CEE property investment doubles year-on-year

Wednesday 25 January 2012
Commercial property investment volumes in Central and Eastern Europe
(CEE) reached more than €11.2 billion by the end of December 2011 –
twice the volume when compared to 2010, according to the latest data
from CBRE.

Prime yields are expected to remain solid in markets such as Poland and
the Czech Republic.
Significant deal flow in Russia during December 2011 pushed CEE property
investment volumes over the €10 billion mark, which resulted in the
third strongest year in CEE history. The strong finish in the final
quarter of 2011 (Q4 2011) confirms the expectations CBRE had at the
start of December that several pending transactions would close by the
year-end. Of particular note was the closing of the Galeria center, a
large mall in St. Petersburg, for over €800 million.

Low levels of property investment activity were recorded in South
Eastern Europe (SEE), with Serbia and Ukraine not seeing a single
institutional transaction during 2011. However, increased investment
activity has been visible in the Hungarian and Slovak commercial real
estate investment markets in recent months.

This trend is likely to continue, especially in Budapest, since the core
segment of the market has remained mostly illiquid thus far and occupier
market fundamentals have remained occupier friendly. In total,
investment volumes in Hungary increased from around €180 million in 2010
to over €600 million in 2011.

Patrick O'Gorman, Director of CEE Capital Markets, CBRE, commented:
"There is some willingness to invest in Hungary, despite recent
increasing unrest in the country, but it remains to be seen how this
trend will continue with current negotiations with the International
Monetary Fund underway and limited financing available.

"Refinancing of current loan agreements and potential partnerships
between owners and opportunistic investors may lead to further deal flow
in 2012."

Despite the fact that in some Western European markets yields have
turned the corner, prime yields are expected to remain solid in markets
such as Poland and the Czech Republic based on strong demand and income
growth, while increasing bond yields and the poor performance of the
Forint are weakening fundamentals in Hungary.

Jos Tromp, Head of CEE Research & Consultancy, CBRE, commented: "Based
on the property transactions under way, 2012 is already following a
similar pattern to 2011. The search for security is set to continue and
lack of product availability at the top-end of the market may start
pushing money into the core markets such as Poland and the Czech
Republic, depending on how the general economic sentiment unfolds.

"Generally, financing will remain the key factor in determining which
way markets move in 2012."

Source: CBRE

Real estate price increase in 2012

What's is happening in the real estate market at the coast of Dalmatia and in Istria? Does the announcement of EU entry in 2013 have an effect already. The first signals are there, and the're very clear.

"The best you can do is to buy a house when prices are at their lowest, and subsequently benefit from the price increase". This mantrum is often heard. But how do you know if the price is at its lowest? And then: are we talking about the price of property in general, or just about specific types of locations? How do you actually know if prices reached the bottom? That's valuable knowledge and international congresses and opinion makers remain undecided when it comes to Europe as a whole. Europe's real estate market is still the toy of the global financial crisis. Instability rules and gets in the mind of the people, who, as a result, don't know where to bank.

Considering that the current crisis hits every market, investors search for unique competitive factors. One positive indicator has the potential to lift one market above the other. Croatia has two: the slow yet stable growth of its economy and the accession to the EU. Both factors, and some characteristics of the Croatian second-home market, form the basis for the prediction that the second home real estate market will show rising prices in the summer of 2012.

Like any other emerging market, Croatia is relatively more dependant on 'direct foreign investment': investments from abroad. Croatia's star had just started rising after the war. The fallout of global investments affects an emerging market more than other economies, hence the slow recovery of Croatia's economomy. Croatia showed, in the first quarter of 2011, still a negative GDP (Gross domestic product). Leading credit advisors now predict that the last quarter of 2011 will show an increase again of 1%.

The date of accession to the EU is set at 2013. Officially. This is an important step and sufficient security for multinationals to expand quickly into the country. Investment funds and banks base most investment decisions on numbers and indicators. 'Being in the EU' raises these indicators and one can already see international banks opening their first offices in Croatia. EU accession will make it easier for any EU citizen to obtain a mortgage with a competitive interest rate (currently there are just a few banks who rule this mortgage market, and their rates are high). In addition, a number of laws lining up with EU law, make it easier to purchase (invest in) apartments or houses even in touristic zones (currently this is only possible in assigned residential zones). This will have a consistently positive effect on the market (more buyers), therefor on prices. But with a delay.

