CROATIA’S property market continues to boom and the Istrian peninsula – the
so-called “new Tuscany” – is attracting significant investment. The
peninsula is very reminiscent of the Mediterranean of old: it offers some of
the finest wines, truffles, olive oil and sea food. Inland there are hills
and medieval towns, and the coast remains largely untouched by the tourist
boom of the 1990s. Even so, with its spectacular scenery and the easy access
to skiing in Italy, Austria and Slovenia, the region lures a third of all
tourists heading for Croatia.
Croatia’s island resorts and unspoilt Adriatic coastline have always been a
holiday favourite with Italians, Germans, Austrians, Slovenians and French.
Tourism was severely affected by the conflict in the Balkans between 1991
and 1995 after the break-up of Yugoslavia. However, 12 years on, Croatia has
hopes of joining the EU and Nato by 2010 and is regaining its reputation as
a desirable holiday location.
Last year the country attracted about ten million tourists, and the World
Travel and Tourism Council estimates that tourism in Croatia will rise
annually by 8 per cent between now and 2015, compared with a global average
of only 3 per cent. So it’s no surprise that demand for property in Croatia
is increasing dramatically. Prices are expected to rise sharply in the
run-up to the country joining the EU, and local people, who tend to buy
inland, and foreigners, who prefer the coast, see property as an excellent
investment. The upmarket estate agent Knight Frank forecasts that average
property prices in Croatia will grow by 12.5 per cent this year. Istria,
which lies in the northwestern corner of the country, close to the Italian
city of Trieste and just 2½ hours from the UK by plane, is considered by
agents to be a prime location for such investment. Peter Ellis, of Croatia
Property Services, claims: “As a second-home destination, Istria is
unsurpassed.”
Liliane Scully, of the property agents Adriatic Riviera, says: “Istria has it
all – wonderful coastal resorts, magnificent hilltop inland villages, such
as Motovun, Groznjan and Visnjan and the famous Brijuni Island and Lim
fjord. It offers easy access to other parts of Europe, a high standard of
infrastructure, Mediterranean climate, a low cost of living, low crime
rates, friendly English-speaking people – and local property prices that are
affordable.”
The data analysis website Propertysecrets estimates that there are now 4,000
holiday homes in Croatia. It says that, in general, cities are more suitable
for investment than coastal towns and villages because they cater for the
local market and are usually more stable. It tips the capital, Zagreb, where
it says prices are rising at more than 10 per cent a year.
Philippe Robin, of Selection Property, says that demand among foreigners is
generally strongest for modern properties along the coast, particularly in
the towns of Umag and Novigrad. He reports that average property prices in
Istria have doubled since 2000, yet remain much lower than southern Croatia.
Property prices in Dubrovnik, for example, have reached €6,000 (£4,000) per
sq m, while prices in the tourist centre of Porec are the highest in Istria,
at about €3,000 per sq m. However, he high-lights Novigrad as being a
property hotspot now. The buzz around a new marina and the recently
constructed five-star Nautica hotel have pushed prices up to €2,585 per sq
m.
Adriatic Riviera is currently offering a selection of two-bedroom apartments
in Novigrad for €165,000. In addition, it has a range of apartments for sale
in Pineta, a small residential development consisting of 27 apartments, also
in Novigrad. Property prices start from €116,500 for a two-bed flat that
measures 59 sq m; it hasa parking space and a communal swimming pool.
Although Croatia has strict planning laws, obtaining planning permission for
new residential developments is easier in Istria, which explains the number
of construction cranes that are scattered across the city. For the time
being the supply of new units coming on the market is still outstripped by
demand.
The most exclusive villas have been built inland, around the hills of Motovun,
according to Andreas Dussmann, of Dussmann Homes. He says that Istria is
undergoing huge changes as it bids to become an exclusive holiday
destination.
Liliane Scully says that five new golf resorts are planned for Istria, with
construction work on two projects scheduled to start soon. She says: “Golf
courses, which to date have not been a feature in Croatia, will come on
stream in the near future. This should extend the rental season overall, as
has happened in other European countries.” The holiday season in Istria
generally lasts from Easter to the end of September.
Scully predicts that average property prices in the region will appreciate by
15 to 20 per cent over the next few years, boosted by the increasingly
year-round rental season.
Peter Ellis sums it up: “Istria is the nearest point on the Mediterranean for
half of Europe and this will continue to drive up prices based on investment
coming in from other Europeans, not just the British.”
For buying advice and an analysis of emerging property markets, go to: timesonline.co.uk/overseasproperty
CROATIA
Istria is the only part of Croatia for which government records on house
prices and ownership is up to date; this minimises potential risks with
title deeds.
To obtain finance to buy a home you have to set up a Croatian company. Only a
few banks offer this service with 70 per cent loan-to-value mortgages
available. Borrowing rates are about 7.7 per cent.
If you buy as a private individual, you need approval from the Ministry of
Justice to let it, although accession to the EU will make this easier.
Ryanair flies to Pula and easyJet to Rijeka, making Istria more accessible.
There is a property transfer tax of 5 per cent, but for new property sold by a
PDV (VAT) registered company this will be levied only on the land value (or
a proportion of it for a block of flats).
Estate agents charge commission of between 2 per cent and 4 per cent.
To
search for properties in Croatia on propertyfinder.com click here
To find the Croatian
property for you on properazzi.com click here
I would agree with you on the necessity of not just going on listed prices when accessing price rises. Any evaluation that we do is based on comparisons with the prices of properties that we have sold. A minority of vendors ask very optimistic prices for property. We had one recently asking 350K for a property they had bought just a few months before for 200K and we refused even to list it, as apart from the unliklihood of it being achieved in the short term, it would have given an unrealistic picture of prices here where there are still huge numbers of much better deals.
We are also wary of giving blanket figures for price rises. Prices go up according to supply and demand in specific areas. A lot of building land for example in the Porec area went up 200% in the last 18mths, but almost entirely on the back of one developers' need for a lot of land on which to build stone villas that he had contracted to build in that particular administrative area. Other areas went up much slower.
Peter Ellis, Visnjan, Croatia
The agents should be careful when talking about price rise based on the list prices of properties. Unlike in Ireland or UK the advertised price is normally revised downwards depending on how quickly one can organise funds. Show up with a suitcase of cash and the price goes down 30%. Also, a lot of properties don't move for 12 months or so because of ludicrous prices. This is especially the case in Zagreb and has started to filter down to the coast as well. According to Croatian papers the sales are down 60% as foreigners move to more affordable locations (i.e. Turkey, Spain, Montenegro). Also bear in mind that the services in Croatia are crappy and overpriced most of times. Trust me on that one, I'm a Croat.
Dom, Manama, Bahrain