Darko Ranogajec, Board President and CEO of Omco Croatia We are losing the battle for competitiveness due to excessive labour costs
Employment subsidies The Croatian Employment Bureau has launched six new measures to reduce unemployment by at least 10%
The ideal Mediterranean A large number of orders from investors from overseass as well as local entrepreneurs as demand increases
INTERVIEW PAGES 2-3
EMPLOYMENT PAGE 4
TOURISM PAGE 8 2008 2009 2010 2011
Croatian Business & Finance Weekly Established in 1953 Monday / 26th March / 2012 Year V / No 0192 www.privredni.hr
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ENTREPRENEURIAL STIMULUS PROGRAMME
Attracting foreign investors Croatian Agency for Small Enterprises (HAMAG) authorised to promote and attract investment in entrepreneurship Igor Vukić he Entrepreneurial stimulus programme will be a new government grant and subsidy programme worth €50 million for small and mediumsized entrepreneurs for 2012, as has been announced by Gordan Maras, Minister of Entrepreneurship and Crafts at a recently held government session.
Small and mediumsized companies have attracted around 30% of foreign direct investment Subsidies can reach €95,000. Clustering will be subsidised with a total of €0.8 million. Subsidies will be also allocated for franchise development, female and young people entrepreneurship and for start-up entrepreneurs. The programme has allocated a total of €15.3 million for capable entrepreneurs, €15 million for convenient financing and guarantees and €7.5 million to develop entrepreneurial infrastructure. The government has adopted amendments to the Small Business Act, in compliance with new European regulations. Hence, following the recent changes, investment of up to €2 million is to be considered micro investment; small investment projects are up to €10 mil-
lion, whilst investment up to €50 million will be considered medium-sized. Subsidy models will be allocated in accordance with this classification. A guide through the bureaucratic maze Croatian Agency for Small Enterprises (HAMAG) will be authorised to promote and attract investment in entrepreneurship and will be named HAMAG invest. The government has great expectations regarding the development of small and medium-sized companies. According to a recent analysis, nearly 80 projects have been implemented over the past several years in this sector, with small and medium-sized companies have attracted around 30% of foreign direct investment. In addition, the government is planning to assist foreign investors by founding an Agency for Investment and Competitiveness. According to Radimir Čačić, Government Vice-President and Minister of Economy, the Agency will provide potential investors with assistance in local administrative procedures. Such agencies operate in nearly all transition countries and it is the third time that it is being founded in Croatia. Relying on appropriate government and ministerial support, Čačić expects a significant enhancement in foreign investment which is of fundamental importance for Croatia.
DIV to purchase Brodosplit, Kraljevica to file for bankruptcy
The government has accepted the Samobor-based company DIV bid for the purchase of Brodosplit. It has refused Danko Končar and his company Jadranska ulaganja bid proposals for the purchase of Kraljevica and Brodotrogir shipyards. Kraljevica, the oldest shipyard on the Adriatic, will file for bankruptcy, as announced by the Prime Minister Zoran Milanović. Employees will receive all salaries, as well as severance payments. On the other hand, new investment and restructuring models are planned for the Rijeka-based 3. maj and Brodotrogir shipyards. The profitable Uljanik will offer 39% of its shares to its employees. Consequently, it will implement refinancing to provide fresh capital for new projects. The model has been approved by trade unions and has attracted the interest of banks, pointed out Radimir Čačić, Minister of Economy.
