10% of loans to enterprises is not payable and total loans to private companies are falling from month to month. The crisis that hit the economy and property market hit the banks too, which means that in the case of bankruptcy of a company it is difficult to settle the remaining property.
The banking rule is that the bank finances the business project, not a company, that is her name or property, but the instruments of insurance still play a major role in the overall job. So when it comes to issuing new loans, banks are more cautious than before, especially when it comes to real estate offered as collateral, which eventually results in smaller loans.
In Zagreb bank there are different approaches and the bank has various insurance instruments. There are promissory notes and bills, mortgages on property assets of a company or private persons. Most loans are repaid according to contracted terms, but there is a small proportion of loans in which the inability to charge results in implementing execution or bankruptcy, which must be initiated by other creditors because the bank can not legally run bankrupcy claims if there is a mortgage on the property of the client. Even if someone else starts the bankruptcy, the bank is charged separately from the amount obtained by selling the pledged property. Appraisal of the property is based on location, quality, age and current condition of the property.
The Hypo Alpe-Adria-Bank said that despite all the problems payments are still satisfactory. There are some problems with credit entities and entrepreneurship, where the increased number of requests for reprogramming in long-term commitments led to a postponement of repayment. Termination of loan agreements are not increased, but the bank is trying different interventions to help clients more easily pass through this crisis period.
The Raiffeisen Bank in cases of enforced collection charges out of all available collateral until all possibilities have been exhausted. The amount that the bank fails to charge is written off the business books. The mere payment out of the insurance is led in accordance with the Enforcement Law. At this point the bank has no losses due to reduced market prices of real estate.
Revaluations of market value of real estate are regularly conducted. In the event that the value is to diminish so much that insurance becomes unacceptable in relation to exposure, the bank may require amendment of insurance.
Basically, the Croatian banks for now deal well with an adverse situation that prevails in the economy, but are much more cautious when making decisions about entry into new projects and loans.

In a time of crisis housing savings societies are perhaps the best form of savings. The reasons for this are their conservatism, security of operations, stable yields and state incentives.
Every Croatian citizen can be a client even if he is residing abroad and contracts are concluded for a period of 5 years. If he makes a loan before the end of the contract, the entire contract amount will be placed at the client’s disposal. There are a number of tariffs depending on savings time, and interests on deposit of 2-3%, depending on the currency clause.
Signing a new contract after the first 5 years gives the right to progressive interest, that is to an even greater profit. After 5 years the client can also use all special purpose funds and government incentives. Some savings banks offer different interest bonuses, especially if the client contracted savings for a child. These bonuses range from 25 to 100%, which is a great encouragement to all young parents.
Most deposits in housing savings are ensured, and every individual family member has the right to a contract. With interest and government incentives to the annual amount of at least 5,000 kuna, it is clear that this is the most profitable form of investment with great safety. After several years of investing in risky stocks and various investment funds, which was a big hit among many citizens of Croatia, it seems that the financial crisis and recession destroyed all illusions and that people are again returning to conservative forms of investment of their funds. In addition to savings banks and the financial market, this is good news for all entities involved in the real estate market in Croatia, whether it is the construction companies or Croatian real estate agencies, since the large amount of housing savings could easily end up on the market.

Real estate market in Croatia will be resting in 2010 too. Majority of real estate agencies in Croatia will try to forget 2009 as soon as possible.
Prices on the Rijeka market finally stopped on autumn levels at the end of 2009, which is below approximately 20% lower compared to 2008. Any significant progress in the next period is not expected; sales are stagnating, as well as prices and new construction, which was almost completely blocked in 2009, which in turn led to major problems for many engineers. In addition to engineers, the fall in turnover of almost 60% closed many small real estate agencies, of which many were not seriously engaged in this activity.
The fall in sales started as 2008 approached the end and continued in 2009 with an average drop of 50%.
One reason is the global financial crisis and recession, followed by extremely strict new conditions for bank loans, but perhaps the most problematic is the fact that the owners of flats and houses in Croatia are very rarely willing to adjust prices to market conditions, which leads to a small number of sales. The main reason is the emotions that Croats have for their property.
Customers are also much more cautious than during previous years, so even after finding a property that best suits them they decide to wait for a more favorable moment, which is directly linked to the overall recovery of the Croatian economy.
As for Rijeka and surrounding areas, trade takes place only at the suburban positions, where there has been a significant decline in the cost of square meters, while in the city itself it is very difficult to achieve sales. Most analysts believe that it will be so throughout the whole year, while the slow recovery can be expected only in 2011. All in all, those who survive the year in front of us can expect a lot of work and opportunity in the coming period. The Government could also contribute to the recovery with a more active engagement in the market.
The situation is even more difficult for construction companies and engineers. Building land prices fell by almost 50% and even so they are difficult to sell. New projects are still a long way from starting and the situation could go for the better only for 2-3 years.

