H2 2017 - Renova nekretnine doorenova.hr/pdf/Zagreb_Industrial_Market_H2_2017.pdfIndustrial stock in...
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1 H2 2017 © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. Supply During 2017, construction activity remained low throughout the country, with the delivery of one smaller industrial scheme in the Greater Zagreb area. After seven months of construction, Heineken Croatia opened a new warehouse in Karlovac. The 5,200 sq m scheme represents an investment of approximately €2.5 million and can store up to 7,000 pallets. Due to long period of limited construction activity, the industrial market in Croatia is considered as immature and represents the least developed segment of the real estate market. The scarcity of speculative industrial projects represents a significant barrier for the entrance of international companies on the market, since many of them are not ready to make long-term commitments. However, numerous companies have recognised the potential of the Croatian market and, like Heineken, have invested in developing industrial projects for their own needs. In addition, several zones around Zagreb were transformed and have emerged as industrial hubs, including Jankomir, Žitnjak, Rugvica, Sveta Helena and Sveta Nedelja. As it was the case during previous years, an important driver of growth on the industrial real estate market is the retail market. Retail operators in Croatia have been expanding, supporting the need for the development of industrial schemes. As a result of continuous investments in new store openings and modernisation of existing stores, there has been an increase in demand for logistics and storage facilities. Another important driver of growth are manufacturing and logistics companies which have mostly been establishing their operations in the wider Zagreb area. In addition to Zagreb, other important industrial areas are populous coastal cities such as Split and Rijeka. Furthermore, another important industrial hub is the Međimurje area, located in the North of Croatia. Due to the immaturity of the industrial segment of the real estate market, the construction of large-scale speculative schemes is still uncertain. However, an improvement of the industrial market is expected and further growth will mainly rely on the construction of built-to-suit projects. During the second half of 2017, an increase in activity was recorded with Heta Asset Resolution’s sale of Magma logistics centre in Jastrebarsko. It is expected that secondary cities will experience higher levels of activity in the upcoming period. Industrial stock in Zagreb (’000 sq m) Source: JLL, 2018 Economic outlook According to Oxford Economics, the Croatian economy grew by 3.2% year-on-year in the third quarter of 2017, driven by consumption. The solid performance reflects another record season for tourism, rising real wages and an improving regional trade. These trends are likely to continue in 2018, and the country is set to grow faster than the EU average in the near term, underpinned by the improved absorption of EU funds. Following debt refinancing problems, the biggest company in the region, Agrokor, was put under state management in April and its restructuring plan could increase the vulnerability of the banking sector and weaken confidence. However, the tourism season appears to have been stronger than the record 2016 season. Tourist arrivals were up by over 12% year-on-year in the period from January to September. Given extensive investment into hotel capacity, services export volumes are forecast to rise 3% in 2018. Recent completions Scheme Type Size (sq m) Location Heineken Warehouse Distribution warehouse 5,200 Karlovac Source: JLL, 2018 - 200 400 600 800 1,000 1,200 2010 2011 2012 2013 2014 2015 2016 2017
Transcript of H2 2017 - Renova nekretnine doorenova.hr/pdf/Zagreb_Industrial_Market_H2_2017.pdfIndustrial stock in...
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H2 2017
© 2018 Jones Lang LaSalle IP, Inc. All rights reserved.
Supply
During 2017, construction activity remained low throughout the country, with the delivery of one smaller industrial scheme in the Greater Zagreb area. After seven months of construction, Heineken Croatia opened a new warehouse in Karlovac. The 5,200 sq m scheme represents an investment of approximately €2.5 million and can store up to 7,000 pallets.
Due to long period of limited construction activity, the industrial market in Croatia is considered as immature and represents the least developed segment of the real estate market. The scarcity of speculative industrial projects represents a significant barrier for the entrance of international companies on the market, since many of them are not ready to make long-term commitments. However, numerous companies have recognised the potential of the Croatian market and, like Heineken, have invested in developing industrial projects for their own needs. In addition, several zones around Zagreb were transformed and have emerged as industrial hubs, including Jankomir, Žitnjak, Rugvica, SvetaHelena and Sveta Nedelja.
