone of a European Common Energy Policy.

Finally, what is needed is a Europe that protects its citizens by enhancing their security, both internally and externally, with an emphasis on a comprehensive approach to migration, especially illegal migration, while continuing to be a Europe that is open and assertive in its immediate neighbourhood and globally.

Make sure to follow our dedicated politics and business pages to find out more about Croatia's upcoming EU presidency.

When one thinks of foreign investment in Croatia, they likely think of the glorious Dalmatian coast and the endless opportunities that can (or rather, should, in a perfect world) present themselves to would-be investors from abroad, not Zagorje.

While this continental region of Croatia is without a doubt beautiful, it doesn't command anywhere near the amount of promotion and attention that the Croatian coast does, again, with a particular emphasis placed on Dalmatia. Investing in Croatia is no easy feat, the Croatian Government have seemed to do everything in their power to make the experience as dangerous and as difficult as possible for foreign investors, and many end up put off and penniless after paying for the ''pleasure'' of such an awful experience.

Of course, there are an increasing amount of exceptions as time moves forward, but the norm continues to be that Croatia is bypassed by many smart investors looking for a place to put their hard-earned cash to work.

One quite successful group of investors in Croatia are the tireless Chinese, who apparently have a very keen eye indeed when it comes to spotting opportunities. It isn't the sparkling Adriatic coast they have their eye on this time, though, but gorgeous Zagorje.

As Poslovni Dnevnik/Darko Bicak writes on the 25th of September, 2019, well known Chinese investor Jiang Yu, who purchased the controversial former political school in Josip Broz Tito's hometown of Kumrovec, a village in Krapina-Zagorje County, for 14 million kuna back in the spring of this year, is also interested in no less than Zagorje's Krapinske Toplice.

Namely, yesterday, Yu held a meeting with Krapina-Zagorje County prefect, Željko Kolar, Kumrovec's municipal mayor, Robert Šplajt, and the president of the municipal county of Krapinske Toplice, Zvonko Očiem, where she announced that she plans to renovate a hotel in Krapinske Toplice and build an old people's home, a new hotel, and tourist villas.

She also announced the construction of a centre for traditional Chinese medicine in Zagorje, more specifically in Krapinske Toplice.

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

As Poslovni Dnevnik/Marija Crnjak writes on the 7th of July, 2019, the director of Cushman & Wakefield CBS International for Croatia, a global real estate market player who entered Croatia's market back in May, explains why the domestic property market has been more lively over the last few years and to what extent developers have taken advantage of that positive trend.

He also revealed his recommendations that Croatia can follow to make sure everything improves, how it can use this new investment potential to the maximum extent possible, and discussed the situation in Croatia's region.

Cushman & Wakefield has expanded its exclusive cooperation with CBS International with its entrance onto the Croatian market back in early May, promising new projects and investors that have continued to show a growing interest in investment in Zagreb, along the Adriatic, and even in other parts of the country.

Cushman & Wakefield already covers the regional markets of Serbia, Macedonia and Montenegro, with a total of 51,000 employees in more than seventy countries, it is among the largest companies specialising in commercial real estate services and enjoys a massive 8.2 billion dollars in revenue. Poslovni Dnevnik sat down and talked with Predrag Tutić, the director of Cushman & Wakefield CBS International for Croatia, and talked about the new investment cycle that is expected in Croatia, the investment projects with the greatest potential, property prices and the legal regulation in the property valuation segment.

Why are you just entering the Croatian market now?

The company's global strategy is to be present on the markets where the customers are present. So far, it's been organised so that markets are covered by regional centres from the surrounding countries. Thus, Budapest was responsible for this part of Europe, and the Prague office supervised operations throughout Southeastern Europe. It has been shown that we've not been able to provide enough strong local support to our customers because there is a need for local knowledge as the market is sensitive and investors are very precise in seeking information.

