Property Market Growth

[johncerhan]

I have just started researching the property investment opportunities in Croatia probably focusing on the holiday home market in Istria.

Does anybody have, or know where to obtain market growth figures for the past few years and/or forecasts for the next?

[Joann Badovinac]

HI MY NAME IS JOANN
I USED TO LIVE IN PULA FOR ABOUT 6 YEARS BEFORE THE WAR STARTED. MY FAMILY OWNED A HOME THERE IN A LITTLE SUBURB OF PULA. IT IS ONE OF THE MOST BEAUTIFUL CITIES I HAVE EVER BEEN IN. THE HOUSE THAT MY FAMILY OWNED ,
WAS A 2 STORY HOME WITH 6 BEDROOMS AND 2 1/2 BATHS.
MY FAMILY SOLD THIS HOME 3 YEARS AGO FOR ABOUT $128,000. ALL I CAN TELL YOU IS THAT THE PRICES OF THE HOMES AND APARTMENTS HAVE INCREASED DRAMATICLY AND THAT HOUSE WOULD BE WORTH $280,000 TODAY.

[Peter Ellis]

I can only really advise on Istria, where we have sufficient comparables. Apartments, depending on location, are going up between 20 and 25%pa. Ones near to marinas or on the seafront do particularly well. Rebuilt or newly built stone houses with pools are going up around 30%, as supply cannot keep up with demand.
The liklihood is that this will continue, with sharper rises as we get nearer joining the EU, similar to the effect that it had on prices in the Czech Republic, Hungary, Slovakia and just to the North of us in Slovenia, when they were almost in the EU.

[beth 79]

does anybody know how to get from nice france to dubrovnik? or split? to look at coastal properties to purchase. thanks. [e-mail]

[Peter Ellis]

Air Mediterranea from Toulon had flights in to Dubrovnik this morning. Toulon should not be too far from you.

[balacleigh]

Has anybody any info on how the market in Istria has performed this Summer and where demand has been coming from ? Also has the Summer season been a good one ? Has hotel accomodation been full and at high occupancy.

Thanks in advance.

Conor

[Graham Amiss - Bosmere Travel]

Re accommodation there is overcapacity in most areas for apartments except for a few odd weekends of the year, however there is a shortage of cottages and isolated villas that would meet the requirements of the more affluent tourist. We have not had any problem with hotel accommodation all season, sometimes specific hotels are full but there is always something that we manage to come up with close by of equal standard.

[Peter Ellis]

Istra has been relatively quieter this year. The locals attribute it to the motorway down to Split opening and theoretically making it easier to get further down the coast.

However the horror stories of huge traffic jams at the bottom end have encouraged the Istrians, who anticipate that next year, the tourists will opt for the more reliable journey to Istra.

As Graham says, there is still an unfulfilled demand for isolated villas with pools for the better off tourists. Clients of ours have had no difficulty filling them this summer.

We continue to find builders to do them and are about to have some more from other developers as our previous developer has sold his entire production for the next two years.

[LT]

Hello,
Im a Croat who is currently living in the US. My husband and I own property in the US and Canada and have considered buying property in Croatia for a while now but found that the entire buying process is very discouraging. I am very impressed with all the foreigners going to Croatia and taking the plunge.

Here are just a few comments based on experiences we have had over the course of three days of house-hunting on the Makarska Riviera in June 2005:

Agents> Most local agents demand some ridiculous upfront cash incentive to even show you their properties.... unheard of anywhere else! They dont necessarily network with other agents so they only show you what they have listed which can be so not worth your time and money. Then they dont even know what the properties are all about. They know they are for sale and that the owner has a building permit but they dont know what for. So what this means is that you are looking at a piece of land and imagining a house there, meanwhile the permission is not for a residence at all. And if it is, it may be just for a residence of a much smaller square footage.

Also, they dont tell you that you can't build on certain lots during certain seasons. So they sell you waterfront in February and then, by the time you get your paperwork done you find you can only build outside of the season. so there you are, 100,000 quid later, sitting on a piece of land you cannot build on for a year.

Also, we have looked at properties that were built too close to the beach and when investigating with the planning offices, we found that the property is "hot" and that the building permit was given by someone who ....oh how strange....no longer works there.....

I love Croatia, its my country and it pains me to see that honest people are being ripped off wherever possible. Im posting this not to discourage but to make people aware that it might be better to sink another 10K into a good angency that will take care of you than to try and do it yourself. Even as a Croat, you are not protected...unless of course, you have a friend, who has a friend.....who can do you a favour.....so beware!

:-/Hello,
Im a Croat who is currently living in the US. My husband and I own property in the US and Canada and have considered buying property in Croatia for a while now but found that the entire buying process is very discouraging. I am very impressed with all the foreigners going to Croatia and taking the plunge.

Here are just a few comments based on experiences we have had over the course of three days of house-hunting on the Makarska Riviera in June 2005:

Agents> Most local agents demand some ridiculous upfront cash incentive to even show you their properties.... unheard of anywhere else! They dont necessarily network with other agents so they only show you what they have listed which can be so not worth your time and money. Then they dont even know what the properties are all about. They know they are for sale and that the owner has a building permit but they dont know what for. So what this means is that you are looking at a piece of land and imagining a house there, meanwhile the permission is not for a residence at all. And if it is, it may be just for a residence of a much smaller square footage.

Also, they dont tell you that you can't build on certain lots during certain seasons. So they sell you waterfront in February and then, by the time you get your paperwork done you find you can only build outside of the season. so there you are, 100,000 quid later, sitting on a piece of land you cannot build on for a year.

Also, we have looked at properties that were built too close to the beach and when investigating with the planning offices, we found that the property is "hot" and that the building permit was given by someone who ....oh how strange....no longer works there.....

