In October there were 7.6% more building permits issued than in October 2019. Also the expected value of construction work is up 9.7% YoY amounting to HRK 3bn.

The Croatian Bureau of Statistics has published data on building permits issued in October, and the numbers are up looking on the monthly level. In October there were 7.6% more building permits issued than in October 2019. Also the expected value of construction work is 9.7% up YoY amounting to HRK 3bn. But when we look at 10M 2020 period, the value of expected work for permits issued it is still down 20% YoY. In the first 10M of 2020 there were in total 7,668 building permits issued and 7.4% YoY less than in the same period last year. 75.5% of those building permits pertain to new constructions. This 2.1 p.p. higher than in permits issued in 10M 2019, which means that the demand for new construction is expected to increase. Also the value of construction work done with own workers and new orders in 9M 2020 amounts to HRK 13.9bn and is 8% up YoY.

Could this mean that construction sector is preparing for higher demand once economy picks-up and employment and wages start growing again? If we were to take lessons from the last crises it is not likely that this sector will recovery anytime soon. When looking at the number of completed buildings on an annual level we can see that it has started to grow only in 2016 when it grew 4% YoY after 9 years of decrease. In 2019 number of completed buildings increased 12% YoY while floor area of completed buildings increased 16%. Before the 2008 financial crisis, Croatian construction companies have been posting strong results on the back of a booming construction cycle in Croatia. However, as the financial crisis struck, investments came to a halt which triggered a downward spiral for the sector.

Number of Completed Buildings