Privredni vjesnik Year V No 0192
Bruno Trapan, owner and director, Trapan vina, Pula
over €30 million ( No results without
invested in modernisation of production plants
INTERVIEW: DARKO RANOGAJEC, BOARD PRESID
Some wine producers managed to attract leading opinion makers since potential is large importance of marketing, since you may have the best product in the world, but you will not succeed if no-one knows about it. It is impossible to achieve results without marketing. The Croatian market is small and there is not enough room for selling Croatian wines. Therefore, it is time we turn towards exports. World-known wine makers will start selling their wines on our market in a few years time, which will additionally aggravate the position of local wine producers. The ince competition is fierce on the local market as well as a limited market of superb wines, it is to be presumed there is no room for new wine producers, and the sale of new wines has become more difficult. However, this is not always the case. Wine is a matter of taste, and there is always room and buyers for top-quality products. This is the reason why we, as a young wine house, without any tradition in either wine production nor any connection with agriculture, managed to succeed in a short period of time. We managed to position ourselves and become recognised in Croatia, and I dare say we achieved realistic preconditions for selling our wine abroad. The key to success for any young and new wine producer is definitely an individual approach, especially the capability to assert himself in a sea of top quality Croatian wine producers. I managed to use my lack of tradition as an advantage. I mention this to warn producers about the
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We are losing t due to excessiv
Omco in Europe owns production plants in Belgium, Great B packaging material. The factory in Croatia generates almost
I used the lack of tradition in wine production as an advantage state must offer greater support in the sense of promoting wine producers abroad, where there is only room for premium quality wines. We can hardly compete with medium quality wines. During the past few years, some of our wine producers managed to attract leading opinion makers since our potential is large. However, luck is also important when selecting global business partners. Vinistra 2010 was a turning point for Trapan, when our Uroboros 2008 was awarded the best malvasia in the category of mature wines. Robert Parker gave 90 points to Uroboros 2008, placing it amongst one of the best tasted Croatian wines. Malvazija Ponente 2009 earned a high score of 89 points of a total 100.
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Drago Živković ounded as a tool workshop of the glass factory Straža, today Omco Croatia is the most successful large company in Croatia and the winner of the Zlatna kuna awarded by the CCE for 2011. Board President and CEO, Darko Ranogajec, points out that as a member of Omco Group, they expanded from 100 to over 400 employees.
Omco Croatia is part of the international Omco Group. What is your place in the Group? The central office is in Belgium, and the company operates in eight countries with nine fac-
tories. We can say it is a global company considering it owns a branch in North America. In Europe, it owns production plants in Belgium, Great Britain, Austria, Croatia, Slovenia, Romania
Innovation is crucial for survival and this is the key to our success and Turkey. Omco exclusively produces tools for manufacturing glass packaging material. Our place in this global system is very important since our factory generates almost 50% of total
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( almost 50% of total production generated by factories in Croatia of the Group
ENT AND CEO OF OMCO CROATIA
the battle for competitiveness ve labour costs
Britain, Austria, Croatia, Slovenia, Romania and Turkey. It specialises in manufacturing tools for producing glass half of group total production production of Omco Group. This is where the centre of Omco sales activities is situated, as well as the Design and Construction Office used by the entire Omco Group. In 2011, you were awarded for your results in 2011 with Zlatna kuna as the best large company. What do you anticipate in 2012 and what are your plans? I fear we will not be able to win Zlatna kuna for 2012. I do not even know what the situation will be for other companies in Croatia, but what we can see as exporters is the global pressure on business. This primarily concerns decreased demand for all types of goods and services. On the other hand, price pressure on all products is intensifying, with a simultaneous price increase in energy generating products, strategic raw materials as well as other materials we necessarily depend upon. The final result is the generally known crisis in which we all struggle to survive. You export most of your products. What are your most important markets? We export roughly 97% of total production and we are present on practically all continents. Of course, the largest share is exported into European countries and we have recently signed a very important and valuable contract with a Japanese buyer. Australia and New Zealand are the most distant countries we have reached, where we exported goods worth several million euros last year. Therefore, we are globally present.
