Page 1 - Croatia Real Estate Report Q3 2012 Published: June 2012

No. of Pages: 63

Price: US $ 1175

The Croatia Real Estate report examines the Commercial Office, Retail and Industrial segments throughout the country in the context of a dour outlook for the economy, which will post a full year recession in 2012. With a focus on the three principal cities of Split, Zagreb and Zadar, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximize returns in the commercial real estate market, while minimizing investment risk. Exposure to the eurozone sovereign debt crisis is impacting export demand and will also manifest itself as ever-important tourist figures fall in 2012, while severe austerity measures will squeeze consumer and government spending alike. Foreign direct investment will slow and credit streams will tighten as domestic banks feel the knockon effects of EU banking regulations. The property market is inevitably being impacted; last year saw stagnant or falling rents in all cities, while yields fell across the board. Rents were also under pressure from a strong supply pipeline. Retail was a bright spot, with rents increasing in all cities boosted by strong tourist arrivals and consumer confidence picking up slightly as the country emerged from recession. The key news in recent times has been the decision by the EU to close negotiations on accession. Croatia is now scheduled to join the EU on July 1 2013. EU membership will have a number of positive impacts on both the economy as a whole and the construction/real estate sector in particular. Key Points:  

Large amount of office space due to come online in 2012, but the risk rests on whether there will be significant demand to match. We believe Croatia’s Kukuriku coalition government is well placed to maintain its parliamentary majority and push through with necessary fiscal consolidation and economic restructuring. Croatia’s economy will post a full-year recession in 2012 – we have revised our forecast to a 1.5% real GDP contraction following no growth in 2011 – as flagging external demand weighs on exports and fiscal austerity by the Kukuriku government squeezes domestic demand. We revised our upwards forecast for Croatia’s average consumer price inflation in 2012 to 3.5%, from 3.0% previously. This was largely predicated on the government’s plans to raise the VAT rate to 25% from 23%, effective March 1, and the sustained rise in global energy prices at the start of the year, which will boost imported inflationary pressures. We forecast that Croatia’s construction sector is poised for a further 0.4% year-on-year (y-o-y) contraction in real terms in 2012 – its fourth consecutive year of decline – as businesses remain cautious about making new investments, and the government postpones existing projects.

Real Estate Report of Croatia Q3 2012 Table of Contents

Executive Summary . 5 SWOT Analysis . 7 Real Estate Market Overview .. 9 Zagreb . 11 Split .. 11 Zadar ... 11 Market Analysis – Office 12 Supply And Demand. 12 Rents And Yields .. 12 Industry Forecast Scenario ... 14 Market Analysis – Retail 15 Supply And Demand. 15 Rents And Yields .. 15 Industry Forecast Scenario ... 17 Market Analysis – Industrial .. 19 Supply And Demand. 19 Rents And Yields .. 19 Industry Forecast Scenario ... 21 Forecast Scenarios 22 Infrastructure Report 22 Construction And Infrastructure Forecast Scenario 24 Macroeconomic Outlook ... 25 Real Estate Risk/Reward Ratings . 28 Real Estate/Construction Risk/Reward Ratings 28 Croatia Business Environment .. 28 Institutions ... 30 Infrastructure ... 32 Market Orientation .. 35 Operational Risk .. 40 Competitive Landscape . 41 Company Profiles ... 44 GTC Real Estate .. 44 Konstruktor-inženjering ... 46 Landmark Property Management 48 Orco Property Group ... 49 TriGranit Development Corporation ... 51 Demographic Data .. 53 BMI Methodology ... 57 How We Generate Our Industry Forecasts .. 57 Construction Industry .. 58 Bank Lending ... 59 Real Estate/Construction Business Environment Rating .. 59 Sources 62 - Croatia Real Estate Report Q3 2012  

The Croatia Real Estate report examines the Commercial Office, Retail and Industrial segments throughout the country in the context of a dou...