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Executive summary<br />
Croatia represents a blend of Mediterranean and<br />
Eastern European culture and is the next candidate<br />
to join the EU, expected in <strong>20</strong>10. Croatia is already a<br />
member of the United Nations and the World Trade<br />
Organisation and is expected to join NATO in the<br />
spring of <strong>20</strong>08.<br />
Zagreb, with a population nearing 800,000, is<br />
Croatia’s business and economic centre. Zagreb<br />
accounts for the majority of property market activity,<br />
although the regional cities and Dalmatian coast are<br />
also seeing increasing market activity.<br />
Croatia is strategically located on the Trans-<br />
European Transport Corridors V, VII and X. The A3<br />
(E70) motorway, as part of Corridor X, provides the<br />
shortest connection between Western Europe,<br />
South East Europe and the Middle East, linking<br />
Vienna with Istanbul. In comparison with other<br />
South Eastern European countries, Croatia has a<br />
good quality, modern road infrastructure, connecting<br />
all major cities.<br />
Croatia has seen signifi cant real GDP growth and has<br />
achieved considerable exchange rate stability. There<br />
is some weakness in the export market which has<br />
increased the current-account defi cit over the last<br />
few years. Generally the Croatian population is well<br />
educated.<br />
Office market<br />
• Most of the class A office stock is concentrated in<br />
Zagreb, where there has been a steady increase<br />
of modern office space over the last two years.<br />
The city represents around 85% of the total<br />
Croatian office market.<br />
• Total stock of class A and class B office space<br />
in Zagreb is currently around 600,000m 2 , with<br />
class A modern stock totalling approximately<br />
270,000m 2 . The Zagreb market size is currently<br />
smaller than Budapest, Prague or Bucharest<br />
but larger than Belgrade. During <strong>20</strong>07 a further<br />
144,000m 2 of new modern Class A offices will be<br />
added to the market.<br />
• Take-up has grown from 55,000m 2 in <strong>20</strong>05 to<br />
an estimated 75,000m 2 in <strong>20</strong>06. It is expected<br />
to reach 100,000m 2 in <strong>20</strong>07, driven by occupiers<br />
moving out from down-town Zagreb and taking<br />
larger, quality space.<br />
• Prime office rents currently stand at €18/m 2 /<br />
month. Due to a number of new developments<br />
that are being finished in the first quarter of <strong>20</strong>07,<br />
Zagreb prime rents are expected to fall slightly<br />
during this year.<br />
www.kingsturge.com 1<br />
Retail market<br />
• The retail market has been going through a process<br />
of privatisation that, although not completed, has<br />
successfully opened the sector to both domestic<br />
and international private retail operations.<br />
• The western outskirts of Zagreb have experienced<br />
intensive construction activity. Jankomir has<br />
become the most attractive location for large<br />
retail occupiers and is considered the main citycentre<br />
shopping area.<br />
• The stock of shopping centres in Zagreb is<br />
currently around <strong>20</strong>0,000m 2 . With the new<br />
openings in <strong>20</strong>07, this figure will increase to<br />
approximately 270,000m 2 .<br />
• There is around <strong>20</strong>0,000m 2 of hypermarket and<br />
big-box retail warehousing space around Zagreb,<br />
the majority of which is owner-occupied.<br />
• Prime rents are around €100-€1<strong>20</strong>/m 2 /month for<br />
high street retail units and up to €65/m 2 /month<br />
in shopping centres units. Zagreb’s prime rents<br />
are somewhat lower than in the Romanian and<br />
Hungarian capitals but more expensive than in<br />
Warsaw and Belgrade.<br />
Industrial market<br />
• The industrial and logistics market is the<br />
least developed market sector in Zagreb and<br />
throughout Croatia. However, the total stock of<br />
new industrial and logistics space is growing and<br />
there are a significant number of developments<br />
to be completed in <strong>20</strong>07-08.<br />
• Modern warehousing projects are being<br />
developed outside the ring road and near the main<br />
motorways. Around <strong>20</strong>0,000m 2 of new space will<br />
be delivered to the market over the next two<br />
years, which will double the entire current stock.<br />
• Currently the demand for modern warehouses<br />
significantly exceeds supply and therefore,<br />
when the supply currently under construction<br />
is completed, international and larger domestic<br />
companies are expected to upgrade their facilities,<br />
leaving a significant amount of secondary stock<br />
vacant.<br />
• Prime rents in Zagreb range from €5.5 to €6.5/<br />
m 2 /month for distribution warehouses and from<br />
€6 to €8/m 2 /month for light-industrial units.<br />
As the supply of modern warehousing space<br />
in Croatia is still relatively tight, rents are high<br />
compared to Western Europe.<br />
• The sale prices for modern warehouse space<br />
range from €1,000/m 2 to €1,100/m 2 , while the<br />
prices of old warehouse space are lower and<br />
range from €500/m 2 to €750/m 2 .<br />
• Land values for logistics uses currently stand at<br />
up to €60/m² in prime locations and up to €40/m²
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