Achieving Sustainable Development on the Croatian Waterfront
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Achieving Sustainable Development on the Croatian Waterfront . Challenges and Opportunities By Bozho J. D. Deranja B.S., Finance, 2000 University of Southern California Submitted to the Department of Urban Studies and Planning in Partial Fulfillment of the Requirements for the Degree of Master of Science in Real Estate Development at the Massachusetts Institute of Technology September, 2008 ©2008 Bozho J. D. Deranja All rights reserved The author hereby grants to MIT permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part in any medium now known or hereafter created. Signature of Author_________________________________________________________ Department of Urban Studies and Planning July 31, 2008 Certified by_______________________________________________________________ Dennis Frenchman Leventhal Professor of Urban Design and Planning Accepted by______________________________________________________________ Brian A. Ciochetti Chairman, Interdepartmental Degree Program in Real Estate Development Achieving Sustainable Development on the Croatian Waterfront . Challenges and Opportunities by Bozho Deranja Submitted to the Department of Urban Studies and Planning on July 31, 2008 in Partial Fulfillment of the Requirements for the Degree of Master of Science in Real Estate Development Abstract Croatia stands true to its marketing slogan, “the Mediterranean as it once was”, with tiny tiled-roof villages dotting the unspoiled coastline-- but for how long? Since it declared independence from Yugoslavia in 1991, Croatia has been on the rise attracting tourists to its Adriatic coastline and over 1000 islands, reaching its prewar tourism numbers when it led the market as the top destination for European vacationers. Investors, speculators and developers have all followed suit, attempting to take advantage of the beautiful coastline and growing market. However, developers have had minimal success navigating through the overly restrictive planning and permitting bureaucracy. In the meanwhile, two to four story apartment hotels have sprung up like wild fire (legally and illegally) and are dominating the coastal accommodations and threatening the natural landscape. As most of the Mediterranean coastlines are 70% developed, Croatia maintains only 15% of its coast developed; creating a strong comparative advantage that must be preserved and strategically utilized. The current system does not have a vision of how to accomplish this. An analysis of the sustainability of the coastal development process in Croatia was conducted beginning with an intense review of available literature, followed by a series of personal interviews with key figures in the market. The seven coastal counties of Croatia were visited during the interview process where developers, architects, city and state officials, business consultants, lawyers, academics and investors shared their knowledge about the opportunities and challenges of this exciting market. Economic drivers, land use policy, design, financing, infrastructure capacity and operations were all reviewed as key elements of the development process. An analysis of these elements produced a final recommendation establishing a vision for the Croatian coast and an Adriatic Coastal Planning Policy to carry out that vision for generations to come. Thesis Advisor: Dennis Frenchman Title: Leventhal Professor of Urban Design and Planning 2 Bozho Deranja Sustainable Development on the Croatian Waterfront Acknowledgements This thesis would not have been possible without the guidance of my advisors, the support of my family and friends, and the vast amounts of information collected in the personal interviews. My advisors, Dennis Frenchman and David Geltner, provided a wealth of knowledge and helped me channel my efforts and explore my passions. I would like to thank all business professionals, city and state officials and academics who took the time to meet with me and share their insight into this stimulating market. I would like to especially thank Sean Simms, David Timmons, Eulogio Bordas, Guy Perry, Eugene Soric, Fabio Jelicic, Vida Ferlin, Nevenka Cavlek, Mato Bartoluci, Ratko Cimerman, Ljubimir Miscevic, Rafaela Kovacevic-Pasalic, Danijel Katicin, Mario Seric, Marco Julia-Eggert, Stanislav Pavlin, Kristian Sustar, Gorana Banic, Tonci Vlahovic, Jelena Paljetak, Ruzica Simic, Ido Kapner and Keith Gurnee for their thought provoking interviews. I would like to thank my parents for their constant support and encouragement, my brothers and sisters for their helpful advise and inspiration, my extended family in Croatia for their open homes and open hearts, and my friends for their understanding and comic relief. The Center for Real Estate at MIT has provided me with this wonderful opportunity to study a topic that I love. I hope to continue in life with the same passion that I have developed in my time at MIT. 3 Bozho Deranja Sustainable Development on the Croatian Waterfront Table of Contents 1.0 Introduction.............................................................................................................................................8 1.1 Purpose................................................................................................................................................9 1.2 Methodology.....................................................................................................................................10 2.0 Croatia in general..................................................................................................................................12 2.1 Short History.....................................................................................................................................12 2.2 Coastal Landscape ............................................................................................................................12 Geographic..........................................................................................................................................13 Climate - Weather...............................................................................................................................14 National parks .....................................................................................................................................14 Nature Parks........................................................................................................................................15 World Heritage Sites...........................................................................................................................16 Access .................................................................................................................................................18 2.3 Croatia Today....................................................................................................................................18 Economic Climate...............................................................................................................................18 Tourism...............................................................................................................................................19 Business ..............................................................................................................................................19 2.4 Governmental Process.......................................................................................................................20 Government.........................................................................................................................................20 Government Transparency..................................................................................................................21 Centralization v. decentralization .......................................................................................................22 Privatization ........................................................................................................................................22 Accession to European Union.............................................................................................................23 3.0 The Development Process.....................................................................................................................25 3.1 Purchasing Property ..........................................................................................................................25 3.2 Land Registry and The Cadastre Project...........................................................................................26 4 Bozho Deranja Sustainable Development on the Croatian Waterfront 3.3 Land Use Policy................................................................................................................................27 Site Selection ......................................................................................................................................30 Coastal Protective Belt........................................................................................................................30 Time Requirements.............................................................................................................................30 Uses.....................................................................................................................................................31