Market conditions indicate that housing prices in Croatia will continue to rise this year, though at a milder pace than in previous years, according to experts speaking at the RE:D real estate conference on Wednesday, reports N1.
Ongoing Price Growth in the Housing Market
Vedrana Likan from Colliers stated that recent data points to a sustained upward trend in housing prices, particularly in new developments, and that market conditions do not currently suggest a reversal of this trend.
"We expect housing prices to show a tendency for slight growth," Likan noted.
A Slowing Market
Despite rising prices, the market has slowed, as evidenced by a decline in transaction numbers. Affordability remains a major issue across the European Union, including Croatia.
Likan highlighted that the Croatian government, as the owner of a significant amount of real estate—especially land suitable for new housing developments—should recognize its role and responsibility in addressing the affordability crisis.
State-Owned Land as a Key Solution
She emphasized the urgent need for the government to activate its real estate assets. While the state does not necessarily need to act as a developer, it should acknowledge that the large land areas it owns present a valuable investment opportunity.
"The government could participate as a partner, seller, concessionaire, or grantor of building rights—there are several possible models," Likan suggested.
Decline in Commercial Real Estate Investments
Likan also reported that in 2024, Croatia saw a sharp 65% decline in commercial real estate investment volume compared to the previous year, dropping to approximately €240 million. This includes office buildings, hotels, logistics spaces, and shopping centers that generate revenue.
Given trends in the global and European markets, a downturn was expected, but the decline was more severe than anticipated. However, she expressed optimism, noting that investment volumes in other Central and Southeastern European countries grew by around 70%, which could indicate a positive shift for Croatia in the near future.
Limited Office Space Availability Driving Up Prices
Croatia is currently experiencing historically low office space availability, with only about 2% of office properties vacant. This scarcity is pushing rental prices higher.
Barriers to new office developments include high land prices, unresolved property-legal issues, high construction costs, labor shortages, expensive materials, and costly financing options.
Is There Enough Supply to Meet Demand?
Likan pointed out that demand across all commercial real estate segments is so high that it remains uncertain whether current and upcoming developments will be enough to meet market needs.
Potential for 32,000 New Apartments in Zagreb
Boro Vujović, director of the real estate agency Opereta, echoed the sentiment that, given inflation and demand outpacing supply, a drop in housing prices is unlikely. Instead, prices are expected to remain stable or increase slightly compared to last year.
Due to high demand and limited new construction, even older apartments are being sold at "perhaps unjustifiably high prices," Vujović noted.
He also pointed out that planned changes to Zagreb’s General Urban Plan (GUP) will likely lead to reduced construction potential and higher costs per square meter. "The new GUP will impose stricter regulations on buildability and building height, making development even more challenging and expensive, which could further drive up prices," he explained.
Estimates suggest that government- and city-owned land in central Zagreb could accommodate the construction of around 32,000 new apartments. However, this would require political will to make the land available for development.
For instance, activating the large Gredelj site in central Zagreb could enable the construction of a significant number of housing units. Vujović emphasized the advantages of developing in central locations, as opposed to the periphery, where infrastructure costs are higher and traffic congestion is an issue.