Innovation is crucial for surviving and succeeding on the world market. What is your innovation record? Innovation is critical for survival. By innovation, I especially mean in terms of technological development, and in the sense of investing in advanced technology. This
able to work independently. This is why we perform another two years of practical training after their formal high-school education, preparing them to become quality CNC operators. On the other hand, we have been lucky. We managed to develop a system with high-schools in our
your advice be to the government? I have never really relied on how we as a company could benefit from the government. I did not build my success on this or blamed the present or past government for our possible failure. Our business policy is
We have recently signed an important and valuable contract with a Japanese buyer and Australia and New Zealand are the most distant countries we have reached
is actually the key to our success since during the past six or seven years we invested over â‚Ź30 million in modernisation and equipment in our production plants. This resulted in constant increase in competition, which enables us to be a global producer and exporter over such a vast area. The metal industry often complains about the lack of staff, especially skilled and highly skilled workers. Do you have the same problem? We have not had these kinds of problems so far. We could, however, discuss their level of training when we employ them. They are certainly not CNC operators
environment, where the schools maintained metal professions in their curriculum and enrolled children for that particular profession. We have contributed much by taking on all the children for practical training, motivating them to stay with us and employing them year by year, securing their future. Due to the partnership between our company and the schools, we have not experienced the lack of qualified workers. According to analystsâ€™ outlook, this could be another recession year. What do entrepreneurs expect from the state in such circumstances? What would
based on always being in charge of our destiny. If the government measures are positive and helpful, this is additional bonus for our business. In case they are negative, then our business does not exceed our expectations, but we always try to keep it within a positive framework. Nevertheless this government should take serious measures to increase competitiveness of the Croatian entrepreneurs by reducing total labour costs, since we, who operate in a European environment, see Croatia losing this battle day by day. Our workers are unhappy and dissatisfied since their nett salary cannot cover the increasing cost of living, and entrepreneurs are unhappy since the gross amounts they pay are too high, preventing them to compete on the international market. This is the main problem.
Privredni vjesnik Year V No 0192
( €46.6 million ( €8 million increase to improve employment opportunities
in budget compared with 2011
Subsidies to create 35,000 jobs The Croatian Employment Bureau has launched six new measures to reduce unemployment by at least 10%
Jasminka Filipas he Croatian Employment Bureau has recently invited companies, small businesses and the unemployed to apply for one of the newly launched measures to improve employment or self-employment opportunities; the budget allocated for this purpose is €46.6 million and it is estimated to help in the creation of 35,000 jobs. The project covers six measures: employment subsidies, self-employment subsidies, subsidies for education and professional training as well as for public works. Companies who decide to employ young people with no previous work experience can obtain subsidies ranging from €1,300 to €4,150, depending on qualifications, whilst those employing those over 50 can obtain between €1,500 and €4,800. “The project has aroused considerable interest: we have received an enormous amount of emails and have been bombarded by constant phone calls from companies and the unemployed”, stated Matijana Blašković, spokeswoman for the Croatian Employment Bureau.
Subsidies entitlement Employers who have not seen a decrease in employment during the last 12 months, with the exception of justified vacancies
(employee resignation or termination of contract, retirement, work disability or similar), employers without financial liabilities regarding their legal contributions and those who have been operating for at least 12 months and employing at least one member of staff for six months are entitled to subsidies. “We have not used these subsidies thus far.
According to Darko Crha, these measures will not have a positive impact on high addedvalue technologies Nevertheless, we will consider the terms and the amounts and, if we find them satisfactory, we will apply for them. The procedure is extremely simple and convenient. We welcome the idea of employment subsidies for employers in need of additional staff”, explained Vladimir Halić, Board President of the Čakovecbased company Zrinski. Želimir Feitl, Director of Kaplast has not been fully advised on the subsidies thus far. He added that, in his experience, subsidies are usually obtained for employees for whom there are opportunities for full-time employment. Unfortunately, Kaplast can currently only provide temporary employment.
