In Croatia number of building permits edges up 1.2% y/y

The number of newly-issued building permits edged up by 1.2% y/y to 676 in January following one-off decline in December, according to the latest stats office data. We note that the indicator has been growing at a double-digit pace in all months from March 2016 through September 2017.

In January, the number of permits for buildings stabilized y/y after growing in the previous month and the permits for dwellings collapsed by 35.9% after the double-digit rises in the previous months. Thus, the improvement was on account of civil engineering works only, where the number of permits was up by 7.3% y/y this January (switching from a decline of more than 20% in the previous months) and the planned value of works rose by 14.1% y/y. New construction accounted for 71.3% of the total issued permits in January, slightly lower than in December. From the other breakdown, buildings accounted for 82.5% and 17.5% on civil engineering works, the same structure from the previous month.

All in all, building permits’ developments in the past two years suggest robust recovery of the construction sector. A major push should come with the start of large infrastructure projects that are financed with EU funds. However, there are severe shortages of labor force in the sector apparently and media reports indicate that some construction companies are refusing to take projects due to lack of personnel. Trade unions claim that there is a permanent lack of some 4,000 to 5,000 workers in the construction sector. The government responded by approving a higher quota for foreign workers in the sector for 2018 as well.

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