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Discussion in 'Emerging Property in Europe' started by opow, Mar 3, 2008.

  1. opow

    opow New Member

    Would be interested in hearing any stories from buyers or potential buyers in Croatia.
  2. qrm

    qrm New Member

    I also very suprised that there are almost no discusion or posts about Croatia expiriences, posibilities etc...
  3. kk1974

    kk1974 New Member

    I'm Croatian and know market very well, though I live in London.

    Do you have any specific questions?

    I would be happy to answer.


  4. qrm

    qrm New Member

    Kk1974, I am also Croatian, just wondering here, how and why Croatia is not still recognised by smaller and medium size property investors. I agree that most of the properties are overpriced now, but there are still pretty good chances. My thought is that turning old style appartment houses and pansions into small hotels would be great investment project and very profitable in short and medium term projects.
  5. kk1974

    kk1974 New Member

    Hi Grm

    I wondered that my self for a little while, and this is my conclusion:

    1. The returns are really poor, and there is so many better opportunities around.
    2. Government planning laws are not very favourable for developers.
    3. Bureaucracy is a killer
    4. Your net rental returns will struggle to pay your mortgage (if you can get it as non-resident)

    To give you an example, you can buy land in Provence for 80eur sqm (great location), it will take you around 2-3 weeks to get planing.

    In Croatia, you will struggle to find land for that price at equal location, and you will need around 2 years minimum to get your planning, if you are really lucky.

    In regards to renovation, its very messy job and still not profitable enough from someone from UK for example to go there, when they can make same amount of money at home.

    With hotels, its very tricky. That can work out only as a small family business, and you will struggle to bring a big operator to run a hotel with less than 100 keys. If you bought a building, renovated it, whom will you sell it to for significant profit to make it worthwhile? There is no exit route.

    I had number of serious investors from UK looking at many diferent options, and at the end we left it. It was just not worthwhile.

    At the moment, Croatia suits someone who would like to buy a holiday home, and still get some money to pay most of the mortgage.

    If you look to make money, there are much better places around.
  6. qrm

    qrm New Member

    since I am Croatian located in Croatia, possibly I am wrongly focused only here while looking but regarding other places in south-east europe as Albania, Bulgaria, Montenegro etc..I have been in all those places and more, and it just cannot compare with Croatian coast, by sea clearness, nature, infrastructure, roads etc etc...maybe I am subjective, but my feeling is that Croatia is just not presented properly, generally both as tourist place and investing place, in UK for example
  7. kk1974

    kk1974 New Member

    See, you are talking about sea clearness, nature etc - you are looking at it as someone looking for a holiday home. Investors are looking at ROI, timeliness, risk, exit routes, finance, hassle etc.

    To give you an example: I brought 3 people from City investment fund from London with me to Croatia (Istria) last January. After only 4 days there, they were so impressed that they all booked their holidays in Croatia for this summer, but none of them put their money down because the numbers didn't stuck up. As simple as that. So they will put their money in Romania where you probably wouldn't even dream of going for a holiday, but will come to Croatia to enjoy its beauty. And current government policies and laws will not allow you to make any money from that tourism.

    You are right that there is not sufficient promotion for Croatia - that's another example of incompetent government.

    Here are my comments to the rest of your post:

    2. Government planning laws are not very favourable for developers. this also is partly true but also depends from place to place, case to case

    Well, the laws are same across the board. The only difference can be how competent are the staff at each planing office. But whole Croatia has T1 and T2 zones that killed all the investment potential. How will investors make money if they can give land tittles? :confused:

    3. Bureaucracy is a killer -also yes, but also changing and getting simpler

    I have to disagree. Yes, they brought outline planing law for buildings under 400m2, but at the same time they said that any building plot in 'neizgradjenom djelu gradjevnog podrucja" requires UPU urbanistic planning. Total mess! There are only 13 offices in whole of Croatia that can do that. EVERY single 'yellow building zone' requires that planning. How on earth will that work out? But thats not all. Local council is meant to finance that planing. However, since they are skinned, they will not do it. So, if you have a land in that area and want to be able to apply for planning permit, you will need to finance it your self. But not only for your plot, but for the whole area. :D Lovely. There goes your profit margin.

