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Post by Mick on May 27, 2004 18:56:33 GMT 1
Hi all I've been talking to one of the agents involved in marketing the new Intercontinental Hotel Development in Korcula which has just come on the market in the past few days. Having een reading through some of these forums I see Peter has mentioned being an Australian citizen it will be hard for me to purchase unless I have permanent residency status in Croatia (which I do not have). Will it be hard or will it be impossible? Should I forget about it now before I waste more time looking into it or is it a possibility for me? Lastly has anyone else looked into the viability of the development? Would love to hear some opinions on the place due for completion 2006... Ciao
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Post by Peter Ellis on May 29, 2004 19:19:35 GMT 1
I haven't looked at this one yet. Martin, do you know anything?
Our legal department have recently been looking at another development at Lumbarda on Korcula on behalf of some buyers.
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Post by Mick on Jun 4, 2004 11:45:41 GMT 1
Thanks Peter you mentioned in another forum recently that off plan purchases with stage devlopments can be a little hairy in the situation where the purchaser may not be able to keep up with the payments and runs the risk of losing all! Surely a purchaser would ensure written into the contract the agreements should this situation arise? I know in Spain for instance many developers have written in if the investor chooses to pull out any stage prior to completion then the developer will purchase off the investor at the current market price, or at least aid in reselling the property. I've not seen a Croation sales contract yet but am I correct in assuming that a good contract combined with a good solicitor would cover all the possible angles that could arise in the development? Cheers Mick
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Post by Peter Ellis on Jun 5, 2004 11:28:04 GMT 1
Hi Mick
You are quite right, but there are other issues, too. Until the roof is on an apartment block, it is not possible to apply for the Division Document. Up until that point, the buyer is getting, for example, 1/12th of a 12 apartment block, rather than a specific apartment. Everyone else will own the other 11/12ths and he will own a 12th of everyone else's apartment. This creates complications. Only when the Division Document is in place is it possible to tie his payments to a specific apartment, as only after that do they have an individual existance at the Land Registry. Normally, the solicitor would be able to protect a vendor paying a deposit on a specific property by getting an annotation in the Land Registry, which would make selling to another purchasor difficult, which is important in a rising market. It dissuades vendors from just returning a deposit and selling to someone willing to pay a higher price. Our contracts would also normally provide for the return of double any deposit in the event of the vendor pulling out. Stage payments on an offplan development can not qualify for such annotations in the Land Registry, as they would not yet relate legally to specific apartments.
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Post by nevenmar on Jun 8, 2004 14:19:38 GMT 1
I am interested in Lumbarda on island of Korcula. You have mentioned there is a possibility of some investment there. Any more information on that ??
Are you also able to say bit more on Intercontinental hotel development in Korcula. Seems to be a popular spot !!
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Post by Peter Ellis on Jun 9, 2004 16:54:11 GMT 1
Korcula is indeed lovely. We have family living further up the island.
We've nothing at the moment on the Intercontinental development.
Kind regards
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Post by Peter Ellis on Jun 9, 2004 17:00:05 GMT 1
Hi all I've been talking to one of the agents involved in marketing the new Intercontinental Hotel Development in Korcula which has just come on the market in the past few days. Having been reading through some of these forums I see Peter has mentioned being an Australian citizen it will be hard for me to purchase unless I have permanent residency status in Croatia (which I do not have). Will it be hard or will it be impossible? Should I forget about it now before I waste more time looking into it or is it a possibility for me? Lastly has anyone else looked into the viability of the development? Would love to hear some opinions on the place due for completion 2006... Ciao I should have responded to this before. Sorry! You could still buy using the company route, thus creating a Croatian entity as the buyer, but whether it would be worthwhile for a single, relatively low cost property is debatable, as the set up costs and ongoing administration might not be worthwhile unless there were other reasons for needing a company. Kind regards
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Post by newbeez on Jun 23, 2004 9:52:49 GMT 1
I presume you will now know that the development in question is Marina Marco, advertised on www.croatiansun.com. The first phase was sold out in just hours of launch (16th of June). I am quite interested in buying in phase 2. The main feature of this promotion is a minimum 6% net rental guarantee for 3 years once the apartment is finished. Not bad. I am really interested if someone knows how I could get financing for, say. 50% of the stage payments. I presume that given the reputable hotel behind it (crown plaza) and the fact that rental income is guaranteed for 3 years, that a bank onshore or offshore would be willing to llok at this? Thanks
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Post by Mick on Jun 25, 2004 22:37:56 GMT 1
Any more interest out there on the above post?? It certainly seems to be gaining some momentum at the Marina Marco... What do people think that may have been involved in things similar to this?? It seems to be a fairly new concept in Croatia - buying off the plan in association with a Hotel name brand...
