Interview with CEO Ivan Kovačić for Poslovni.hr

Pandemic as a 'game changer', Croatia targeted by wealthy buyers.

The arrival of global brands for real estate brokerage such as Christie's, and then the pandemic, have put Croatia more than ever in the focus of buyers and investors who want to invest in luxury real estate there, either with the goal of moving or making a good profit.

The demand for luxury residential real estate has increased tremendously during the pandemic, leading Croatian brokers and consultants reveal to us. Croatia was finally noticed by buyers who previously focused on the luxury destinations of Spain, Italy or France.

Germans, Poles, Austrians, Czechs want to have a summer house here or even a property to move into, and such residents dramatically boost local economies. However, they have high criteria, they want a safe purchase and a quality product, and we have a situation where the demand is dramatically higher than the supply.

Although it is significantly better than in previous years, the offer is permanently limited by urban planning policy and legislation in Croatia, which prevents the construction of detached residential areas without touristic purpose. Instead, we usually have wild urbanism with questionable infrastructure, warn our interlocutors.

"After years of struggling to attract the upper middle class from Lago di Garda to Istria or Dalmatia, Covid came. He was a 'game changer' for the increase in demand for luxury real estate in Croatia, which coincided with the arrival of the world's leading brands in mediation.

Covid has made it impossible for buyers from other EU countries to access traditional destinations, such as summer resorts in Spain. They had nowhere to go, so they turned to the more accessible Croatia, and were pleasantly surprised by the beauty of the landscape, cleanliness, and local culture.

That's how we got a large number of customers who are very interested and have money, for example, Germans who are less and less satisfied with life in Germany and see Croatia as an alternative.

However, these buyers have learned to a certain level in terms of urban planning, infrastructure and content, which Croatia does not yet offer. Our legislation does not allow the development of new residential areas, but outside the existing ones it allows the development of only tourist zones intended primarily for commercial activity, not for housing", says Ivan Kovačić, CEO and partner in Remington Realty, an exclusive branch of the international company Christie's International Real Estate.

The Croatian branch of Christie's started its work in 2019, while the demand was not yet so strong, but even then the profession sensed that the 1,800 kilometers of coastline in the heart of Europe would one day become a hit, and last year they opened a Showroom in Opatija. A small virus helped them, but the system slows them down.

Necessary professionalization
"Today's customers are interested in a safe purchase and a reliable broker, and the presence of leading brokerage names not only guarantees this, but also raises the credibility of the entire market. The offer is of better quality than before, the quality of the facilities is at the Western European level, although there is still a lot of room for professionalization - for the engagement of professionals, designers, architects. The awareness of investors is growing on this issue as well, the situation is positive.

However, the most that developers in Croatia can currently carry out outside existing settlements are touristic projects consisting of a hotel building and accompanying villas, but even such are still a rarity, also due to urban planning and spatial limitations and the lack of quality infrastructure. Urbanism is still planned based on existing land ownership, instead of strategically.

Designing settlements and plotting plots, and building infrastructure so that projects can be offered to developers and investors, this is a model that respects the public interest and that's how things should be set up," Kovačić points out. And the situation for the changes advocated by the profession is more than favorable - square meters in Opatija for such properties have doubled in one year, the price goes up to 10,000 euros per m2.

"The potential of the luxury residential market in Croatia is huge, and the market itself is growing significantly, but everything depends on how much the decision-makers will want to recognize and manage it," concludes Kovačić.

"The most sought-after properties are first row to the sea, finished villas ready to move in, and investors are also looking for land by the sea, that's the trend. However, this market in Croatia, compared to some other countries in the region, is still in its infancy, we still have a lot of unused potential and I hope that investors will turn more to this segment in the future.

However, for such development, and for the perception of Croatia as a premium destination, we lack luxury hotel brands such as One&Only or Four Seasons. "Montenegro, for example, went in that direction, the brands raised their prices, so a square meter in the luxury segment is sold for 8,000 euros on average, which is a higher average price than in Croatia," says Marko Pažanin.

You can read the entire interview at the following link: Poslovni.hr