Housing market in Croatia, according to some estimates, is still not stable. Analysis are many and they come from all sides, and some experts are even pessimistic enough to announce that the year ahead will be worse and anticipate further price drop, though such estimates should be taken with some reservations.

Prices of flats fell in 2009, but it is difficult to determine exactly how much because some of the high quality and good location flats even got more expensive, while for others prices fell drastically. Real data will be known in the next few weeks. Apart from problems with prices, a big problem could be non-return of loans to banks, causing a situation in which a large number of properties could go to banks, which could in turn lead to insolvency because of the inability to sell them. Such a development could have a negative impact on the construction industry, which is already faced with certain problems, and a significant number of construction firms, especially smaller companies, have justified fears of bankruptcy.

Banks have already begun to prepare for 2010 and they launched a write-off of bad projects. Bad credit policy regarding the purchase of real estate will leave a mark on the Croatian banking market, but most experts believe that new investments from banks will get into new cost-effective projects.

Predictions for 2010 also bring significant changes in the policy of investing in property in Croatia. New housing properties will be less built and most money will be earned from investment in office buildings, renovation and reconstruction of old dwellings and construction of energy efficient property that banks will encourage with more favorable loans.

The exact number of unsold flats is not known but it is assumed to be a figure between 10,000 and 15,000 apartments, whose value is estimated at over 8 billion kuna. In this situation all suffer - the state is losing tax revenue, builders will soon be out of work, which will again cause a decline in state revenues. Some politicians have suggested that the state should actively participate on the market by creating a guarantee fund to enable the price of commercial housing to reach the level from the program of encouraged housing.

Financial problems and difficulties in obtaining loans are the biggest problems of young people when it comes to buying real estate. One of the problems are conditions that are required in employment, such as experience, foreign languages and higher education, all for a small salary, or even a minimum wage. With such conditions, the question of how young people can solve their housing problems presents itself.

Demography is also part of the problem, especially in the former socialist countries. A large number of young couples with children live as tenants or with parents, while the situation is even more critical with singles. The impossibility of solving a housing problem is one of the leading reasons why young people rarely enter into marriage and decide to have a family. You could say that this is a vicious circle of demographic problems. A debate on solving the housing strategy should definitely be started around this issue. A large number of young people are tenants and are most disadvantaged. Flats are small, prices high and a fact that they are usually rented out without an application prevents a tax refund.

States should certainly be more actively involved in solving this problem by encouraging both demography and housing. Some European countries, like Holland and France, have even included provisions that people have the right to housing in their constitution and the states took obligation to provide them. In Croatia, the market for new housing so far worked quite liberally with uncontrolled prices. In Europe the situation is somewhat different and the market is controlled, so the larger cities and housing societies are often involved in plans for building housing for citizens, as is the case in Vienna. In such cases the prices and potential buyers of flats are known in advance.

If it wants to avoid further worsening demographic situation and housing problems, the Croatian government should also start thinking about taking a significant role in the real estate market along with the cities.

Five Croatian saving societies concluded over 100,000 new savings contracts worth about six billion kuna in the first 9 months of 2009, which is a growth of almost 10% over the same period last year.

Most new contracts were concluded by Prva stambena stedionica. Also, very good results have enabled savings banks in Croatia to achieve great growth in revenues and profits. Thus, their total gross profit is more than 40 million, an increase of over 250% compared to 17 million from the previous year. The biggest gain was made by Prva stambena stedionica. The only minus was recorded in operations of the Raiffeisen housing savings. Total assets of Croatian saving societies at the end of September amounted to over 6 billion kunas, or about 5% less than in 2008. HPB residential and Wüstenrot are the only ones that recorded growth, while others recorded a decline in value of assets. Banks and savings banks also have a high capital adequacy ratio of 15%.

We have good news in the banking market too! From 1st of December 2009 Zagreb Bank returned the offer of housing loans for young people, designed for customers under 40 years of age for a period of up to 25 years. In relation to the standard offer, the interest rate is lower by 0.5% and it is 7% linked to foreign currency in € with a reduced ratio of loan amount and collateral. So loans can be approved with a minimum participation of 10% without guarantors and without deposits. Insurance instruments such as life insurance, cash or funds deposit may also be paid from the loan. The fee for approving the loan is 1% for purchases and 2% for reconstruction of a property. All beneficiaries of ZABA housing loans in Croatia can get large discounts for equipment and renovation of the property. CEO of Zagreb Bank said that such changes are possible because of the cheaper sources of financing in the international market and we can expect a further decline in interest rates in Croatia. Larger and more favorable credit offers can help sales of new apartments, so more and more investors are realizing that they must adjust their prices to the emerging market conditions.

New oonstruction or old? New apartments are nice, but often they know to offer poor quality. In any case, it is best to bring a guide who understands the issues during the purchase.