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Post by Peter Ellis on Jun 25, 2004 22:54:20 GMT 1
In situations like this elsewhere, the developer often offers financing, as they have the muscle to negotiate it with a bank and can guarantee repurchasing in the event of a default. Defaults are always the issue here as it is much harder for a lender to recover a property because of the slow court system. The 6% guarantee for 3 years will have been costed in to the price. Whether it is achievable, net, after that, will depend on many things and any lender would go over that very carefully, if it is the main basis for the loan repayment.
Kind regards
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Post by Peter Ellis on Jun 25, 2004 23:35:50 GMT 1
I just had a look at the agents' website and realised that even the cheapest apartments are selling at over Eur 3000/m2. This is 50% higher than anything we are selling in Istria, which is much more accessible. I wonder how many people rushing to put deposits down have visited Korcula? Presumably, they are going to be flying to Cavtat, South of Dubrovnik, hiring cars, then driving up to Orebic past Dubrovnik on the coast road and getting the ferry across. The alternative would be flying in to Split, then the ferry to the top end of Korcula and driving down to the other end of the island. Either way it is a bit of a trek and you would need to wait for availability on the ferries, which in high season could be a while. We have family on Korcula and love going there, but it is always very time consuming travelling to it. To put it in to perspective, Istria is served by at least 4 airports. I say at least, because usually I would have said Trieste (Ryanair), Ljubljana (Easyjet), Pula and Rijeka (Both Air Croatia out of Heathrow), but this week we have seen clients who flew in to Venice and Treviso(both Ryanair) as well. The latter two are a couple of hours from Istria, but the first four are all little more than an hour from the areas we sell in. From a letting standpoint, Istria is easy to get to by road, too, as the European motorway network brings people in from all directions. If it is easy to get to, it is easy to let out. Property managers will be letting to all sorts of different Europeans. The opening of the missing link on the Zagreb motorway this week has brought Istria half an hour nearer for the central Europeans, as there is now motorway all the way from the Hungarian border. The difference in accessability is immense. In Istria nipping down for a long weekend is quite feasible from the UK and clients do it all the time on viewings. A long weekend is hardly a practical proposition on Korcula. By the time you got there, it would be time to come back.
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Post by Mick on Jun 25, 2004 23:59:40 GMT 1
Thanks Peter I've spoken to croatian sun about this transport issue and have been told the Development will have an exclusive hydrofoil transport from Dubrovnik (or cavtat) taking clients directly to the waterfront marina at the resort (approx 45mins apparently). It seems to be something operating on another level to what present hotels/resorts provide in Croatia today. An expensice investment yes, but i wonder what the returns will be like in the long run should it be a sucess. However, its an interesting point the exclusive hydrofoil is not mentioned on their website. Would you expect a Development like this demanding such a large amount from clients to have Developer Insurance in the event of the Developer going bankrupt midway through completion or anyother unforseens? cheers for now mick!
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Post by Peter Ellis on Jun 26, 2004 6:32:25 GMT 1
Insurance is an interesting point and I really don't know.
