There is both loyal and unfair competition in the market. Due to the problems caused by the corona virus, a significant number of employees in the tourism sector moved to real estate, counting on quick earnings, says Boro Vujović, Vice President of the Real Estate Business Association at the Croatian Chamber of Commerce and General Manager of Operetta d.o.o. real estate agency, for Diplomacy & Commerce. It is better to pay professionals and sleep peacefully, than to have headaches later, Vujović emphasizes.
- To what extent and did the COVID 19 pandemic actually affect the real estate market in Croatia?
The pandemic affected the real estate market both in Croatia and all over the world. When the pandemic began, prices were expected to fall and a scenario similar to 2008 was expected, but the opposite happened. States reacted differently, giving subsidies to preserve jobs and the economy. As a result, the system did not collapse, but the situation moved in a different direction. One of the reasons is that there was no “Swiss franc effect” that made the 2008 crisis “disastrous” for the real estate market. The reaction of banks was also different, giving clients a moratorium on loans, thus avoiding pressure on the sale of real estate, and the scenario of 2008 was not repeated. The pandemic made people able to work from home, so the pressure on office space was reduced and there was a change in the market. There is less interest in renting office space, but the pressure on storage and logistics real estate has increased. A good part of the traffic has been transferred to the Internet, and this requires logistics centers, which are currently lacking on the market. Many buyers from abroad have realized that they can work from home and that it is better for them to sit in a house on the Adriatic coast than being closed off in an apartment in one of the EU cities. This has made our property even more attractive. The earthquake in Zagreb had an effect on the market. A good number of properties have disappeared from the market. It led to an increase in the prices of newer real estate, and made old real estate unattractive.
- It seems that the prices have never been higher. At the same time, the offer of new build is increasing. How far do you think this can go and is any stagnation expected in this regard?
It is difficult to predict exactly what will happen to prices. We do not expect prices to fall given all the current circumstances. We have low interest rates for housing loans, low interest rates on savings. Real estate from the premium segment will continue to achieve high prices and price growth is possible. Considering the amount of building permits and the purchasing power of citizens, price stagnation is possible. It is important to emphasize that in the current market prices of all real estate do not grow linearly. New apartments in attractive locations have become more expensive than those in “non-attractive” ones. The difference between the situation from a few years ago and today is that everything can be sold. Until 5 years ago, an apartment in the Podsljeme district was difficult to sell, regardless of the price.
- The coastline and Zagreb represent a significantly different market than the inland. What makes them stand out and what makes them different?
The buyers in Zagreb are domestic customers from Croatia, Bosnia and Herzegovina and the diaspora. At the moment we have few foreigners on the capital city’s market. After the earthquake and Covid, the attractiveness of Zagreb as a tourist destination decreased, so this is even more pronounced.
The advantage of the coast is that it has buyers from all over Europe, and Dubrovnik has buyers coming in from all over the world. This gives real estate on the coast an advantage over Zagreb. A larger pool of customers with higher purchasing power. Most of them are buying second homes on the coast, but more and more buyers are moving to our coast because of the home office model.
- How much did the earthquake in Zagreb, and the slow-moving reconstruction, affect the real estate market in the capital?
It was a tectonic disturbance in every sense of the word. Old buildings in the city center went from being the most attractive real estate to the least desirable goods. The price for new buildings in the center has risen further, but for old apartments it has dropped significantly. In 2020, the number of sales dropped by almost 50% in the center, as a result of the earthquake. The slow pace of reconstruction further slows the recovery of the downtown market. All of this has affected the price growth in other locations in the city.
- What is your advice for all those who intend to buy a property in the near future? What to pay attention to and is now the right time for it?
Given the trends, buying seems like a smart decision at the moment. Of course, one should take into account what and where is bought, as well as the price. Buying for a living or renting is definitely worth it.
- How do you estimate the market in terms of agencies and those dealing with sales and rentals, whether there is unfair competition and what are the most common business problems?
There is both loyal and unfair competition in the market. Due to the problems caused by the corona virus, a significant number of employees in the tourism sector moved to real estate, counting on quick earnings. This has led to a drop in quality and a questionable level of service. Especially from unregistered intermediaries who work “from their kitchen”. The chaos on the market is also made by foreign agencies that operate on the market, but without the control of our institutions.
Buying and selling a real estate is one of the biggest things in life for a large number of citizens, so it is important to pay attention to be careful about who they do business with and hire professionals. An old saying goes “There’s no such thing as a free lunch”. It is better to pay professionals and sleep peacefully, than to have headaches later.