I love Croatia, its my country and it pains me to see that honest people are being ripped off wherever possible. Im posting this not to discourage but to make people aware that it might be better to sink another 10K into a good angency that will take care of you than to try and do it yourself. Even as a Croat, you are not protected...unless of course, you have a friend, who has a friend.....who can do you a favour.....so beware!

[Peter Ellis]

Hi LT!

So much of what you say is very true. I am sure that the success that we have had has been down to trying to do things in the way that foreigners are more accostomed to. We certainly don't charge applicants to view properties. If we are to do our best by our vendors, we need to show people their properties and not put buyers off by charging for viewings.
I suspect the many other agents who do, do it because they are waiting for buyers to pass their doors rather than going out, as we do, advertising abroad and having an active website that draws in the serious buyers.
Because they essentially rely on holidaymakers, many of whom have nothing better to do for an afternoon, they charge in order to identify serious buyers. Unfortunately this also alienates many who understandably object to it. We often spend two or more days with buyers, finding them exactly what they want and developing their confidance in investing here. For all the pitfalls, it is a super place to invest. Many of the agents don't actually sell very much, even ones who have been in business a long time, and probably are fairly desperate to cover their costs. We regard the cost of viewings as a normal business expense, just like the phone bill, or the electricity bill and don't see it as reasonable to charge applicants.

We have a lot of our own properties. 99.9% of the property on www.croatiapropertyservices.com is directly from the owner. On the other hand, we also work with a number of other local agents, both locally and down in Dalmatia, and if we haven't got what an applicant needs, we do ask our colleagues in other agencies if they can help. I agree that it isn't that common here, though. Most of the local agents seem to be so competitive that they would rather turn down a split commission than work together. The more savvy ones do though and we now find that because we have a good reputation for selling the more luxurious properties, other agents are actually letting us know of their higher end properties when they get them, to see if we can find a buyer for them. It is no more than we used to do when I originally trained as a Chartered Auctioneer & Estate Agent, 40 years ago, when part of my job each week was delivering sales particulars to every other agent in town, as well as the banks and solicitors, but it is unusual still here. It will change eventually.

Good title is often a problem here and we often turn down property if the vendor can not show us the correct paperwork. Clearly other agents don't always do this. We are fortunate in that my wife is a Croatian property lawyer and we can check more easily before taking on a property. She has often had cases where she has been retained to do contracts for foreign buyers buying from other agents where the title was obviously defective and the agent was wasting everyone's time, including his own, by even offering the property. There is no sense in it.

One real problem is that, in order often to avoid tax, people have done deals in the past that were never registered and got away with it. Now that property is worth much more and may offer life changing possibilities for the 'owner', they naturally want to sell it. They paid for it, perhaps many years ago and regarded it as theirs. When the registered documentation suggests otherwise, they still try to sell and many agents just take their word for it and go ahead. 'The papers are clean' is a phrase we hear all the time, but we have learned to take nobody's word for it and to check it ourselves. before proceeding. That is what we believe buyers expect of an agent.

If our experience is anything to go by, the agents who will succeed will be the ones who are customer focussed, who anticipate what the customer needs and who are open when the customers need them. So many just close at 15.00, because they always have done, rather than asking themselves whether they might do better being available later and at weekends. We are open 7 days a week, because many people don't want to cut in to their annual holiday entitlement and prefer to come and look at property over the weekend. To us, it seems obvious.

In short, yes, the pitfalls exist, but if you get a decent agent and lawyer, there is no reason why the experience should not be entirely successful. There are good and bad everywhere, not just in Croatia.

[balacleigh]

All,

Many Thanks for the information.

Regards

Conor

[Charles Southgate]

I couldn't agree with Peter more. Most agents in Croatia think that giving any information away about a property is liable to see them cheated out of a deal. We're based down in Dalmatia www.aplaceindalmatia.com and have our own properties as well as co-operating with others. It makes a great sense to get some revenue rather than none and we believe customer service is the key. We aim to be as professional and customer orientated as possible.

Clean papers are the vital element to successful buying in Croatia and we too check them beforehand. Having been let down by an agent on this when we had fallen in love with a property and wanted to buy it, it's importance can't be stressed enough. Employing agents and lawyers who know how to spot potential pitfalls upfront saves a lot of time. effort, heartache and reputational risk.

Charles

[Martina]

Hi Peter,

For research purposes - would you have any idea/estimates how many Brits & Irish have a property in Croatia (both via company & 'suglasnost' routes) ?

Also, would it possible to quantify annual demand for Croatian properties from these two markets and whether it's growing, stagnating or declining?

No, I'm not planning to set up another agency but rather compliment estate agencies' services and help potential buyers with some post-buying services, including letting and maintenance services...

Thanks a lot.

Regards,
Martina

[Peter Ellis]

Hi Martina

I've no figures at all. The Ministry of Foreign Affairs might have something. We obviously know what we have sold but there are plenty of other agents selling to foreigners too. We've also been selling to expats of British and Irish origin. Whether they get listed by that or by the country they currently live in, I don't know.

Cheers

[Dario]

Hi Martina,

I had a very similar task a few months ago but it was almost impossible to gather reliable data on foreign property ownership in Croatia.

However, here's what I managed to estimate from various sources ( to cut the story short...) and figures relate to the UK market only:

Total property ownership: 280 - 320
Annual Demand ( queries ): 1600 - 2000 (trend + 40%)
Annual purchases: 60 - 90 ( trend + 85%)
Average spend: £75.000
Most popular destination: Istria

Again, figures are estimated and gathered from various sources including websites, estate agents, solicitors, local land registry offices & Croatian foreign office.

If anyone have better data / estimates I'd like to hear them too....

Regards,
Dario