Buying in to a development like this is not like buying in to something smaller and it isn't just the possibility of the developer going broke. If you buy in to small developments you are not dependant on a lot of other people buying too and you can usually make a judgment based on existing local facilities. I remember developments in London Docklands, where all sorts of core facilities were included that were being built last and that never materialised, because buying demand dropped off and the developers could not afford to complete them. The hydrafoil service might fall in to this category and only start once the development was finished or nearly finished. Similarly with shops and other facilities. Whilst the initial phase appears to have sold quickly, you never know whether that absorbed most of the people with that sort of money available that were interested in buying there. It is a bit like publishing a book on a specialised subject. You have a print run that sells quickly, do a second edition, then find that pretty much everyone who was interested in that subject bought it already and the second edition stalls, ruining the profitability of the first, successful edition.
Developers face a dilemma. If they include all the extras right from the start, their cash flow suffers. If they don't come up with them fairly soon, demand suffers and prolongs when they might be available. It is all down to the marketing and ensuring that the whole thing sells quickly. If it drags, then that is when the difficulties start. You need to look at it all and ask yourself whether it would significantly affect your enjoyment of a holiday there if you had to rely on the existing local facilities. If you still could, then the development extras are a bonus.
Property here will be like property everywhere else in Croatia. It will be important to buy against a recent Certificate of Title for the specific apartment (not just the land or the building generally) and that the Useage Certificate is available, ensuring that the construction conforms to the planning permission and that the apartment is judged fit for human habitation by the authority. The latter is the final stage in the planning process. In order to get the Certificate of Title, the developer will have had to have got the Division Document. This is important as only once that is done, does the individual apartment begin a legal life of its own and it is difficult for the buyer's lawyer to get an annotation in the Land Registry against the specific apartment, protecting the buyer's interest, if it is not available. Prior to its availability, a buyer is only getting a percentage of a development, not a specific apartment. Ultimately, proof of ownership to a buyer will depend on their getting their name in the Land Registry. This is the sole proof of ownership of real property in Croatia and important if you ever want to sell. These documents will be essential to foreigners when applying to the Ministry of Foreign Affairs to get the approval prior to being able register in the Land Registry. Since presumably these could be difficult for the developers to produce in the early stages of a development, are they actually selling apartments, or shares in a company that provides rights to use an apartment ? If that were so, it could raise different issues.
So far as returns go, much will depend on the season. Rentals here are currently based on a three month season, plus Easter. Everyone is looking forward to more Brits arriving as they extend the season, coming down from Easter to the beginning of October.
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Post by Graham Amiss - Bosmere Travel on Jun 26, 2004 17:26:30 GMT 1
A hydrofoil from Cavtat would not save a lot of time. I estimate the journey, port to port would take about 2.5 to 3 hours allowing for reasonable seas, however if it was slightly choppy, the transit time would be much longer. All depends on the size of the vessel, but I can not see a demand for a large craft, or indeed the developers being able to support the operating costs of a large craft. Greece is littered with failed developments, I would not want to see the same in Croatia
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Post by Mick on Jun 26, 2004 20:52:07 GMT 1
Some interesting comments here. After checking the distance from Cavtat to Prizba, korcula, its approximately 75-80 natical miles. To complete this in 45 mins an average speed of just over 100nm/hr is required. This is 185km/hr! Thats very fast for a boat! Even at half the speed, say 90km/hr (1.5hrs travel time) thats very quick for a boat! (Whats the average speed of a hydrofoil I wonder?) I have been to Korcula and I am familiar with the town of Prizba, where the proposed Development will take place. If using ground transport and driving from Dubrovnik, once arrived on the island at the Korcula port it's approximately 35 mins drive from there to Prizba along winding narrow roads. I wonder if people paying top dollar (for Croatia) will really want to go through all that? It's an interesting plan and the advertising certainly has some very attractive pictures but there does seem to be a lot of 'ifs' and uncertainties. Has anyone actually seen the Development or heard any more about accessing the site upon completion etc? Another interesting point is the the place will need to be completely self sufficient as there's not too much in the surrounding towns for people on hols to go and see or do when compared to other areas around Croatia. It is 'in the sticks' so there will want to be lots of services provided by the development.
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