The Covid 19 pandemic has briefly slowed down the real estate market in the SEE region but the industry swiftly showed strong resistance, as well as the ability to adapt and recover, according to real estate experts that participated at the ZaGRE 2022 conference in Croatia.
The panel called “The real estate market in the South East Europe (SEE) region after the crises” was moderated by Mia Zečević, Director of Novaston Platform, a leading real estate management company in Serbia that is rapidly expanding its operations in the retail, office, and hotel sectors across the SEE region. The company is especially expanding in Croatia, primarily through projects in Rijeka and Opatija.
First the Pandemic Crises and Now the Ukraine War Crises
“Last year ended with a positive volume of investments made in the SEE region, despite the Covid 19 Pandemic, but we are now facing supply chain issues as well as an increase in energy and raw material prices mostly due to the Russian-Ukrainian war. The leading real estate players in the region are currently Serbia, Croatia, and Bulgaria, followed by Slovenia”, stated Mia Zečević.
Mia Zečević also pointed out that the new crisis in March brought inflation, which reached its highest level in the past 40 years. According to her, the biggest challenge will be to work on its stabilization and reduction.
Nebojša Nešovanović, Head of SEE Valuations at CBRE, said that the pandemic and the war in Ukraine have both brought on lower economic growth and an increase in public investments. During the pandemic, there was an increase in health-related investments and now investments are being made in weapons.
“Apart from these similarities, there are also significant differences. During COVID 19 there were operational problems, such as the fact that employees could not go to their offices or that some malls had to close while others shortened their working hours. During that period we had very stable inflation, even low. Now with the crisis in Ukraine, the problems are no longer operational in nature but more financial. At the moment, we have very serious inflation that is raising construction costs, and operating costs, while encouraging the Fed and the European Central Bank to change their monetary policies, ” said Nebojša Nešovanović.
Croatia Continues to Attract Tourists and Investors
The Mayor of Rijeka, Marko Filipović, said that looking back at history the world has always been going through some sort of crisis and that Croatia should continue to use its competitive advantages during these challenging times. He assessed that it is best for them to turn towards the European economy, as Croatia will introduce the euro on January 1, 2023, and become a Schengen member.
He also stated that tourism is recovering in Croatia and that this is confirmed by data that shows that Rijeka in the first four months of this year achieved 14 percent more overnight stays compared to 2019.
“My mandate is to change the face of the city during these four years. A lot of investments have been made in tourist facilities and many world companies have recognized our city as a place with investment potential. We have many projects aligned, such as the complex “Zapadna Žabica” which includes a new bus station in our city, and the development of a marina at the oldest part of our port. Another key project is “Rijeka Waterfront“, a large and award-winning development designed by the strongest Croatian architects, which will cover the size of almost the entire city center,” said Marko Filipović.
Demand for Luxury Real Estate on the Rise
Ivan Kovačić, the Executive Director of Remington Realty – Christie’s International Real Estate Croatia, believes that when it comes to luxury real estate the situation is much better than before.
According to him, the period after the pandemic brought an increase in demand for real estate in the upper middle, luxury, and even super-luxury market segments on the Adriatic coast, which is increasing real estate prices per m2. He pointed out that the beautiful nature, favorable geographical position, security, and price competitiveness of Croatia are reasons why more premium developments should be made.
Only the Most Adaptable Companies will Succeed
Mihailo Janković, President of the Management Board of MK Group, pointed out that during crises only companies that are quick to adapt to new circumstances are going to be able to succeed. He added that this is the reason why MK Group has developed as an agile and flexible investment company.
“Our organization enables us to effectively manage and enter into new investments, create and develop sustainable projects focused on profitability and optimised business processes. We use the experience and knowledge we have gathered over the years to easily identify good market opportunities for growth and expansion, and we react quickly,” said Mihailo Janković.
According to Mr. Janković, MK Group is continuously considering new opportunities for further investments and is always working on investment projects worth approx. 500 million EUR.
Recovery and New Development Opportunities
“Despite the crises, the real estate sector is showing not only a recovery but also new development opportunities”, concluded Mia Zečević.
As a company that always looks toward the future and anticipates trends, Novaston Platform, believes that the Istrian region, like all the other capitals across the SEE region, will experience in the next 5 years a revival by continuing to work on new projects.