Croatia Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Croatia Facility Management Market is expected to grow by registering a CAGR of 2.1% during the forecast period (2022-2027). The growing propensity to adopt specialized solutions and services across various high-growth sectors in the country such as construction, manufacturing, and IT is creating significant demand for facility management solutions in the country.

Key Highlights

• Croatia has been a member of the European Member since 2013. Becoming a member of the European Union has significantly boosted the growth of the country with several EU grant funds helping the country carry out developmental activities. For instance, in September 2021, under its Recovery and Resilience Facility program, the European Commission disbursed EUR 818 million to Croatia in a pre-financing payment. The increasing number of developmental activities led by such fundings, across the country is creating a supportive atmosphere for the growth of the facility management market.
• According to data provided by the National Bureau of Statistics, in May 2021, a 15.9% increase in the volume of construction work carried out was reported in Croatia, the reported increase is in comparison to the construction work carried out in the country in May 2020. Furthermore, on yearly basis, the volume of construction work to buildings increased by 18% while a growth of 13% was reported in construction work to other structures. The increase in construction activities especially in the commercial sector is driving the demand for facility management services in the country.
• Furthermore, the growth of IT sector in the country has significantly increased the demand for commercial buildings which is a major consumer for facility management services. Microsoft Croatia, Siemens, Ericsson Nikola Tesla, Atos IT Solutions and Services,Danieli Systec, and Constellation Software Group (IN2) are some of the international corporations having their presence in the country.
• Moreover, the country lags behind majority of EU countries in terms of digital technology adoption. For instance, the country ranks 41st out of the 130 economies included in the Network Readiness Index (NRI) 2021, a leading global index which reflects the impact of information and communication technology in economies around the world. Such trends may limit the growth of the studied market during the forecast period.
• The impact of COVID-19 in Croatia was significant during the initial phase as the national lockdown significantly slowed down the economy. Furthermore, the limited activity in the commercial buildings due to restrictions imposed by the government significantly reduced the demand for facility management services in the country. However, the country has framed a recovery and resilience plan wherein it will be receiving a grant of EUR 6.3 billion to support its climate objectives and digital transition.

Key Market TrendsIncreasing investment in Smart City Infrastructure to Drive the Growth

• A smart city refers to a city wherein the intelligent adoption of information and communications technology is used to enhance its sustainability, livability, and workability. The role of facility management becomes even more important for the efficient management of smart cities. Being a part of the EU has significantly boosted the growth of this sector in Croatia which in turn is creating a supportive environment for the growth of the studied market in the country.
• According to ITA, the process of implementing one or more smart solution projects has already been started in about 50% of Croatian cities. Along with the development of Smart City concepts, the Association of Cities promotes an increase in the use of EU funds for Smart City projects. For instance, the Center of Competence for Smart Cities is the largest three-year development project in Croatia in the field of information and communication solutions.
• In November 2021, it was announced that about 40% of public lighting will be reconstructed by the City of Zagreb, using a public-private partnership model in a project worth EUR 42 million. The project is a step forwards in Croatian capital's ambitious target of the strategy of becoming a Smart City. Such developments are expected to drive the demand for facility management and maintenance services and is encouraging the vedors to develop smart solutions.
• For instance, in Diversey - a global hygiene and cleaning company having significant presence in Croatia, launched IntelliCIP (clean-in-place) cloud-based data analytics platform. Designed to securely collate and process food and beverage production CIP data, the platform delivers real-time insight into operational performance of each cleaning run along with the hygiene compliance.

Healthcare Sector to Drive the Demand for Facility Management

• The Healthcare sector in Croatia has witnessed significant growth over the years. Both the research and development and construction of healthcare facilities have increased significantly in the country. For instance, the EU invested more than EUR 48 million from the European Regional Development Fund to extend the Children's Hospital in the country. The project involves the purchase of research and medical equipment and the construction of a 15,000-m2 facility which is set for completion in early 2022.
• With individual medical practices prevailing on the market, the demand for facility management services such as cleaning, and maintenance is expected to increase during the forecast period. For instance, in March 2022, an investment of about EUR 70 million was announced for the expansion of KBC Zagreb hospital.
• The COVID-19 pandemic significantly disrupted hospital care, as along with continuing to fulfill the ongoing health service needs of their communities, hospitals had to deal with a highly infectious virus. This had a major impact on the demand for efficient facility management across the Croatian healthcare sector. Furthermore, the widespread vaccination drive going on in the country is also driving the demand for facility management for efficient management of such drives.
• Moreover, initiatives taken by the Croatian government especially since the outbreak of the pandemic are also creating a supportive market scenario for the growth of the studied market. For instance, the updated long-term National eHealth Strategy of the country, which was planned to be adopted in 2021 emphasizes on telemedicine and include the development of modular IT infrastructure.

Competitive Landscape

The Croatian Facility Management Market is moderately competitive and is expected to become more competitive during the forecast period as the demand for digital solutions and specialized services increases. The major focus area for the vendors operating in the market is to innovate new products and service types to become integrated facility management service providers. Some of the notable vendors operating in the market include Atalian Global Services, Regina Group d.o.o, Diversey Holdings LTD, and Alpeona HSG d.o.o.

• December 2021 - Poseidon Group, an investor, asset manager, and property manager of the Capitol Park centers in Croatia, announced the sale of the assets of Križevci, Krk, Jastrebarsko, Ivanić-Grad, and Makarska to a group of local private investors.
• July 2021 - The Croatian company Asura Facility Management Skopje, a member of the Croatian Asura Group, signed an agreement in the city of Skopje on the management services of the East Gate Mall, which is the largest shopping center. As per the terms of the agreement, Asura will provide all of the needed integrated facility maintenance services.

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