    So much about things getting simpler. :(

    4. Your net rental returns will struggle to pay your mortgage (if you can get it as non-resident) - also depending really on location, but I agree, is hard to find profitable system if investment is full mortgage

    We are talking 70%LTV mortgage. You could perhaps do it in Zagreb, but it will still be hard. As a foreigner, you are left only with Hypo-adria bank rates, which is not much of a choice. But then you also need to consider the lack of professional letting agencies and property management solutions, unfriendly tax laws for buy-to-let - hardly worth your hassle.

    On the coast, you have season of 3 months. No golf courses, no other facilities besides beaches. Its hard to break even with only 90 days average occupancy.

    To give you an example, you can buy land in Provence for 80eur sqm (great location), it will take you around 2-3 weeks to get planing.
    In Croatia, you will struggle to find land for that price at equal location, and you will need around 2 years minimum to get your planning, if you are really lucky.

    I heard of such delays many time, but also lately can be done in few months, I managed in 2 months, not on seaside but still...

    Presently, if your plot is in the area that needs UPU, you are stuck. No one knows what to do. If you go to the planning office, they are clueless. You will be lucky to get planing in 2 years now.

    With hotels, its very tricky. That can work out only as a small family business, and you will struggle to bring a big operator to run a hotel with less than 100 keys. If you bought a building, renovated it, whom will you sell it to for significant profit to make it worthwhile? There is no exit route.
    small family business facility I had in mind, as Croatian goverment is financing part of the investment and giving programmed financing support/credit as still more than few hundreds small hotels are needed on the Croatian coast. Your remark of no exit route can still be true but, but if there is market for booking small hotels, should be a market to sell it also.

    Another example of governments incompetence. It will be very hard to make the effort worthwhile with 3 months of season. If you could get the golf courses and other facilities, then it would make sense. But look at the golf situation - Ladic is working on Merlera for almost 10 yrs, and still no permit. There isn't a single golf course that has final planing permit till this date (unless something changed very recently). According to data from Ministry of Tourism, to design a golf course in Croatia it will cost you 2-3 times more than anywhere else in Europe. And the authorities will make it 3 times more complicated than anywhere else.

    We need to ask ourselves why there are no big hotel brands in Croatia. Why are they not interested? And than I was just discussing yesterday with a friend of mine who is a hotel operator about Iraq. There is a huge hype about Kurdistan part of Iraq. So many big hotel names are fighting to get in. Iraq vs Croatia?:confused: Obviously something wrong, eh?

    To conclude, I can sympathise with you. I was in exactly same mind frame till 6 months ago when I realised all of this. It all looks great till you start doing feasibility studies and see that numbers just dont stuck up. I invested a lot of my time and energy over last two years trying to package investment deals all the way up to 600m eur worth. Now I'm looking to fine a nice place for me and my family to go for holiday, but I go elsewhere to make money.:)

    Anyway, nice to meet someone from Croatia here. Keep in touch mate. :)
  8. John

    John New Member

    qrm can you please contact me on email [email protected]
  9. qrm

    qrm New Member

    kk, I will avoid quoting your post from two reasons, one is that post would be too long and other reason is that sadly I must agree with most of it. You clearly know what are you talking about.
    My thouights have always been more pointed to tourism oriented investments, rather than clear property reselling, there lays the reason that I can see some light after all. Maybe too entusiastic, but just cannot help it...
    How I see it biggest problem you mentioned is 90 days season in big majority of area on the coast, with exception of Istria and Dubrovnik.
    As for bureaucracy and incompetence of Croatian government, we are very well feeling it in day-to-day basis here, maybe therefore we also feel step by step improvment, slow but still...Croatia will join EU and laws related to points we are discussing are and will be changed.
    Iraq comparation is quite interesting.
    Good luck with finding a place for you and family, I am sure you will find nice place you will enjoy and relax.
  10. kk1974

    kk1974 New Member

    Funnily enough, just yesterday I had a chat with a partner of mine in Istria. Things are getting to that point now where everyone is trying to sell their land - and no buyers. I know some superb plots that were selling at 60-70eur last January, now they cant sell it for 40.

