Property Investment Croatia | Saving societies and construction

Posted on July 29, 2012

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New provisions in the law permit a saving society to be actively involved in the construction by lending to the market the amount limited with the height of liable capital. This amount is currently 500 million for five largest savings societies. This figure is indeed impressive and its release could significantly improve the situation on the property market in Croatia. However, is it a worthwhile job? Would new housing in the current conditions ever find buyers?

Leading personnel from the biggest savings societies, which are mostly already part of large banking groups, believe that there is no sense that they perform work for which their parent companies are already responsible for, that is the banks. This is somewhat understandable because the banks already have a lot of big problems with construction companies, so there is no sense that the same problem gets pushed to the savings societies. On the other hand, there are societies that are not a part of banking groups, but act independently on the market. What will they decide?

Perhaps they are most likely to turn to their existing customers and move them in into “complete” buildings. This would mean that they would first start testing to determine whether it is possible to arrange their own customers to buy entire residential buildings, and if not then other savings companies and their customers would be included. This model could prove successful, especially in larger cities where there are a lot of clients.

The main goal of the whole project would be to effectively close the investment. Thus, the savings banks would credit savers, who would pay to construction entrepreneurs, and these would immediately return loans. Quickly and efficiently! Of course, most projects that could be financed would be smaller residential buildings, while some megalomaniacal projects would be out of the question.

Despite the fact that all together it sounds interesting, we need to wait to see what will happen with the long anticipated government incentives for the purchase of already built flats. It simply does not make sense to move in on any new revolutionary projects while the fate of thousands of unsold buildings is not resolved.

via Property Investment Croatia | TRASA Real Estate Croatia – Part 3.

Posted in: Croatia