The markets are similar, but we can already see the difference between the Zagreb market and that of Belgrade or Budapest, not to mention the Czech Republic or Slovakia, which are markets that are much more active.

Our clients are banks and investment funds that require consulting or property assessment services, then companies which go on and open new offices and domestic or foreign developers who're developing projects on the housing market or the commercial real estate market.

Is your entry onto this market an indicator of stronger dynamics on the Croatian real estate market?

Of course, the market has come to life in the last three years and is dynamic. Zagreb recorded a slight increase in transactions in all segments on the property market and this trend will continue, so the city will remain attractive for investments, as will Croatia's coastline which is always attractive for tourism investments.

The main reasons for the revival of the real estate market in Zagreb can certainly be seen in the recovery of the economy with a low level of unemployment and a rise in salaries and personal consumption. In addition, banks are very liquid and lending is convenient.

All this has resulted in higher demand for all products on the property market, we know that most shopping malls have changed owners, and there were great investments that took place in tourism as well. The housing market has already been very dynamic for three to four years now, there are a growing number of transactions, new projects are well thought-up and respond to the needs of the market, so investors didn't encounter any problems with their sales.

What can you expect in the future, what do you count on?

In the forthcoming period, we expect a new investment cycle that will bring in modern projects with new content, but to do so, we have to work on the development of infrastructure and urbanism, in the City of Zagreb and in other cities in Croatia. City zones need to be defined in a better way and locations for new types of projects that will provide a different type of experience with their concept and content, either in offices or in the residential segment, need to be prepared. Market changes happen very quickly, business models are changing and investors have to follow that. In the surrounding countries, such projects have existed for years and Croatia is now prepared for them.

In Zagreb there's a low rate of free office space, and so the prices are stagnating.

The vacancy rate is now below five percent, which clearly shows that the market is ready for new projects. We expect the lease prices to remain stable, but future projects that will be defined by the new standards will also have some higher prices. So far, the generators of the growth of the property market have been IT companies which grow quickly, they have been among the first to have implemented new standards in using their business premises to motivate and retain their employees in a stimulating working atmosphere.

Have you noticed the greater interest of foreign investors in Croatia?

There's definitely great interest from foreign investors, as well as from domestic investors and developers who have been analysing Croatia's market for some time and considering all the possibilities for investing in Croatia.

So far, there have been some attempts made by investors but now is definitely the right moment to catch that wave. It's necessary to define projects and investment zones where they can realise their ideas. We support them in every step, from the project definition itself, its features, the preparation of the market project, the analysis of the site itself with the investor, participation and monitoring of different stages of project development, and finally at the point of placing the investment onto the market.

How do markets differ in Zagreb and Belgrade?

Zagreb's investment cycle and market development began in all segments ten years before Belgrade's did, which is particularly noticeable in the segment of commercial real estate. In 2009, Zagreb had one million square metres of office space, and Belgrade will only reach that number by the end of 2020. In the retail space segment, Zagreb has 650 square metres of space per 1,000 inhabitants, and Belgrade on the other hand has 230 square metres. However, Belgrade is a bigger city and there is a greater need for new commercial spaces, which is one of the reasons for the current expansion of the market.

How big is the market in Budapest, and the Czech and Slovak markets are saturated, what's happening there?

These are bigger and more developed markets, but more importantly - the quality of the offer they have differs significantly when compared to that which Croatia offers and have long been on the map of institutional funds. On the other hand, it's difficult to talk about the same trend for all segments of the market as they go through different phases, because they're heavily dependent on supply and demand. For this reason, in such countries, investing in better quality commercial or residential projects that will respond to specific market niches as well as investing in alternative investments such as investment in student homes or homes for the elderly, are increasingly present.

Will house prices rise further?

Over the last three years, prices in Zagreb have risen, which is the result of new projects that have been better defined and as such introduced new prices. When we talk about housing construction, we have to make a difference between demanded and realised prices. I'd say that the realised housing prices in the coming period will not grow drastically, because we're still a market with limited capacities. We've had a very similar number of transactions in the last three years, so we don't expect any bigger deviations here.

