Coloiers Aktualno stanje Market Overview 2021

Market Overview 2021

1. Vedrana Likan EMBA, MRICS
ManagingPartner, Colliers Croatia, Slovenia & BiH
October8, 2021
ArhiBau
Budućnostnakonkriza–
inicijativaNovogeuropskogBauhausa
Market Overview
Croatia H1 2021

2. Agenda
Colliers 2
MarketOverviewOffice market
Retail market
Industrial & logistics market
HTL market
Second-home market
Residential market
Investment market

3. Under construction
Dalmatia Tower
KFK Tehnika–
City Island
Infobip–
Alpha Centauri
BHB Domus
27floors –tallest
building in Croatia
30,000 m² GFA
First phase –
25,000 m² office NLA
Second & third phase -
Eight new office buildings
New campus in Sv. Klara
10,500 m² will be
completed by the end of
2021
Mixed-use project on
corner of Branimirova&
Heinzelova
4,700 m² office NLA
Office market
Total office stock in Zagreb -approx. 1.5 million m² (approx.
43% in Class A)
•Pandemic accelerated trend of remote working
•Demand is strongest for Class A buildings
•Earthquake removed old stock in Zagreb city centre
•Workplace strategy: coworking, flexible workspaces
Colliers 3
Many companies position HQ
in Zagreb
5%
Average vacancy rate
€12.5/m²
Average rent in Zagreb

4. Newschemes Under Construction
Family fun &
home Mall
Z Centar KaptolCentar Kaufland Eurospin
May 2021, Zagreb
30,000 m² GFA
August 2021,
Zagreb
75,000 m²GLA
Supernova invested
€15 million in
revitalization
Opened twostores
in Rovinjand
BiogradnaMoru
Building two big-
boxes in Zagreb
and Zabok
Building on several
locations for its
stores in Croatia
(Split, Osijek, Pula,
Zaprešićand
others)
Retail market
In H1 2021, retail trade turnover increased by 12.6%
•Lockdown 2020 accelerated online shopping which will further
increase
•After lockdown, shopping centresturnovers and footfall started
to recover
•Prime properties in good locations will continue to perform well
•Food retailers (Lidl, Kaufland, Plodine, Tommy) continued
expansion led by Eurospin
Colliers 4
Retail volume strongly
rebounded
<3.0%
Average vacancy rate in prime
shopping centresin Zagreb
€20/m²
Prime weightedaverage rent

5. Croatia hasa favourablegeographical position, proximity, and
transport routes to Central Europe
•Majority of stock is concentrated in and around Zagreb; zones in
Kukuljanovo, Rijeka and Dugopolje, Split are active and growing
•Modern stock is limited and mostly owner-occupied, plannednew
build-to-suit(BTS) projects
•Increased interest and activity from developers; demand drivers
retail, distributors, 3PL operators and e-commerce
Colliers 5
Croatia's least developed
real estate market
<2.5%
Vacancy rate in modern stock
€5.5/m²
Prime headline rents in
Zagreb
ZAGREB LOGISTICS MARKET
Total stock in m² +1,000,000
Vacancy rate <2.5%
Average Prime Headline Rent 5.5/m²
CITY AVERAGE MONTHLY RENT
Split / Dugopolje €3 -5/m²
Rijeka / Kukuljanovo €4 -6/m²
Osijek €2 -4/m²
Industrial & logistics market

6. Colliers 6
Under Construction
Log-Expert Eurospin
JGL d.d.
(Jadrangalenski
laboratorij)
Fischer Advanced
Composite Components
(FAAC)
Class A Logistics Park
developer in Meridian 16
business zone near Velika
Gorica
Two logistics-distribution
centres, preleased to
international tenants
68,600 m² GLA on 170,000
m² plot
Investment estimated at
€60 million
Building its central LDC in
Meridian 16 zone
29,000 m²GFA on 77,000
m² plot
Investment estimated at
€35 million
New logistics centrein
Kukuljanovozone near
Rijeka
5,785 m² GFA on 20,500
m² plot
With maximum height of
22 meters, it will be the
highest building in the
zone
Austrian aerospace and
defense company
Building a €33 million
aircraft parts
manufacturing plant and
warehouse on a 128,000
m² plot in Jakovlje, north
of Zagreb
€ 4,70
€ 4,90
€ 5,20
€ 5,50€ 5,50
€ 7,00
€ 0,00
€ 1,00
€ 2,00
€ 3,00
€ 4,00
€ 5,00
€ 6,00
€ 7,00
€ 8,00
BratislavaBudapestPragueBelgradeZagrebLjubljana
Monthly rent per m²
PRIME WAREHOUSE AND LOGISTICS MONTHLY RENTS IN THE REGION

7. HTL market
After most European countries had some variation of lockdown
in Q1 2021, measures and travel restrictions have mostly been
relaxed beginning summer
•In H1 2021, overnights increased by 82% yoy, but still were 58%
lower than pre-CovidH1 2019
•Total hotel stock in Croatia is predominantly owner-operated with
independent or domestic brands; strong demand from
international hotel operators to enter market
•Car based destinations proved to be more resilient
Colliers 7
Tourism is still impacted
and shaped by Covid-19
2.3 million
tourist arrivals in H1 2021
9.5 million
tourist overnights in H1 2021
0
20
40
60
80
100
201220132014201520162017201820192020H1
2021
Millions
ArrivalsNights
TOURIST ARRIVALS AND OVERNIGHTS IN CROATIA