    It all got hyped-up with Golemovic and Istrian Experience 2 yrs ago, but now there are 700 villas in the pipeline that already got the permit, everyone wants 400-500k euro per unit, and Istrian Experience went bust. They were up for sale for 1euro (plus all the debts).

    Land prices were just going up for min 50% per year for past 3-4 yrs, now it finally came to the point where it reached its peak, and in one sense, now it might be a good opportunity to pick up some good plots and sit on them for a while. Prices will pick up once the planing laws are sorted and we start seeing some progress on golf courses. There must be quite some distressed sellers out there now. I have seen how local 'developers' were buying everything and anything, with no due dilligance, and I'm sure that now they are feeling the pressure of loan repayments. For example, there is a fantastic plot near Motovun that I was looking at some time ago. Around 5000m2 plus possibly additional 5000m2. Stunning views, 7 mins drive from Motovun. I'm sure one could pick it up for 30euro now, which is a bargain. If the Motovun golf course and polo course get go ahead, it will easily double in price and there will be demand again.

    Also, I just got to know about some government scheme where they started giving good finance for renovation of old stone houses along the cost. You will need to keep within the present outline, but you don't need planing and you can gear your finance very well. If that is packaged nicely, it could be something worthwhile looking at. You are still looking only at small time investors that really like Croatia - the profits will hardly attract serious investors.
  11. Bianka

    Bianka New Member

    I bought one apartment in croatia, on island Veli Losin.35m2 costed me 45 000eur and after one year on this island there is no chance to buy under 80 000 eur
  12. qrm

    qrm New Member

    Yes, that was good buy. For some croatian islands can take bit more time to come to with ferry or so but it certanly worth the time as they are great. I just came back yesterday from island Krk, weather is still great, not so crowded so perfect...
  13. Bianka

    Bianka New Member

    well i had a guest in my apartment and they leave 3 days sooner coz the weather was not so good anymore:) Actualy this apartment i bought in veli losinj is good investment 4 me coz i had all season full:) How much did you pay 4 this apartment on krk?per day?
  14. qrm

    qrm New Member

    We are refurbrishing over 400y old house in village on Krk, bought it for less than 25k gbp for 95m2. We are kind of at home at Krk so not paying much or at all, but normaly is from 75 to 120 eur a day, depends on size, in high season.
    Last edited: Sep 22, 2008
  15. Bianka

    Bianka New Member

    mmmmm sound realy nice, I allways wanted some stone house 4 my self:) but the prices are realy high now and you need aloth of money to do all what needs to be done:) are you from croatia?
  16. qrm

    qrm New Member

    Yes. I live in north part of inland Croatia, but very frequently going to Istria, Rijeka and Kvarner islands...
  17. istracpsboss

    istracpsboss New Member


    I'm new here. Google Alerts took a long while to come up with here! I'm an agent in Istria.

    Kana makes good points. The Golemovic/Istrian Experience expansion was responsible for the dramatic land price increases here. Once the locals realised that he needed a lot of plots with good sea views in a relatively tight area, to satisfy his contract with Citygreen/Istrian Experience to build 80 villas, mostly on sites with just one or two villas, although there were some bigger sites, prices rocketed from around 20,22,24 Euros/m2 to 70 in around 18mths. It was simple supply and demand. Unfortunately, land in adjacent areas, where there was not the same demand, went up too, as vendors thought if others in the Porec area could get it, they wanted it too. Vesta caused the same effect in the Buje area.

    The result has been that developers now expect much more for their houses, having paid too much for their land. Too few apply normal economics. They don't look at available money from housebuyers and build to satisfy that. They ask us what should they build. We tell them and six months later they bring us visualisations of wonderful houses which are clearly very expensive. When we query this, they say, 'but we had to pay 100Eur/m2 for the land'. Saying, but you didn't. If you all refused for a few months, land prices would drop to levels that you could build on and actually sell for, doesn't seem to sink in. They should have taken their profit on their previous sales and sat tight for a year, instead of thinking that they must be developing continuously. They'll now have to wait for the higher net worth tourism campaign to bear fruit. The houses, locations and views are lovely, but until the profile of Istria rises more as a destination for higher net worth people, we will continue to have a plethora of upmarket villas needing buyers.
    The prices don't drop but once the bank loans the developers used get near the usual two year period, they will have to. Foreign owners drop those they want to sell, until they get buyers, but Croatian owners refuse to and their properties stick. It's one thing for hereditary land owners holding out, who probably don't need the money, but another for developers who have money, often borrowed, invested in construction.