Do you see a place for the development of long-term rental projects?

Certainly, this is a model that happens abroad, and it will certainly be one of the segments that will start to develop here, whether it's generally intended for housing or for student accommodation.

The long-term rental market is slowly stabilising. It is well known that a large number of owners have changed things up with their property to suit short-term rentals on the tourist market, but I think we've reached a certain maximum on this issue and the trend is that the owners of apartments will slowly return to long-term rental market. Tourism management requires serious engagement, property preparation, and constant investment to make the market competitive and generate revenue. I expect the market to stabilise over the next two years, and I also expect new investors for long-term leases.

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As Poslovni Dnevnik writes on the 1st of July, 2019, Moscow alone has a budget of 40 billion euros, and it would be an idiotic move by Croatia to not take advantage of the potential this could bring to the country.

''Nobody has the power to invest as much into Croatia as Russia has, neither the European Union nor the United States of America, but in order for the Russians to actually put their money where their mouths are and invest in Croatia, there are preconditions that Croatia must meet,'' stated the Ambassador of the Russian Federation to Croatia, Anvar Azimov, on Monday during the Zagreb-Moscow economic forum.

At the forum held during the "Moscow Days in Zagreb" event, Azimov said that Russia was ready to invest several billion euros into Croatia, but Croatia must show interest and create the proper preconditions for these investments.

He pointed out that the relations between the country and Russia are stable and friendly. A good political dialogue has been established, and the links between the two countries are now excellent in many segments, but intergovernmental economic cooperation hasn't been following that good relationship, at least according to Azimov.

"The trade and the economy [between Croatia and Russia] are weak, I'm not satisfied with that as an ambassador, and I'm also not happy that Russian business hasn't recognised the opportunities offered to them in Croatia," said the Russian ambassador to Croatia.

He also stated that, according to his statistics, which don't actually match up with the statistics from here, Russia exported 700 million euros worth of gas to Croatia last year, and that Russian gas is the most favourable for the local market.

''The LNG Terminal isn't competition to us," he added.

Regarding the sanctions imposed on Russia, Azimov said that the Russians are losing oit because of them, but the West, as well as Croatian partners, lost three to four times more to those sanctions than Russia did. Azimov stressed that Russia is interested in renewing its ties with both the US and the EU.

"We'd like to be in harmony with our neighbors, and the EU is our neighbour," said the ambassador.

As for Croatia, he said that there should be no fear of geopolitical plans, and that the Russians do want to invest here. He stated that just Moscow alone has a budget of 30 billion euros, and that this country should utilise that massive potential. His wish is also for the Russian President, Vladimir Putin, to soon come to visit officially.

Since 1993 to the end of the third quarter last year, Russia has invested 410.9 million euros in Croatia. At the same time, 98.3 million euros was invested by Croatia into Russia.

The President of the Croatian Chamber of Commerce (HGK), Luka Burilović, is pleased with the economic cooperation between Croatia and Russia, noting that it still isn't at the level it was at until 2014 when sanctions were initially imposed on Russia, after which economic trade unfortunately almost halved.

"We had a continuation of growth until two or three years ago, we had stabilised economic relations, and we're slowly returning to the level it was at before 2014. Traditionally, we're very prone to the Russian market and we know it well, our companies have been operating there for many years, in Moscow alone we have twenty registered Croatian companies, and of course in many other regions over there, too. The Croatian Chamber of Commerce is institutionally working to strengthen economic relations with the Russians and there's a lot of potential to strengthen these relations, and I believe that will be seen in the coming years,'' Burilović said.

Last year, more than 122,000 Russian tourists visited Croatia, which is three percent more than were recorded in the previous year, but at the same time, there was a drop in overnight stays made by Russians, by two percent.

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