“These measures have not impacted significantly on entrepreneurs, particularly in the light of current professional training expenses of, for example, a qualified electrical engineer”, pointed out Darko Crha, Director of the Bjelovar-based company Data Link. “We need at least two years for the professional training for such a job, whilst, according to the proposed measures, the training needs to be completed within one year. I am convinced that an employee can contribute greatly to a company only after two years of professional training. In addition, the measures do not enhance employment of such professionals, since they usually find satisfactory employment within a shorter time span. The measures will not have a positive impact on high added-value technologies which have a fundamental role for the country in overcoming the economic crisis”, stressed Crha, whose company operates in electronics and robotics. Meagre figures and slight hope According to data provided by the Croatian Employment Bureau, unemployment figures in March hit an 8 year high, standing at 338,000. Osijek-Baranja and Vukovar-Srijem Counties have been facing the most serious situation, with 60,000 unemployed. On the other hand, Ličko-Senjska
The six measures include: employment measures: allocated to companies and small companies employing young people, people over 50 or longterm unemployed self-employment: unemployed for over 6 months, aiming to launch their own business are entitled to between €2,400 and €3,200 additional training: those facing lay-off or given the opportunity for a new job provided they complete additional training professional training: for the unemployed who can enhance their employability by retraining professional qualification: for the young who need to pass a professional examination or need to gain work experience are not eligible for employment for public works where the employer (municipalities, towns or counties) needs to provide 15% to 25% of funding and Požeško-Slavonska Counties have the lowest unemployment figures, standing at slightly below 10,000. The forthcoming tourist season is likely to provide some employment opportunities, yet they are seasonal and not a permanent solution to the problem.
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( €1.15 billion ( 959 requests from contributions
for tax debt reprogramming
MINISTRY OF FINANCE
Tax income increased by almost 8% VAT achieved the highest increase of 32% as many companies had previously paid out profits in order to avoid paying new tax on dividends Igor Vukić uring the first two and a half months of this year, tax income increased by 7.9%, according to data provided by the Ministry of Finance. Income from profit tax achieved the highest increase since many companies had previously paid out profits in order to avoid paying new tax on dividends. However, in relation to the same period of last year, profit tax income also increased (1.2%), as well as VAT (1.2%). The state budget received €0.25 billion from duties. High petrol prices have obviously led to saving, and oil derivatives duty contributed to the budget €10.4 million less than last year. Duties on cigarettes also increased (€18 million), and the state treasury received a total of €1.5 billion in income tax.
Despite the news on unemployment growth, the budget accumulated a slightly higher income from contributions, totalling €1.15 billion, some 0.53% more in relation to the same period of 2011. According to the Ministry of Finance, tax from income and contributions show that despite the continuous crisis in Croatia, economic activity did not slow significantly at the beginning of 2010. From June 1 to March 15, 2010, budget income totalled €2.87 billion, which is 6.6% more in rela-
tion to the same period of 2011. Expenditure decreased by €85.87 million or 2.5% and stood at €3.45 billion. This year, the Ministry of Finance received 959 requests for tax debt reprogramming. According to the new law, the deadline for clearing debt is 36 months. The requests for reprogramming have a value of €0.43 billion. A similar law was in force last year, when the payment deadline was 30 months. Of 2,284 requests approved last year (€0.2 billion), around €26.67 million has been
collected to date. Around 300 entrepreneurs took advantages of the new law, to have their debt interest written off if they immediately paid the entire principal sum. A debt of around €6.75 million was settled in this manner, whereas around €1.87 million in interest was written off. Tax administrations began a new public tax control system, where large variations between income and assets had been noticed. Tax administrators have already questioned around 100 people regarding how they acquired their property. When answers on the origin of their assets and income are not satisfying, assets are regarded as income for the current year, and they will have to pay income tax according to existing rates. Public income and assets will be questioned on the basis of tax returns from 2008 to that submitted in February 2012.
ENTREPRENEURS JOIN WITH GOVERNMENT
Croatian Employers’ Association (HUP): more consideration for taxpayers Causes and consequences need to be considered in all cases prior to turning taxpayer debtor list into a “list of shame” roatian Employers’ Association representatives have expressed their approval at the measures implemented by the government to enhance economic growth, particularly regarding the announced investment cycle, as has been stated following the recent meeting between the government and the Croatian Employers’
Association delegation with the Prime Minister, Zoran Milanović and Radimir Čačić, Minister of Economy. Ivan Ergović, President of the Croatian Employers’ Association (HUP) and his colleagues agreed to submit proposals to ministries regarding further measures to be implemented by the government in the near future in order to fos-
ter economic growth and create a more favourable investment environment. He also expressed his approval of recent activity by the Economic and Social Council. Government officials have presented their plans of measures aimed at tackling investment obstacles. Ivan Ergović, President of HUP expressed his approval at publishing a taxpayer debtor
list. Nevertheless, he does not approve of turning it into a “list of shame”. Causes and consequences need to be considered in all cases, bearing in mind the general level of illiquidity. Relieving the economic burden is an imperative in order to start the process of creating profitability and settling all liabilities, stated Ergović. (I.V.)
