GTC announced acquisition of 12,000 sqm plot in Zagreb, Croatia for its retail and office complex. It is located on one of the Zagreb’s main transportation routes Slavonska Avenja. GTC plans to develop 18,500 sqm of net rentable area. The total investment cost is estimated at some EUR 42m and the completion is scheduled for 2009.
Our view: GTC is already present in Croatia with Avenue project in Zagreb and seaside golf course resort. We remain positive on GTC’s expansion to the SEE region as it provides higher upside potential to CEE3 capitals. The yields in Zagreb are still in 7-7.5% range and therefore provides enough space for contraction. In addition prime retail rents increased last year in Croatia by 20% y/y to EUR 65/month/sqm. This is significantly less than prime locations in Bulgaria (EUR 130/month/sqm), Romania (EUR 120/month/sqm) or even more mature markets of CEE3 countries (EUR 75-115/month/sqm).