As it was the case during previous years, an important driver of growth on the industrial real estate market is the retail market. Retail operators in Croatia have been expanding, supporting the need for the development of industrial schemes. As a result of continuous investments in new store openings and modernisation of existing stores, there has been an increase in demand for logistics and storage facilities.
Another important driver of growth are manufacturing and logistics companies which have mostly been establishing their operations in the wider Zagreb area. In addition to Zagreb, other important industrial areas are populous coastal cities such as Split and Rijeka. Furthermore, another important industrial hub is the Međimurje area, located in the North of Croatia.
Due to the immaturity of the industrial segment of the real estate market, the construction of large-scale speculative schemes is still uncertain. However, an improvement of the industrial market is expected and further growth will mainly rely on the construction of built-to-suit projects.
During the second half of 2017, an increase in activity was recorded with Heta Asset Resolution’s sale of Magma logistics centre in Jastrebarsko. It is expected that secondary cities will experience higher levels of activity in the upcoming period.
Industrial stock in Zagreb (’000 sq m)
Source: JLL, 2018
Economic outlook
According to Oxford Economics, the Croatian economy grew by 3.2% year-on-year in the third quarter of 2017, driven by consumption. The solid performance reflects another record season for tourism, rising real wages and an improving regional trade. These trends are likely to continue in 2018, and the country is set to grow faster than the EU average in the near term, underpinned by the improved absorption of EU funds.
Following debt refinancing problems, the biggest company in the region, Agrokor, was put under state management in April and its restructuring plan could increase the vulnerability of the banking sector and weaken confidence. However, the tourism season appears to have been stronger than the record 2016 season. Tourist arrivals were up by over 12% year-on-year in the period from January to September. Given extensive investment into hotel capacity, services export volumes are forecast to rise 3% in 2018.
Recent completions
Scheme Type Size (sq m) Location
Heineken
Warehouse
Distribution
warehouse5,200 Karlovac
Source: JLL, 2018
-
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014 2015 2016 2017
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H2 2017
Considering pipeline projects, one of the more notable schemes is the project of Hrvatska Pošta in Velika Gorica. The construction of its new logistics centre commenced in 2017, with completion of the first phase comprising a 32,000 sq m centre set for 2019. The overall project represents an investment of nearly €50 million and its goal is to centralize the overall operations of the national postal operator of the Republic of Croatia, including shipments, transportation and international services.
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Rental levels
During 2017, prime rental levels have remained stable at €5 sqm /month. Additionally, rental levels for secondary assets, including 15 to 20 year old buildings and lower quality facilities have remained stable ranging from €3 to €4 sq m /month.
Demand
Throughout 2017, market activity was mostly driven by the retail, manufacturing and shipping sectors. Retail chains already present on the market are expanding their operations and modernising their existing stores. High levels of activity on the retail market are expected to continue, which will further support the development of industrial schemes.
In the recent period we have recorded an increasing level of demand for speculative schemes sizing from 5,000 – 10,000 sqm , however there is still an insufficient number of suitable projects on the market to meet the demand. As a result of a lack of developments, vacancy levels for industrial objects remained low throughout the year. This trend is expected to continue, as new projects on the market are mostly developed for owner occupation purposes.
Future projects
Industrial production index
Source: Statistical Office of Croatia, 2018
Project Type Location
Croatian PostDistribution centre/ administrative bldg
Velika Gorica
Managing Director – [email protected]
+381 11 7850 579
Senior Research Analyst – [email protected]
+381 11 7850 589
Source: JLL, 2018
Another important project that could be of great importance for Croatia is the construction of Alibaba’s distribution and logistics centre. During the first half of 2017, the world’s largest online business-to-business trading platform announced its plans to open a distribution and logistics centre in Europe. The exact location of the project is still uncertain, however, among several countries, the company has shown interest for Croatia, more precisely Zadar. The city and its economic zone Crno are strategically located in the proximity of a sea port, airport, motorway and railway, providing excellent conditions for the distribution of various goods.
Managing [email protected]
+385 91 4826 194
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