UPRIV, ASSOCIATION OF FRUIT BRANDY PRODUCERS
Privredni vjesnik Year V No 0192
LED I MED, ZAGREB
Top quality brandy Sagas of brandy throughout history in the “ducal style” tasting room
Honey and hockey an ideal match A former member of the national ice hockey team owns two stores selling sports equipment and during summer he produces honey everal years ago certain Baranja-based fruit-growers saw a slump in the sales of their top quality fruit and consequently started brandy production. “We have opted for traditional recipes and have used expert assistance from the Faculty of Food Technology and Biotechnology. As a result we have achieved considerable success and satisfactory results”, stated Davorin Škoflek, President of UPRIV, the Association of Fruit Brandy Producers, which has some 20 members. In addition to pear, apple, plum, quince and grape brandy, special attention has been given to apricot brandy production.
Association members primarily focus on apricot brandy The optimum annual production of brandy is up to 10,000 litres. It is exclusive brandy in 0.7, 0.5 and 0.2 litre bottles, as
well as in souvenir packaging. In order to enhance its branding, producers have presented it through Croatian sagas from history. Hence, brandies are named after Croatian kings and dukes Tomislav, Branimir, Ljudevit and Domagoj. Bottle design contains elements of wattle and Glagolitic script. Exclusive products at exclusive prices Exclusive products are sold at appropriate prices which has adversely affected their market penetration. ‘Duke brandy’ is sold in quality hotels and restaurants throughout Croatia. Nevertheless we have been completing the construction of “ducal style” tasting room, developing doorstep selling which is the most desirable and the most cost-effective for producers. In addition, ‘duke brandy’ will be available in an online store. We cannot rely on classical retail selling, due to insufficient supplies to meet retail chain standards”, explained Škoflek. In addition, the architecture of the distillery and the ‘ducal style’ tasting is unique, with its octagonal brick tower, fortress wall and chained wooden door and windows reminiscent of the 12th or 13th century, as well as the tower interior and the tasting room with a huge round table for top quality brandy enthusiasts. (S.S.)
denko Crnković was the goalkeeper of the national team but following retirement, he began training juniors and subsequently opened a sports equipment store Led i med (ice and honey). “Through my work with juniors, I became aware of the need for a specialist sports equipment store and decided to open one”, he explained pointing out the global trend of former players owning sports equipment stores. “A former professional player can
Games in Sarajevo. Currently, many hockey and ice skating professionals and enthusiasts also opt for his services. He also cares about their health and in addition to his love of ice hockey he has cultivated a deep love of bees and honey production. Hence he decided to focus more on his hobby. He currently owns over 130 hives. “I mainly sell honey to friends and by recommendation and deliver it to customers as, in my opinion, trust between the consumer and
The owner owns over 130 hives provide specific information on a wide range of sports equipment, for example, sports injury protection, thereby also providing useful advice which is instantly recognised and valued by customers”, he emphasised. He owns two sports equipment stores in Zagreb, and also providing skate sharpening and repair services. Stars on ice He began providing skate sharpening and repair services due to the fact that such services provided by others did not meet his criteria. Consequently, he provided skate sharpening services for the 1984 Olympic Winter
the producer is basic, particularly with so many products of dubious quality. The quality of my whole product range is without question and there are no problems with sales”, he stated, explaining that his love of ice hockey and honey, which is reflected in his company Led i med, make a perfect match. Thorough the winter he is involved primarily with ice hockey when bees are dormant but during the summer he returns to nature and his bees. (A.Š.)