The crisis began to show its full extent in 2009. Due to the sudden absence of UK- and Irish buyers (Europe's largest second home buyers) the market came to a stand still. Dutch, Belgians and Scandinavians were still active, which has to do with another investment mentality. On average, a second home hunter takes one year to find his dream home. There were no houses hunters around anymore in 2009, which resulted in estate agents having virtually nothing to do in 2010. As a result, the prices dropped in that year 2010. Burza Nekretnine and Fillipovic Advisory are two domestic bodies that publish price movement of all real estate. Investors from abroad prefer to look at the core of this second home market, only the type of property that has always moved well: new apartments by the sea and single-family-houses with sea view in Dalmatia or scenic view in Istria. Apartmani-buildings are kept out this equation since the demand for this type of property had already decreased before signals of the crisis. So just the good properties, with nothing wrong about them, started dropping their prices in 2010 with, in average, 25%. Properties with a special characteristic: like newly built seaview houses or properties on the first line to the sea, dropped prices with 10%.

These figures are really significant: Croatia's real estate prices fell back to where they were at the start of the market's boom! This attracts investors of a different kind: people who are really looking to put their money in a stable investment: to save it for their future, for their children's future. These are different kind of people then those who were just hunting for a place in the sun: who just wanted to escape from Northern Europe's bad weather.

The summer of 2011 is over now, and along the entire coast of Croatia the market has shown great movement. Most real estate agents did good business again. Taken into consideration the fact that this market responds to changes in one year, the expectancy that prices will rise in 2012 is considerate. What can we expect to happen?

First of all, in the spring of 2012, it will not be easy to negotiate low prices anymore. Then the special discounted properties will not be present on the market anymore. Then the indicator of average asking prices will move up slowly. One should always consider that the investors in this market are still 90% foreigners, and that the sellers are families, people who owned that plot of land or property for many years, some even built that house by themselves. So unlike Spain, Portugal or Turkey where the market mainly consists of mass resort development, Croatia is a country of small interventions on a community scale. Prices respond to the market, and in Croatia they also respond to the seasons of the year. The summer is Croatia's economic high season!

No one has a crystal ball, so no one can predict what will happen. One can only rely on hard facts and on real figures. Croatia has now, within Europe, a unique position through its accession to the EU. This fact was in recent history the strongest catalist for price increases in the Czech Republic, Hungary and Romania. There the opportunity that invstors are looking for presents itself. It's nothing grand, nor is it the next golden investment tip; it's just a unique indicator that gives Croatia a competitive edge for investors seeking growth.

This article was written by Middelland Croatia, an Amsterdam and Split based real estate advisory who have been assisting Dutch and Belgium investors with their entry to Croatia's 'second-home' real estate market since 2005. This article was published before, in Dutch language, in Mondi, Benelux's leading second-home magazine.

Source: www.globalpropertyguide.com

Croatia's referendum gave 'yes' to the EU

Reuters

ZAGREB - Croatia voted on Sunday to join the European Union next year, shrugging off concerns over the economic turmoil in the bloc and fears that membership will compromise its hard-won sovereignty.

Provided all 27 member states ratify its accession, the Adriatic state will enter the EU on July 1, 2013, more than two decades after breaking away from socialist Yugoslavia and fighting a 1991-95 war to secure independence.

It will become the second former Yugoslav republic to join the EU, following Slovenia in 2004.

Sixty-six percent ticked "Yes" in the referendum, the state electoral commission said with almost all votes counted.

"This is a historic moment, and could be a turning point in our history," Prime Minister Zoran Milanovic told reporters.

Turnout, however, was low, at 44 percent of eligible voters, well below the resounding votes of many former communist countries that joined in 2004 and 2007.

That figure appeared to reflect widespread uncertainty among Croats over what membership will really mean.

But the result suggested the EU had not completely lost its appeal in the struggling western Balkans despite the debt crisis that is threatening the single currency.

Many Croats hope accession will mark a clear break with the region's recent past of war and nationalism, and help its weak economy through EU funds and full access to the bloc's common market.

The slow pace of reform in the rest of the western Balkans, and waning enthusiasm within the EU for further enlargement, mean other countries in Croatia's neighborhood - such as Serbia, Bosnia and Albania - will wait years before they too can join. Tiny Montenegro on the Adriatic coast is next in line.

"GREAT RELIEF"

"I feel great relief, for me, for my children," said bank worker Jasna Maric, 43. "Only fifteen years ago, we were still killing each other here, so this was a strategic decision."

Foreign Minister Vesna Pusic, though visibly delighted, sounded a note of caution:

"With this, we leave behind political instability, but the rest will depend on our ability and creativity," Pusic said. "Our chances will be better, but no one will do the job for us."

Croatia saw strong growth in the past decade on the back of foreign lending and waves of tourists to its Adriatic coast, but its economy has been hit hard by the global economic crisis.

It will have to work hard to make its public finances sustainable before it is allowed to join the euro zone, which analysts say is unlikely in the next five years.

Its gross domestic product per capita is 61 percent of the EU average.

Analysts and government officials had warned that rejection of EU accession on Sunday would have hit the country's credit rating, deterred investors and further dampened any prospect of a quick economic recovery.

