Croatia - Property market overview

Key points to note:

Outlook for Croatia property prices:  Property prices continue to rise steadily in Croatia at about 10 % per annum. There is a lack of supply for quality villas both for purchase and rental.  Hence Villa prices are forecast to grow at greater than the market average.   Istria is seen as being one of the key Croatia regions with it's popularity as a tourist and second home base growing.  We are seeing asking prices in Istria, for quality villas, rising from the 2004 level of 1,850 Euro per square foot to 2,200 - 2,500 per square foot, depending on location.  

Prices are forecast to continue growing up to and possibly beyond the EU accession in 2009/10.  Indicators supporting this growth are:

  • Rental yields improving :   today yields are averaging 9% and are  forecast to grow to 10-12% as the tourist season extends.
  • Croatia is the hot travel destination:  In 2006 Croatia was voted the top European choice of travel professionals worldwide.  Croatia scored top in the most exciting country and best value for money.  Croatia continues to get an excellent press write up and Istria is highlighted for it's countryside, activities, yachting basin and excellent food.
  • Property price equalization with Italy :  Prices for like for like Villas in Istria are still about a third to a fourth of Italian prices and equalization over time is  forecast by many industry observers, including FPD Savills.  Plenty of room for appreciation!
  • Improved airline access: UK budget airline operators have opened up new routes, including direct routes into Istria.  This is important both for making second homes attractive to Brits (although a large part of Europe can drive comfortably to Istria and it is a favoured second home destination for the Germans) but also helps to increase demand for rental.
  • EU talks positive:  Press comment on these negotiations is varied but this is all part of the process for accession into the EU.  The key issue is that the talks continue to progress towards an entry date of 2009/10.
  • Improved Liquidity:  Mortgages for Croatia properties are becoming available, a number of VestaLand customers are currently applying for mortgages.  The mortgage market is at an early stage and so not a straight forward process! We will develop an understanding of how to work the system and it will be smoother over time. The development of a functioning mortgage market should have a major impact, it will open the market up to a wider segment of buyers and hence should stimulate price increases, particularly in the villa segment.
  • Growth and sound economy: 5% annual GDP growth (currently) and a mixed economy (30% industry, 60% services and 10% agriculture).
  • Stable currency: the Kuna closely follows the Euro and major transactions (including property) are often negotiated in Euros.
  • Freehold rights: No restriction on foreign ownership; freehold rights are available.

Within Croatia our top pick region is Istria: 

  • Proximity to Europe; less than 30K from the Italian border

  • Easy access; by road, air and sea

  • Choice or airports: including Trieste ( for UK budget carriers)

  • The New Tuscany: Stunning landscape and historic villages

  • Careful Planning:  Istria is taking a very considered approach to the development of Tourism

  • Culture and Sports:  Istria is a centre for culture and sport, attracting holiday makers wit it's many and varied activiites.

  • Focus for yachting: Many of the towns along the Istria coast have harbours for Yachts. The clear seas and many islands are increasingly attracting the yachting set.

  • Great food and wine !!!  Istria featured in the Times food section in May 2005

 

Summary comments: Over the last few years Croatia has become one of the hot investment spots in Europe.  It is seen by some as the “new Italy”.

Croatia is on track to join the EU and its foreign policies are all tailored towards achieving this as smoothly as possible. Croatia has recently been receiving favourable reports from highly reputable organizations which included the Financial Times “Croatia - The Mediterranean’s latest property hotspot."

There is real potential for capital appreciation and world financial institutions are predicting an increase in property by 200-300% in the next 3-5 years. There has been a influx of foreign travelers to Croatia seeking the sun drenched beaches, lush pine forest and extensive vine yards.

 

The Istria region of Croatia  is our pick for 2007. 

 

  • Detailed information - Croatia

    It is our goal to develop a range of investment opportunities for people who are looking at buying investment property.  Please find below information that we think is useful property investment advice.  The information ranges from web links to interesting web sites, news articles and property reports that we have found.  We do not necessarily agree with all the comments made. 

    For more detailed information on Istria take a look at  www.propertycroatia.biz

     

    • Country Information:

     


     

    Croatia is economically sound and EU accession is being sought. The economy is a mixed one, with 30 per cent attributable to industry, 7.9 per cent to agriculture and 62.1 per cent to services, including tourism. The growth in GDP is 4.3 per cent per annum. The currency, the kuna, was formerly pegged to the deutschmark and now shadows the euro. It has been stable for several years.

    Before the dissolution of Yugoslavia, Croatia, after Slovenia, was the most prosperous and industrialized area, with a per capita output perhaps one-third above the Yugoslav average. The economy emerged from its mild recession in 2000 with tourism the main factor.

    Croatia is forecast  be a new "European" rival of  Italy, Portugal and Greece in the Mediterranean coast

    Now, Croatia is on track to join the European Union and its foreign and economic policies are all tailored to achieving this as smoothly as possible. Many people, Croatians and foreigners, are investing in property, fully expecting the same rises in property values that were seen in other EU candidate state prior to their accession

    Of the varied parts of Croatia it is Istria that has attracted attention as the new Tuscany.    Istria is situated in the north of Croatia and is the largest peninsula in the Adriatic region. The spectacular, well-intended shoreline has numerous bays, islands, coves and pebble and rocky beaches. Summer sea temperatures range from 23-27 Celsius, generously warmed by a sunny Mediterranean climate.

     Until 1945 Istria was part of Italy. Indeed for some 500 years it was the summer playground of the Venetian republic. The city of Venice, just a 90 minute boat ride away , is clearly visible on a sunny day. 

    Istria retains a distinct Italian flavour. Architectural reminders including piazzas and Tuscany-style farmhouses are everywhere. Italian aromas fill the air with restaurants serving gnocchi, truffles and classic northern Italian fare. Boasting over 600 restaurants. Istria has a unique cuisine enlivened by many influences. Local wines, especially Malvasia and a Momjan Muscat, compare with a high quality French or Italian. 

    The heritage of hospitality and tourism  can be traced back in the 19 century. The time of the Austro-Hungarian Monarchy saw the boom of tourism and the growth of numerous facilities along the coastline: hotels, boarding houses, restaurants, beaches and spa baths. Towns like Portorož, Umag, Poreč, Rovinj, Pula and the Brijuni Islands on the west and the town of Rabac, Lovran and Opatija, started growing into real tourist centers. 

    Property Market

     

    Croatia offers a good investment opportunity. Prices are rising steadily and rises of 20 per cent per annum are considered to be reasonable forcasts.

    In fact World financial institutions are predicting an increase in Croatian real estate value of 200 per cent - 300 per cent in next few years.

    Property prices in Istria - where property is still affordable - are rising steadily at 20% per annum

    The Croatian government started to restrict further development alongside the coast ,in order to protect the environment and avoid “concrete holiday destinations” , the properties already built and the plots of land that already have planning permission are increasing in value.

     

    Property  in Croatia is still much cheaper in comparison to other property hot spots in the Mediterranean, like Spain for example.

     

    Property prices differ depending on the area of Croatia you decide to buy. Dubrovnik, which has received a lot of good press in the last years, has already seen significant increases in value.

     

    In Southern Istria, towns like Pula, Medulin, Premantura and Pjescana Uvala prices are still lower and offer potential for capital appreciation.