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CROATIAN FOREIGN CURRENCY MARKET Currency
AUD CAD JPY CHF GBP USD EUR Source: HNB
Kuna exchange mid-rate
5,904945 5,671328 6,868533 6,245520 9,000062 5,674321 7,525852 WEEK MARCH 24, 2012
INSURANCE MARKET ON THE EU THRESHOLD
Since 2008, gross premiums have dropped by around 6%, and the number of insurance policies is 3% down
he past three years have been marked by a slow insurance market decline, where total gross premiums decreased by €73.3 million. It is impossible to predict the near future and the influence of Croatian EU accession since the market is constantly changing, warned the Board President of Euroherc osiguranje, Damir Zorić, at a round ta-
Insurance premium per capita dropped to around €287, which is five times less than the EU average. ble convened by Banka magazine. Since 2008 gross premiums have dropped by around 6% and the number of insurance policies 3% lower, which reveals taking on higher risks by decreasing prices under the pressure of a competitive environment. Zorić says final results will soon be visible in the
annual reports from insurance companies at the end of the first quarter. Insurance premiums per capita dropped to around €287, which is five times less than the EU average. The premium structure is an additional problem: in Croatia, only one quarter refers to life insurance, but in the EU around 60%. Even though some see this as a possibility for industry growth, Zorić warns the public have to have extra money for premiums to grow, and this is obviously not the case. To sum up, the insurance market has become a smaller and more expensive cake, but the numbers are increasing. Law amendments Even though Zorić does not expect significant changes when Croatia joins the EU, the claim that a market of several hundred million people will open to Croatian insurance agencies, Zorić regards an illusion. “The big EU markets will not open for us, but rather our small market will open to them, since we do
The cake is getting smaller but numbers increasing Drago Živković
not have the potential to penetrate their market”, he explains. Insurance companies rely on advising the public about the necessity of personal pension savings in a society where the ratio between those employed and the number of non-working public is decreasing. This ratio should be 3:1. However, it has dropped to 1.2:1, which brings Zorić to the conclusion that the insurance industry is standing at an historical milestone and only those who survive will be able to speak of the outcome. An additional challenge for Croatian insurance companies refers to legislative amendments, conditioned by the implementation of the Solvency II EU Directive, which will introduce stricter risk management. Board member of Hanfa, Gordana Letica, announced the forthcoming amendments to the Insurance Act and Compulsory Automobile Insurance Act, which should result in price increase during the first phase, and then their decrease in the long-run.
Erste Bank profit increase Last year, income from the normal activities of Erste Bank in Croatia increased to €0.31 billion, 7.4% more in relation to 2010, according to data provided by the bank. Nett profit came in at €86.8 million, 6.7% more in relation to 2010 and with which the bank managed to keep a stable level of profitability. On December 31, 2011, bank assets totalled €7.6 billion, up 12.9% over the same month of 2010. Return on assets totalled 1.22% and return on equity stood at 10.47%. Income to expenditure ratio was 37.5% in 2011. Total lending of Erste Bank increased to 12.6%, double the market average. Fund assets decline In February, total assets of open investment funds fell, primarily due to considerable asset reduction by money market funds. According to data provided by the Croatian Financial Services Supervisory Agency (HANFA), total assets of open investment funds amounted to €1.43 billion, a 7.6% decrease. Only equity funds finished the month with an asset increase. €75 million loan to Agrokor Agrokor has taken a loan of €75 million from a group of banks for a period of 3 years under a guarantee from several companies within the consortium. The loan will be used to refinance existing obligations and maintaining debt at the same level. BNP Paribas, J.P. Morgan and Zagrebačka banka participated.
8 ::: news Americans interested in Croatia Over one third of American travel agencies surveyed have ranked Croatia as the most interesting and most desirable European destination, according to the results of a survey conducted by the American company Travel Leaders Franchise Group. 640 American travel agents participated in the survey.
