Downtrend in the construction sector in Croatia started already in the final quarter of 2008 with lower demand for property on the Croatian real estate market.
In fact, the number of building permits increased just 11.1% in December 2008 compared to the year before, with 16.1% more construction projects registered by the Croatian Statistics Office. In comparison, the number of issued permits almost doubled at the start of year 2009, evident in the annual increase of 96.8%.
Still, it seems that lower demand on the real estate market will further decelerate the construction activities this year, which is the forecast of most analysts. Also, unfavorable financial conditions presented by many banks are expected to limit the sources of funding for new projects and lower state investments. Downtrend in the final quarter of last year already cut capital investments which left a negative impact on Croatia and its economic development.
What is expected now is for the crisis to come to a stop and then the market will get fired up again. Many analysts also believe the fact that the crisis is responsible for the current situation is a good enough reason to start investing in Croatia, especially in these times when all construction almost stopped completely. There is a very real possibility that any new property built, in particularly business real estate, will have no problem with finding a buyer in a year or two.