    I'd love to see land prices drop, because we'd then move stuff. Instead, they persist in trying to hold out for prices that make construction of affordable property difficult. Getting developers to build Fords and Toyotas instead of Rolls Royces is an uphill task!

    The more imaginative ones are starting to offer mortgages on their properties from the same banks that are financing them, but the rest will just wait.

    Golf will make the big difference, as it will extend the letting season, as well as filling in a gap in the infrastructure necessary for higher net worth buyers. You can play golf here in January. You'd love it now. The 'season' is over and already restaurants and hotels are closing until next year, yet the weather is great and people have been sunbathing this week. We are conditioned by formal concepts of 'the season' rather than the real desirability of Istria outside of that. May, for instance, is usually gorgeous, yet many restaurants are still not open then, because it is not 'the season'.
    Golf will change all that. The course that Kempinski have been building in Savudrija is already beginning to look like one. It's a pity that prices on their adjacent residential development have already outstripped the advantages of it, but it will offer superb facilities to anyone with villas within 20mins drive of it, and that takes in a broad swathe of north west Istria from Porec north. The Markocija one has already been clearing the land. It will be interesting to see how recent global financial problems have affected Jupiter, who are financing it.

    However, golf construction is under way in Istria, with Gardiner & Theobald project managing and while prices are currently sticking for many villas, they will inevitably rise once the facilities are completed, as genuine demand returns.

    There are even potential courses being mooted at places not on the usual list, where local communes are realising the potential and have available sites. Visnjan, where our offices are, is one. Because the majority of the land is owned by the commune, it will not suffer from the problem the Motovun one faced in trying to assemble sufficient land from multiple owners.

    Istria, with year round access through Pula in summer and Trieste (both Ryanair) at any time and good underground water, is set to become the golf centre of Croatia. There are vastly more planned here than in any other part of Croatia.

    Now if I could only find this land, that Kana reckons could be had for 30 Eur/m2..............


  18. newera

    newera New Member

    Any changes to property prices due to current economic situation?
  19. felicia

    felicia New Member

    Tourist Rental Laws

    Hello - I'm new to this forum which I have just discovered. I have property in Istria and live in UK. Am battling to get equal rights for foreigners wishing to rent out their property for tourist lets.

    Another very discouraging fact which makes property investment in Croatia very unattractive is the fact that non nationals can no longer get categorization to rent to tourists even through d.o.o. - so bad luck if one did not make it in time by end of 2007. The fact that this is (for British citizens) contrary to the bi-lateral agreement with the UK signed in 1998 for the Promotion and Protection of Investments seems to elicit a total non-response from anyone. However my MP has taken this up in parliament here but progress is very slow. In the meantime many of us are suffering financially and in turn the Croatian Tourist Board are not doing themselves any favours by discouraging these lets which would bring in a substantial amount of the tourists their economy depends upon. Neither does it promote goodwill among the foreigners who unwittingly invested albeit under the previous discriminating laws. Perhaps the reduction in tourists predicted for this year will elicit some change - I have seen that Bajs (Minister of Tourism) is considering a reduction of VAT in for those engaged in providing tourist services for NEXT year - of course, they could not consider for this year that would be far too swift.
    If anyone has any further information on this subject I would be very glad to hear it.
  20. newera

    newera New Member

    Now it is time for Albania Property market to flurish

    It seems that Albania is the answer to the current market. Off plan property prices at approx 70% cheaper than neighbouring countries, therefore Albania offers great pottential for high ROI. Albanian Property market is driven by local demand and large number of diaspora/expats returning.

    In this site you can find general Albanian property information and prices: Albania Properties.

    Land prices are not that cheap though but depending on locations and sizes of the plots there are good options available.

    No difficultios for foreigners to buy off plan without needing to create any company plus there is no tax to pay when purchasing a property.

    The only taxes you pay is capital gains at 10% and income tax at 10%.

    None resident finance also available.
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