Privredni vjesnik Year V No 0192
Peristil, Split: specialists for luxury stone villa construction
The ideal Mediterranean
A large number of orders from investors from Great Britain and Scandinavia as well as local entrepreneurs as demand increases for old stone houses Jozo Vrdoljak
Increase in tourist arrivals during Easter holidays Members of the Association of Croatian Travel Agencies (UHPA) record a 10% increase in holiday package sales for Croatia over the Easter holidays compared with the same period last year according to a survey conducted by UHPA. Local agencies have pointed out that most Easter holiday arrivals are expected from Austria, Italy, Germany, Hungary and Spain. Feravino remarkable success at Split GAST fair The company Feravino, last year the champion at the International GAST fair in Split, has again won the highest number of medals for its wines amongst local competitors. Feravino holds 5 gold and 2 silver medals, as well as 1 bronze making it the regional quality leader. Its Zweigelt Miraz is the highest ranked local red wines. The best local furniture designs
Local furniture producers have shown their products at the Furniture fair International GAST fair in Split. Journalists participated in ranking the best local furniture design during Journalists’ Day at the exhibition. Lapibus was the winner with its product Varius for furniture and PPS Galeković with its product Deking parquet for interior design products. Spin Valis, Naprijed, Interijer, Palković and DI GELI also participated.
he Split-based company Peristil is the sole Croatian construction company specialising in the design and construction of luxury stone villas in the Dalmatian style. The idea of a joint project “A return to stone” was developed in Pula, Istria, following five years of cooperation between the founders in real estate intermediation and the traditional construction of stone houses. The company was founded at the end of 2004 in Split. It currently employs 12 staff, all qualified for working in stone and other traditional materials.
Increasing demand “In addition to the construction of Dalmatian style villas, we are specialists in property decoration, particularly dry stone walls. We have recently been contacted by several investors regarding the construction of villas with accompanying facilities and property. We are currently working on a similar project covering an area of 27,000 m2”, stated Samir Koštić, owner and Director of Peristil. He pointed out his negative stance on the trend towards the over-development of apartments in Croatia, adding that in his opinion the construction and rental of tourist villas will be fundamental in the near future and a turning point in the development of Croatian tourism. “Legislation s a major hindrance to development and attracting investors, with nearly insurmountable problems regarding urban planning. Urban plans comprise many tourist zones, yet in reality they are non-existent. Consequently, we have only recently been contacted by foreign investors interested in tourism. My company has received a welter of orders over a one year period from investors from Great Britain and Scandinavia, regarding pur-
No demand for private apartments The construction of luxury stone villas requires a deep knowledge of long neglected crafts, such as stone-cutting, finely forged locksmithery, tailormade carpentry and similar. According to Koštić, a return on investment is likely within a period of between 12 and 15 years. In addition, the prices of such villas are constantly rising, as opposed to apartments for which there is currently little or no demand. chase and rental, as well as from local entrepreneurs. There is increasing demand for old stone houses”, pointed out Koštić. Luxury and peace He added that he would be extremely pleased to have competitors, as competition can significantly destination value. “Our project is a return to traditional Dalmatian values and Dalmatian culture which has been adversely affected by mass tourism. In addition to the construction of individual villas, we focus principally on élite areas. We opt for selective construction within the local community”, explained Koštić, adding that in his opinion the creation of employment opportunities, focus on long neglected crafts and reduce the over-abundance of apartments on the Croatian coast is imperative in the not too distant future. “The beauty of a destination, an agreeable climate, top quality ac-
commodation in Croatian villas, as well as satisfactory organisation, will all contribute to attract tourists with high purchasing power. According to information provided by real estate agencies, I believe that currently foreign investors are primarily interested in villas with pools”, he explained. According to Koštić, there is high demand for villas in peaceful locations with a sea view, in towns with preserved local architecture, without hotel or apartment proposals, in locations far from power-transmission lines and transmitters. “Consequently, villages in the Istrian hinterland, which were almost deserted some 20 years ago, have been seeing a growth in population, as well as increased employment opportunities in areas of facility maintenance and agricultural production. Hence, we believe our project is a return to traditional values”, concluded Koštić.