Minister: Construction sector significant generator of development

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(Hina) The Croatian construction sector is growing faster than the country's GDP and is an important driver of economic development, Construction Minister Branko Bačić said at an event held by the Croatian Economists Association on Friday.

Citing data for the first seven months of 2023, Bačić said that the construction industry had grown by 3.5% on the year, more than the planned GDP growth of 2.8%.

The share of the construction sector in GDP is 5%, more than the European average, and the reasons are numerous, from the use of EU funds to other investments, he said.

The volume of construction work in Croatia is recording greater growth than the EU average, and is even better than in France, Germany or Italy. In the past seven years it grew by around 50%, he said.

Bačić said that there were plenty of jobs in the sector as well as orders, but that there was a shortage of quality labour that could meet the demand. The number of workers in the sector has increased by 55%.

Around 11,000 work permits will have been issued for the sector by the end of the year, the same as last year.

Cash transactions, foreign buyers increase property prices

Speaking about housing construction and the real estate market, Bačić said that many studies had been made, showing that the number of foreign buyers increased upon Croatia's entry to the EU and that one in three properties were sold to foreigners and one in three were paid for in cash.

That has resulted in an increase in prices, he said, adding that prices were slowly stabilising.

Large number of empty flats

The minister stressed that work was underway on a national housing strategy, noting that 15% of flats in Croatia were empty in 2022.

Of the 370,000 flats in Zagreb, around 54,000 are empty and they were probably an investment, he said, adding that the state could respond with the tax policy to make sure they are put to use or build new flats to be sold on the market.

One of the priorities is amendment of the Construction Act, Bačić said, noting that work on that was underway, and he also mentioned changes to the Flat Lease Act and old, unresolved disputes, adding that the state would have to build new flats, mostly in Dubrovnik, Zagreb and Rijeka.