Glas gospodarstva plus (Voice of the Economy), March-April 2018

15.09.2018 / Matija Tomšič
The market for commercial real estate continues to grow - The price is a reflection of subjective expectations - What interests the buyers?

The market for commercial real estate continues to grow

The arrival of some larger multinationals to our market promises at least a sustainable growth in the number of sales and rent outs of the commercial real estate.

The price is a reflection of subjective expectations

Nina Hudnik, the director of Roni nepremičnine, concludes that the commercial real estate market is still growing: “It would be difficult to talk about a lack of new commercial real estate, especially because the market is packed with real estate for sale and for rent. Their high prices do not reflect a higher demand, but merely the owners' subjective expectation of the economy's quick recovery and the rise in people's purchasing power. Despite the fact that giving out loans is becoming less risky for banks, the requirements for the insurance of loans are getting higher, the interest rates are increasing and the time to pay off loans is shorter, no changes have been seen in the number of sold real estate and the height of prices so far. The price range of commercial real estate varies, but high prices are justifiable for a new commercial real estate, built to high standards and on great locations.” She added that the market for commercial real estate is already doing better than it did before the crisis: “If we consider the cluster of investors, already known for having bought larger quarters of land for commercial building, and several multinationals coming to our market, we can expect at least a sustainable growth in the number of sales and rent outs of commercial real estate.”

What interests the buyers?

According to Roni nepremičnine, the buyers are interested in primary revenue, of which the demanded height and expectation are conservatively on the rise. Criteria such as location, the functionality of the real estate, potential for further development, year of build and price are also important.

Nina Hudnik, as well as other real estate agents, stresses that there is no recipe for a successful commercial real estate sale or rent execution because each real estate is unique. However, it is often a good tenant with a long-term lease and good revenue that seal the deal. It is one of these two conditions that help convince the buyer or investor to take on a commercial real estate: “Of course, if a company decides to purchase a commercial property for their own personal needs, they follow different qualities and criteria than those looking to invest and profit.” Roni nepremičnine primarily advises all owners of commercial property to get a reliable tenant with a long-term lease. After this step, they can start selling their real estate together with the tenant and can surely guarantee an income to the potential buyer. “With this approach, we can establish solid grounds for real estate as ​an investment.”