ZAGREB, 21 March (Hina) - Rising property prices make it more difficult for more and more Croatians to buy apartments, making rental housing an ever-growing necessity,  it was stated on Thursday at a panel discussion during the second day of the RE:D conference.

Building apartments for rent requires cooperation and dialogue between the private sector, the state and local governments, said participants in the panel discussion titled "Renting Residential Properties – Is a New Opportunity Opening in the Real Estate Market?"

Ilijana Jeleč of the MIDA Group stated that, from the perspective of investors and developers, rental construction projects are currently not profitable, partly because it takes about three years from purchasing land to obtaining permits and finally completing construction, during which time no income is generated from the project.

Additionally, calculations show that with rental construction, it takes about 10 years to recover around one-third of the initial investment, which implies that most of the project’s financing would have to come from equity, with only a smaller portion coming from bank loans.

However, the situation would be different if ready-made projects were available for investment, and in such cases, potential investors do exist, she said.

"The real sector wants to move towards such projects, and the state is supposed to provide an adequate framework, and a dialogue is needed to create quality measures. There is potential for the development of this market, but there is definitely also a need," said Jeleč.

Josip Tica, a professor at the Faculty of Economics in Zagreb, told the event that there are two groups for whom, given relatively low wages and high property prices, buying real estate is not an option – young people, who on average live with their parents until the age of 35, and foreign workers, some of whom will eventually bring their families to Croatia.

He warned that the rental sector is not adequately institutionalised and that there is no "ecosystem" in place that can provide these groups with social, affordable or market-based rental options.

The mayor of Kastav, Matej Mostarac (SDP), believes that Croatia needs a housing law, and that the development of a model for building rental apartments requires cooperation and dialogue between cities, the state and the private sector, as the state and local authorities cannot enter such projects alone.