Success Factors of Urban Property Management in Croatia

Abstract

Local self-government units in the Republic of Croatia own a large number of different types of property. Real estate represents the most valuable form of income in the non-financial property portfolio. It is considered property of the highest value, which is disposed of and managed by the cities. Such real estate
is the indirect ownership of all citizens, making the insurance of its effective management important. This paper shows the poor use of real estate as a city’s source of financing, reflected in the indicator of return which the cities realise on the basis of the real estate in their ownership. Using panel regression, the paper
empirically explores the indicators of return on real estate in Croatian cities in the period between 2005 and 2017, with particular emphasis on the quality of city administration as an important indicator of the utilisation of real estate. Due to the lack of credible and publicly available indicators on the quality of the cities’ administration, this paper uses the number of entrepreneurs per capita as a proxy variable for the quality of the cities’ administration. This approach is based on the Tiebout model of foot voting.