As I was reading an old article from 2009 whereas Reuters says that it is not save to invest in Croatia. Looking at the situation then and as of 2014 it seems that nothing has changed. Croatia is not able to solve the problems of privatization, corruption, unclear laws, lack of ownership and lack of a national investment strategy. Reuters produced this text on tourism in Croatia, with special emphasis on the situation in the hotel industry.
It seem also that the hotels for sale are mainly designed between 1970 -1980 and in need of total refurbushing. Most reports show that a huge stake of hotels which were bought the timeperiod of 2000 and 2010 are now available for sale. Or major players like Goran Štrok are reducing their significent portion of his stake in their investments.
There are quite a few losers which had seen their portfolio value drop by around 50%. Just to mention one of those investors, Slovenian Istrabenz OMW which bought the Grand Hotel Adriatic in Opatia in 2003 for aroung 30 million Euro’s. The stimated price is now around 20 million Euro’s. As Istrabenz OMW get’s under pressure from creditors they are trying to solve their hotel portfolio. But with no indication of imminent sale.
Who are the winners when hotels or bigger objects were sold in the last 10 years? It seems that is always the same procedure, whereas buyers from the Balkans buy through the privatisation process hotels or valuable properties for a fraction of their “streetvalue”. We will just list two examples here, but there are hundreds available.
In 2003 the Hotel Paris in the city center of Opatija was sold for 2.3 million euros. The owner is Mark Ines, through her company Varaždin Spa. The sale had additional commitments to employees, but which were quickly broken. Following a law suit by the employees, the new owner announced reconstruction of the hotel in 2008. This once famous hotel with it’s magnificent cafe terrace is closed and no reconstruction have been accomplished. One real estate company is selling this hotel since 2011 for as much as 21 million euros.
In 1999 one of the most prestigous villas on the Kvarner Coast Villa Münz has been acquired by the Hopper-Šegedin, a Croatian-American couple. After a divorse settlement, the sole ownership was transferred to Ljljana Šegedin (Sagitta d.o.o.). As the couple were the only bidders in this tender, the mansion was sold in the second round of the tender for just 14 million Croatian Kuna (less than 2 million euros). Less than ten years later the same mansion, now devasted and in ruins, has a comfirmed offer from the current owner of 11 million euros.
How is it possible that privatisation and tenders seems to attract just local people from Croatia? How is it possible that most of the properties sold at tender, appear a couple of years later on the market for a price of 5-10 times higher then the price the tender fetched just a couple of years ago? How is it possible that laws are being ignored by the new owner? Why are Employment Laws, Protection Laws for Cultural Heritage and others just ignored? How is it possible that those owners are not being stopped by local or national authorities?
As this post is getting a bit long, I will add some additional posts in regards to the situation in Croatia on a daily bases. So do not forget to sign-up for my newsletter (the form is at the bottom right of this site). M.S.
- Please see also : Why to buy a property in Croatia?
- Please see also : Opatija : The devastation of Villa Münz
Sources:
Reuters: Due to corruption in Croatia do not buy hotels
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