|Why buy in Croatia?|
- Despite the growth in tourist numbers in the past 4-5 years and predictions to 2025, Croatia still remains a relatively unspoiled destination - protective of their success in not sacrificing the environment for tourist dollars.
- ‘It's the Spain and Portugal of 20 years ago' – young and fresh – attracting the discerning traveler opting for somewhere different yet fascinating with a surprise around every corner turned – Far away from condominium jungles and the ‘ hen party culture '.
- With a pristine coastline stretching some 1100 miles along the Adriatic coast and 260 days of sunshine each year, Croatia is a holiday paradise and fascinating place to visit.
- Property is still very affordable by Western European standards.
- Strong demand from overseas investors is creating a buoyant market – the market has seen growth in property prices of 20-30% + per annum. The market, although increasing rapidly is still considered to have significant scope to grow further, compared to Spain and France.
- The quality of property is of a reasonably high standard.
- Croatia is becoming far more accessible by air is and ticket prices are becoming increasingly affordable. It's a short distance from the UK and Ireland (2½ - 3 hours flying time). Low cost carriers are currently negotiating landing rights.
- Using the right partner in Croatia, the purchasing process can be reasonably straightforward.
- Macroeconomic conditions and political structures are stable.
- Conditions in the region are stable.
|Croatian Property Situation|
While real estate sales have always existed in Croatia, there were no agencies dealing in real estate until after the war. Family homes would be passed down generations and as a person would die, new names would be added to the title deeds creating a lot of confusion in the court deeds, as family members migrated from the country or members granted the property to one family member but no changes were made to the original titles.
The population of Croatia is now around the 4 million mark and there are that many again that migrated to the countries with better economic conditions. This creates a situation where these absent owners need to be contacted and becomes a time consuming process that is best handled by a competent real estate lawyer.
According to Croatia statistics the average purchase price is 150,000 Euros and there are various 'hot spots' such as Dubrovnik, Hvar and Istria. However these are now quite expensive to the average buyer and more and more buyers are now focusing on opportunities in Northern Croatia and Northern Dalmatia.
Regularly now there are reports in various international property magazines that are featuring Croatia as the place to buy property, given that it will soon be given the go-ahead to join the European Union. Once that happens Croatian property prices will increase at an ever increasing rate. Even now properties in Dubrovnik are reaching prices of 4,000 euros/m2, while those in Zadar are around 2,000 euros/m2.
In my opinion, properties in the price range of 600euros/m2 no longer exist or if they do they are for run down or devasted homes. Even old stone houses go for 1,000 euros/m2 and still are in need of renovation.
Unless you purchase a property with a clean title the sale will never complete. Alternatively if you pay in full to obtain possession with a house without clean title eventually the government will come looking for its 4% as the public notaries notify the authorities that a sale occurred and then you could lose the house or be in a situation where you have to hire a lawyer to clean the title, a process that could take several years.Citizens of the European Union will be interested to know that the new real estate law in Croatia makes them equal to domestic population when it comes to buying real estate. The law went into effect on February 1st 2009. This means that European buyers will from now on be able to buy real estate in Croatia without any of the previous limitations and special rules, which will now only apply to residents from other countries that are not yet members of the European Union. So from now on all Europeans can start investing in real estate in Croatia freely!
It is almost impossible to accurately price the Croatian Property market, although the Saturday edition of the the morning times 'Jutarnji List' does a weekly projection on the cost of flats, homes and land in the various regions of Croatia. Every year there are more foreigners buying property in Croatia.
If you are are a buyer outside the European Union you should check with the Croatian Embassy in your country as to whether a reciprocity agreement is in effect with Croatia allowing you to purchase property in Croatia with permission from the court.
It is quite a simple process for a lawyer to apply for permission from the relevant authorities and have the title transferred to you at a reasonable cost if reciprocity exists.
There may be a boom in Istria and Dubrovnik and waterfront property where prices increase steadily year by year, however the prices throughout the rest of Croatia still represent excellent value in comparison with Italy, France and Spain, especially property with a view of the sea but up to 10 kilometers of the sea.
Now new factors are influencing the boom throughout the coastal region given the new motorway and the new budget carriers entering the market.
The usual purchase system (see how to buy) is to enter into a pre-contract with a 10% deposit and apply for permission before finalizing the sale. In a rising market this can cause problems as the buyer may break a pre-contract even though he would be obliged to pay double the deposit as part of the exit clause. This happens when permission drags on for over a year and it becomes tempting to a vendor to pay double deposit if the price of the house has increased sufficiently to make it worthwhile.
Most agents therefore propose a workaround solution where you gain full possession and the vendor receives full payment and you apply for permission after completion. There are 2 main ways to achieve this goal - either by buying as a Croatian Company or through contract wording by your solicitor that state that the foreign buyer is aware of the necessity of obtaining the proper 'permission'. If for any reason, the foreign buyer does not obtain permission, then the agent will resell your house for you. Please note that I have yet to hear of such a situation occurring, as the only reason that the authorities would not grant permission is if the buyer has a criminal record or it is perceived that the transaction is a money laundering operation.
Prices once used to be higher if one used property search agencies, as naturally enough, the local people would try to increase their profit as soon as a unenlightened buyer appears on the scene. However with the internet where more than one agency is selling a property this practice is dying out as reputable agencies want to keep their good reputations.
There is no danger with property search agencies if one works with a reputable agency. Look for an agency that displays its business license. Some 'agents' operate out of their homes if they have a business premise on site. Agents are required to advertise the name of their agency when advertising properties. A reputable agency will provide a buyer with a certified valuation of the home done by a court evaluator on request as a service. Make sure you are working with a reputable agency. A lot of foreigners are coming to Croatia and setting up internet agencies and avoiding paying taxes both in their home countries or in Croatia. Avoid these agencies as sooner or later they will be caught and then you will find yourself in a situation of having to provide testimony in court.