The difference between the quality of the construction of new buildings and old buildings is great. Each new apartment is equipped with separate devices for measuring energy consumption and the difference is even greater when it comes to materials used during construction. If you consider all possible new technologies that are now used in construction, then the new building should be a sure winner. However, everything changes when we know that the apartments are still built by people, people who usually like to invest in something and save some money during the process. This leads to big problems, because not many use quality materials, nor the most modern technologies. In addition, old buildings are usually built to suit needs of people, which means that durin construction builders thought about comfort for the people who will live in an apartment, not just the profit, which is the case today. Besides all stated above, the greatest advantage for old buildings is definitely location. All attractive locations for construction of real estate were occupied a few decades ago, so if the buyer just has to live in the city center or some other attractive location, he/she is ready to give an unrealistic amount of money for an apartment in an older building. This is an emotional component that is difficult to express in money.

New buildings have their advantages and the old have their’s, but the biggest problem is that the difference in prices between the old and new housing is simply too small, which creates an unrealistic picture of the real estate market.

Real estate prices are down 7 percent and after negotiations they can drop up to 20 percent. However, it is expected that even lower prices are possible only for low-quality real estate. Furthermore, crisis and recession have extinguished more than 40 percent of Croatian real estate agencies.

The 60 percent drop of sales was too much for a large number of agencies and the situation is so bad that some are even considering not organizing some traditional gatherings at which many agents regularly came before. However, information coming from the market related to a decrease of 60 percent say it is not a realistic figure and that after the final analysis at the end of the year this figure will be around a more tolerable figure of 25 percent. Apart from the crisis, the problem is in the fact that opening the market for foreigners did not lead to more positive developments as was expected, but this is likely due to the crisis too.

We could find some joy in the fact that big European countries have started to slowly emerge from recession. The owners of agencies that had a smart business plan endured the crisis and hope that the situation in 2010 will significantly improve in realtion to 2009. Tourist season already helped the agencies on the Adriatic to achieve a certain income and announcements say it should be even better in the coming months.

As for the prices, they have fallen in all parts of Croatia, but further large drop is unrealistic to expect, especially when it comes to quality real estate in desirable locations. Agency owners hope that banks will not just stand on the side when it comes to the real estate market in Croatia, but that they will release the brakes in credit market policies to provide the market with enough money for recovery and development.

Despite the fact that the decline in prices is slowing down and the recovery that began slowly in some countries as the end of the year is nearing, the global real estate market continues to feel the effects of recession and the financial crisis.
Unlike the situation at the end of 2008 and early 2009 when prices around the world fell to historically low levels, the recovery of markets and prices in the second half of 2009 started in several countries. However, it should be noted that the world property market is still dealing with a lot of big problems. Data from many countries proves this.
The first signs of recovery can be seen in China, Portugal, Australia, New Zealand, France, Sweden, Hong Kong, Israel, Switzerland, Indonesia and Norway.
In Portugal the prices increased slightly more than 1 percent. Government subsidies, which are announced in Croatia, are the reason for growth in France, which is slightly higher than 3 percent. A similar percentage can be seen in Sweden. Swiss market opposes crisis since the end of 2008 and prices have risen nearly 5 percent in the first half of this year. Similar situation can be seen in Norway, which also shows a constant increase in prices in 2009. In other European countries a further fall in prices was recorded, ranging from small 1.75 percent in Germany to almost 10 percent in Bulgaria. The biggest drop of more than 26 percent was recorded in Riga, the capital of Latvia. Real estate market in this country is one of the hardest hit by the crisis, with a drop of more than 60 percent this year.
In the U.S. market there was a slower decline, which is quite good if we take into consideration that the United States is where the crisis started. In the second quarter decline was about 14 percent, which is about 4 percent less than the decrease of 18 percent from the first quarter. As for the rest of the world, quite a large drop of almost 50 percent was recorded in Dubai, but we also saw a slower decline in the second quarter there too.
Unlike the rest of Europe and the world, the crisis and the price drop in Croatia were not so drastic, but it is a small and rather open economy, so it is important to follow the events on the international markets.

Croatian courts have a difficult task of selling a large number of houses, flats and small apartment buildings whose owners have failed to meet their obligations to banks.
Owners of mosto properties are mostly citizens, while there is much less companies with similar problems. The value of property that will be offered for auction by the end of 2009. is about 250 million kunas (more than 30 million euros), but it is very likely that the sales will be achieved with a much lower prices, even up to 50% cheaper.
According to statistics over 93% of these procedures that were conducted during the last 5 years were conducted over ordinary citizens and sometimes craftsmen. Most requests for starting the proceedings came from the banks and other financial houses, but a good part often comes from other people or state institutions.
In addition to residential real estate, a number of meadows and fields is also found for auction. Many farmers have in recent years raised large loans for improvement of production, and now are in trouble because they are incapable of returning their debt and must sell the agricultural land.