A well-known Croatian entrepreneur has abandoned his plans to transform a historical building in Pula, Croatia into a hotel and lost his 785,000 HRK (105,000 EUR) deposit after he was informed by government officials of unexpected additional costs.

Another Failed Croatia Real Estate Venture

Another real estate venture has failed in Croatia, this time in the historical center of Pula according to Barbara Ban/Novac/Jutarnji List on December 31, 2019. This project involved the renovation of Scracin building, which formerly housed the Croatian Pension Insurance Office (HZMO) and Croatian Health Insurance Office (HZZO). The building is located next to the Zlatna vrata (Golden Gate) or Slavoluk Sergijevaca (Arch of Sergius) landmark.

The buyer, renowned Istrian entrepreneur Kristijan Floričić, allegedly abandoned the purchase of the building priced at 15.7 million HRK (2.1 million EUR) and lost a sizeable deposit of 785,000 HRK (105,000 EUR) after he realized that, due to the number of unanticipated conservation projects and required research, he would not be able accomplish everything he had planned, which was to transform the property into a hotel. In December, TCN covered another much larger failed real estate venture, which was abandoned by investors for eerily similar reasons, on the island of Pašman. Back in Pula, the Scracin building is on the market again as of December 11, under the exact same conditions and for the exact same price.

Kristijan Floričić | Facebook

Buyer Informed of Costs and Restrictions After Deposit

Unofficially, problems arose after Floričić submitted his offer, and he found out that he would have to invest a considerable amount of money in research before he could move forward with his renovation plans. The conservators would not allow specific renovations to the building and the conditions they set for the buyer allegedly amounted to a multi-million HRK investment, which is why Floričić decided in the end that the project would be unprofitable. What kind of research was necessary and whether that research required a multi-million HRK investment could not be confirmed because the Pula Conservation Department could not be reached for comment. But this building, built between 1880 and 1881, and destroyed in a 2014 fire, will unfortunately remain vacant until further notice.

The building owners are claiming that Floričić knew what kind of property he was buying because the tender noted that the building was a cultural asset.

Building Registered as Protected Cultural Property

“According to the provisions of the Law on Protection and Preservation of Cultural Property, before the procedure of sale by public tender, the real estate was offered to the Republic of Croatia (Ministry of State Property), the County of Istria and the City of Pula. These authorities showed no interest in the purchase, and on October 10, 2018; a public tender for the real estate sale was published in Narodne novine, Glas Istre, and on the HZZO and HZMO websites.”

“The tender stated that the so-called Scracin Palace is a property of a cultural value and had been entered in the Register of Cultural Properties of the Republic of Croatia and the List of Protected Cultural Properties. Each potential bidder had the opportunity to inspect the real estate, as well as access to the Register of Cultural Properties of the Republic of Croatia. The buyer also had the opportunity to inform the ministry of their potential plans related to the renovation of a cultural property,” the Croatian Health Insurance Office pointed out.

They added that the bidder had fulfilled all the conditions of the tender and his bid had been selected as the most favorable one, but he eventually decided that he did not want to finalize the purchase contract.

Zlatna vrata and Scracin Building | Vintage Postcard | Facebook

Buyer Abandoned Purchase and Lost 105,000 EUR Deposit

“After the conditions for the finalization of the real estate purchase contract were fulfilled (the prior consent of the Governing Council of the co-owners and the Government of the Republic of Croatia), the selected bidder-buyer was invited to finalize the purchase contract. However, the buyer abandoned the finalization of the purchase contract because, according to him, the real estate has certain material defects which make it impossible to use for the specified purpose, which was the completion his planned project. Since the co-owners of the real estate do not believe that the material defects were not known to the bidder at the time of submitting the bid, the selected bidder has lost the right to recover the deposit,” according to a statement from Croatian Health Insurance Office.

They add that it was stated in the conditions of the public tender that the successful tender applicant was obliged to finalize a purchase contract with the sellers of the real estate within 30 day from the invitation to finalize the purchase contract. Otherwise he would forfeit his deposit.

Building Back on the Market: Same Price and Conditions

The building is now on sale again for the price of 15.7 million HRK (2.1 million EUR) as it was previously and is available to view as of January 14. Bidders are required to pay a five percent deposit of the initial price of the property, or 785,000 HRK (105,000 EUR). The deadline for bid submissions is January 17, and bids will open to the public on January 23. The building itself is about one thousand square meters, with an additional 576 square meter building and a 15 square meter auxiliary building. They state that the property is for sale in its current state, which is "as-is".

Follow our Business page to keep track of failed (and successful) business ventures in Croatia.

Thinking of a weekend getaway in March? Here's an idea: a visit to a beautiful national park which doubles as a short holiday on the Adriatic