Modern Istrian Villa for sale

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 A door leads to a corridor with the private area of the house, that is also designed for spending you holidays: 2x bed room with 2 separate, small bath rooms. 1 extra bed room with private master bath room including bath tub, A covered patio terrace links these rooms. All rooms have double doors opening to the garden. Further, the house has 2x storage space, one is accessible from outside. This layout is ideal when the owner decides to rent out the property and wishes to lock off private possessions,

Asking price: 350.000,00 EUR

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CHRISTMAS GREETINGS FROM CROATIA

We look back at a great year and end this business year with solid feeling that Middelland has been of proper benefit to its customers. The general feeling in the market has been, also throughout 2011, that the world was reluctant to invest. But the clients of Middelland, who purchased their dream home or land plot at the coast of Croatia this year, carried out one communal thought: 'what should we be waiting for'?
Croatia's market is recovering, slowly but steadily. No overproduction here, no crazy impossible resorts, just a pristine coastline within one day driving distance and a EU entry just around the corner. And with most of the gold-digging agents now vanished from the field, one can expect the highest quality of advice and real knowledge as a guide towards finding your dream home too.
To give you this knowledge too, we publish a series of market reports for your convenience, or for reading on the sofa during the holidays... preparing for great steps to take in 2012! The team of Middelland will be there too. We wish you a merry christmas and an exciting 2012.

Click here to find the reports

Tomorrow, Croatia will sign its EU accession treaty

TheAccession Treaty between Croatia and EU will be signed on December 9 inBrusseles, on the eve of the summit of leader sof 27 EU countries where Croatia will, for the first time, be invited to attend as an observer.

Croatia will sign the Treaty of Accession to the European Union on Friday, and will become the bloc's full member on 1 July 2013. Until then, Croatia will have observer status in EU institutions, while its status of a candidate country will change to that of an acceding country.

During an hour-long ceremony, scheduled to start at 0930 hours in Brussels, the treaty will be signed by Croatian President Ivo Josipovic and Prime Minister Jadranka Kosor, and by the EU heads of state or government.

At the beginning of the ceremony, brief speeches will be delivered by European Council President Herman Van Rompuy, Polish Prime Minister Donald Tusk, whose country is holding the EU rotating presidency, European Commission President Jose Manuel Barroso, European Parliament President Jerzy Buzek as well as by Josipovic and Kosor.

After the signing ceremony, a photo session will be held and after that a regular summit of EU leaders will begin, with Croatia attending for the first time as an observer.

According to the document, Croatia becomes a full member of the EU on 1 July 2013, after Zagreb holds a referendum on the matter and EU member-states ratify the treaty.

Until 1 July 2013, Croatia will have observers in EU institutions. During this process, Croatia will be informed and consulted about new laws being adopted by the EU. Croatia can also contribute to the elaboration of laws and regulations but cannot vote on them until it becomes a full member.

Croatian ambassadors to third countries will be invited to meetings of their peers from the 27 EU member states.

With Croatia's admission to the European Union, the Union's Delegation in Zagreb will become the European Commission's office.

The Treaty of Accession is written in the 23 official languages of the EU and in Croatian, which will become the 24th official language of the Union on 1 July 2013.

Two documents are to be signed on Friday: the Treaty of Accession and the Final Act, a final political document of the intergovernmental conference which includes all that was agreed upon during the negotiating process.

After that, the treaty is to be ratified by all EU member states, and in Croatia its citizens will express their view on the matter at a referendum.

The treaty stipulates that the deadline for depositing ratification documents to the Italian government, the depositary of the agreement, is 30 June 2013, and admission is scheduled for 1 July 2013 when Croatia is to become the 28th member of the bloc.

The Treaty of Accession is the result of negotiations that lasted five years and eight months. They were opened on 3 October 2005 and finalised with the closing of the last policy chapters on 30 June 2011.

The negotiations were conducted on 33 chapters, or policy areas which a candidate country is required to adjust to EU standards. There are two more policy chapters -- Institutions (Policy Chapter No. 34) and Other Issues (No. 35) -- but they are not subject to negotiation.

Under Chapter No. 35, the European Commission is expected to carry out a monitoring process, as has been the case with other acceding countries, in order to see whether Croatia is fulfilling its obligations in the run-up to full membership.

In the spring of 2012, the EC will publish monitoring tables for three policy chapters -- Judiciary and Fundamental Rights, Competition Policy, and Justice, Freedom and Security. In the autumn, a comprehensive report on monitoring will be published regarding all policy chapters.

Chapter No. 34 defines the participation of Croatian representatives in EU institutions and agencies and designates Croatian as a new official language of the EU starting from Croatia's entry into the bloc.

Under Chapter No. 33 (Finance and Budgetary Provisions), Croatia can expect to have some 800 million euros at its disposal from the EU budget in the first six months of its membership. The funds cannot be drawn immediately but can be used over a longer period of time for the implementation of long-term projects.