As of the 1.4.2009 for an agency to be licensed they must employ a qualified agent that has passed the real estate exam licensing test. An agency need only have one of these people working in their office, and have several other employees that do everything from answering the phone to verifying documents to showing properties.
The property market is becoming more mature, and one can obtain a property valuation, sometimes the owners even provide one if they have borrowed against the home or obtained a mortgage. As more and more buyers are seeking credit it is becoming normal practice to have homes valued. So house prices are becoming more of an exact science instead of you having to decide how much a property is worth to you and whether in comparison with similar properties in other countries like Spain, France, it looks good value.
Croatia entered the EU on 1.7.2013 and there is an equalizing of prices across the region. If one does a comparison today of the Croatian market with other western European countries then the Croatian market is currently undervalued especially in the hinterland regions.
|Living Costs in Croatia|
- Non-Residents' tax is 1,30 € for sqm of the housing space annually
- Land-tax is 0,25 cents per one square meter annually
- Waste removal costs are approx. 50,00 € annually
- Electric costs - 1 kw is in 2012 approx.2,00 €
- Water costs - one cubic meter of water in 2012 approx. 4,00 €
- Insurance for the house and household depending on the size of the home, but for a 160 per square meter house are approx. 500,00 € annually
- A Capital Gains Tax of 35% is incurred if you sell your home within a period of 3 years of ownership
- Property inheritance tax is 5%
- Car Tax is between 35,00 € and 160,00 € annually
- Boat Tax is between 30,00 € and 650,00 € annually
- Personal Tax on earnings depends on the number of deductions and number of dependants and is between 15 % - 45 %
- Tax on a resident's Holiday House is between 1,00 - 3,00 € per square meter annually
- An agricultural tax of 40,00 - 50,00 € per hectare is assessed annually on agricultural land that is not farmed
- There is also a tax on building land that is not developed of 0,10 € to 1,00 € per meter square annually, however this tax is rarely applied
- Sales tax on property is 4%.
|Price Guide for Croatian Real Estate|
Don’t underestimate current pricing levels. Prices are not dirt-cheap. We, in the real estate business in Croatia, discuss our experience with foreign clients expecting to buy immaculately restored three-bedroom stone houses—with sea views—for an equivalent 65,000 € or less. These clients leave Croatia disappointed. Although the average Croatian monthly wage is around 600 €, this means little when it comes to house prices. Croat's aren’t daft. They know that along Europe’s other sunny southern coastlines, old stone-built seaside properties change hands for senseless sums. Croats don’t yearn to live in these properties themselves, but they realize their value.
When one considers the prices of equivalent properties in Spain, France and Italy Croatian prices are perhaps 30-40% cheaper, and Croatia is a much nicer country, with its coastline of 1018 islands - the Med as it was 30 years ago. Bargains still come up but you need to move quickly when they do and rather than finding them in Istria, Dubrovnik, Hvar or Vis you need to look at places like the islands of Murter, Ugljan, Pašman, and Pag and towns on the coast like Pirovac, Šibenik, Biograd, and Sv Filip Jakov, Turanj or Pakoštan. As a very general guide the following may be of help (prices in Euros):
|30,000-40,000 ||Entry budget level for ruins/Basic land plots in Croatia's hinterland (Lika, Međjumurje, Slavonia, and Zagorje)|
|50,000-60,000 ||One bedroom apartments/Larger Ruins/ Land Plots within several hundred meters from the sea or small homes in Croatia's hinterland.|
|70,000-90,000 ||Basic stone house in need of refurbishment/Larger land plots within several hundred meters from the sea or starting prices for small farms in Croatia's hinterland.|
|100,000-120,000 ||Larger stone house in need of refurbishment/cosmetic work/2-3 Bedroom Apartments |
|130,000-150,000 ||Restored small stone houses/All of the above closer to the sea/airports/tourist towns|
|160,000-220,000 ||Restored large stone houses/luxury apartments/Holiday homes|
|250,000-350,000 ||Small Houses and larger apartments with land and/or first/close to the sea|
|400,000-750,000 ||Larger houses and/or first/close to sea, or very close to major airports and tourist hot spots|
|750,000+ || |
Luxury Homes and/or commercial opportunities/estate properties/larger farms
Driven by rising affluence, the number of the more prosperous European union retirees owning two or more homes in Europe, will double from today's levels, with destinations such as Croatia, Bulgaria and Turkey becoming ever more popular alongside the traditional Spanish Costas, France and English-speaking countries.
Lower living costs, a more sedate pace of life, a healthier climate and year-round sunshine are the main reasons for Europeans purchasing in Croatia. When Croatia joins the European Union, a major concern of retirees - healthcare - will be less of a concern as migrants will be covered for a proportion of healthcare costs as Europe has special regulations for healthcare.
|Countries with Reciprocity Agreements|
Residents of certain countries have permission to buy property in Croatia. Consent can be given to citizens of countries with which Republic of Croatia has signed agreement on reciprocity. These are USA and the Russian Federation. Croatia does not have reciprocity principle with Yugoslavia.Citizens of Switzerland and Bosnia & Herzegovina can buy real estate here only if they have permanent residence in Croatia. Those citizens of countries without reciprocity can still purchase properties in Croatia by forming a company and purchasing a property in the name of the company.
European Union countries do not need permission to buy real estate in Croatia with the exception of agricultural land and real estate of national interest.
|More Croatian Property Facts|
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Ministry of the Justice
Ministry of Foreign Affairs and European Integration
Ministry of Finance
Croatian National Bank