8. Colliers 8
Newopenings Under Construction
Hilton CostabellaBeach Resort
& Spa
4* Courtyard by Marriott
ValamarPineaResort in
Poreč
July 2021, Rijeka
132 hotel rooms and 66
apartments
Investmentestimated at €80
million
Top ten floors of DalmatiaTower,
Split
194 accommodation units and a
panoramic restaurant with a terrace
on the top floor
Largest investment in
Croatian tourism
Stopped due to Covid-19
Investment estimated at
over €100 million
22,3%
28,7%
37,9%
43,0%
39,7%
28,2%
0% 20% 40% 60% 80% 100%
Beds
Overnights
Hotels and similar Private accommodation Camps
ACCOMODATION TYPE BY SHARE IN BEDS AND SHARE IN OVERNIGHTS IN
CROATIA IN H1 2021

9. Second-Home market
Only a few large-scale resorts with residential components on the
entire Croatian coast and all are over eight years old
•High interest from foreign investors and developers, only very few
large-scale greenfield investments in this sector
•Demand is strongest for the seafront properties, highest in developed
destinations with good infrastructure and relative vicinity to the airport
(Dubrovnik, Split, Opatija, Istria, Island of Hvar, Island of Brač)
Colliers 9
Croatia’s underdeveloped
market, compared to SE
Buyersare looking for
hassle-free property-
resorts with an
operator taking care of
the property when the
owner is not present
and providing services
and yield for the owner
users who buy solely for their own use
users/investors who use it for a few weeks
annually and lease their property for the
remaining time
investors who are interested only in
returns, whether through rental income or
capital appreciation
Under
Construction Pipeline
PetraMResort LukoranProject Prim Bay Resort
Savudria, Istria
Apart-hotel with 179 units
(apartments), 55 villas and
three buildings with 18 flats
investment estimated at
€80 million
Developer SITNO
HOLDING Real Estate
Upscale tourist resort in
UgljanIsland on 7.7 ha of
seaside land
126 residential units,
including villas,
townhouses, apartments,
beach club and a marina
Envisioned resort in
Primoštennear Split
Hotel with 250 rooms, 111
apartments, 30 villas, and
ethno village

10. Residential market
Around 9,000 –11,000 new-built apartments were brought to
market annually in Croatia
•Currently around 10,000 apartments advertised for sale in Zagreb
•Construction and planning activity continued led by local
developers -strong interest from foreign developers in large-scale
development projects in Zagreb
•Zagreb accounted for approx. 4,500 or 40% of all transactions
Colliers 10
Development activity
increased in last few years
€2,200/m²
Average asking price for
apartments in Zagreb, June
2021
11,400
total number of apartment
transactions in Croatia, H1
2021
Under construction
VMD Park Kneževa
VMD KvartHeinzelova-
Darwinova
Project Bužanova–
Štrigina
125 apartments
€5,000/m² (incl. VAT)
More than 400
apartments
€2,600 -€3,000/m² (incl.
VAT)
69 apartments
€3,200 -€3,700/ m²
(incl. VAT)
Demand
local population in need of permanent
residence
foreigners or diaspora buying on the coast
and in high-end projects in Zagreb
short-term rental apartments (coast,
Zagreb city centre)
modern buildings built to the highest
safety standards
houses

11. Investment market
The investor sentiment is positive.
•A good number of deals despite the inability of some foreign
investors to execute deals
•Focus for banks and investors is the sustainability of the
underlying income and tenant risk (or operational risks for
trade related properties)
•Debt underwriting has also been prolonged with extensive
due diligence activity required by banks holding back deals
from quick completion
•Workplace strategy: coworking, flexible workspaces
•Foreign capital (closed-end funds, listed and private vehicles)
remained the main source of investments
•Investors are looking at opportunities to acquire core assets
•Majority of the vendors were able to achieve pre-covidlevels -
a result of demand exceeding the supply, coupled with
positive expectations for the sectors
•Pricing might change for the properties with liquidity issues
related to the pandemic measures and high leverage
Colliers 11
Investment transaction
volume 30% increase yoy
€290m
Transaction volume in
H1 2021
€9 -€11m
Average deal size

12. Colliers 12
Most significant transaction
SunceHoteliby Eagle
Hills
GTC
Portfolio by Optima
M7 and Wiener
osiguranje
11 hotels, a camp in
Dalmatia, own airport
and a large land bank on
the Island of Brač
26% of the total
investment volume on
the buy side
Closed deals in
logistics and office
sectors
Prime yields2009-H1 2021 (in%)
4
5
6
7
8
9
10
11
12
200920102011201220132014201520162017201820192020H1
2021
Office Industrial Retail (Shopping Centers)
Investment transaction volume in 2014-2021 (€Millions)
0
100
200
300
400
500
600
700
800
900
1.000
2014201520162017201820192020H1 2021
H2
H1
Share of sector by investment transaction volume in 2020
(inner circle) and H1 2021 (outer circle)
45%
22%
23%
10%
4%
69%
20%
7%
Retail
Hotel
Office
Industrial/Logistics

13. Colliers 13
Questions?

14. Contact
Thank You
Vedrana Likan EMBA, MRICS
ManagingPartner
Colliers Croatia, Slovenia & BiH
Petrinjska3, Zagreb
[email protected]