Expert Agent Interview: Croatia Property Sales - Inga Majic
- In which country do you sell property and to what level has the real estate market in your country been affected by the global crisis?
We cover property sales along the Dalmatian coast of Croatia and the islands from Dubrovnik to Zadar, with our main offices in Split. This area is the most attractive for investors and the demand is high with people wanting a second home on the coast and to use the property for income from the lucrative tourist market. Our niche is that we are cater to international and overseas clients rather than the home market. This is a specialist area requiring experienced staff who are comfortable talking and negotiating in different languages, a knowledge of international law and banking etc and experience in handling high value sales at the top end of the market.
The market was greatly hit by the crisis in the period of 2009-2014, with a significantly lower number of property transactions, not to mention sharp decline in construction. However, in that period most of the properties left unsold went under several price corrections, some as much as 20-25 percent from their peak values, making them now more affordable. Seafront properties are the only exception - they have been increasing in value over time. As their number permanently limited - due to new spatial planning rules from 2007, they have become more sought-after and there are very few of them on the market. A buyer looking for a traditional seafront property needs to reach deeply into his pocket, paying well above the market prices of similar property even a few yards back from the coast.
- Have property prices risen or fallen in the last 12 months, or have they bottomed out?
While the inner part of Croatia is still struggling around zero, coastal properties in the last 12 months have not only bottomed out, but they are on the rise again. A modest one, but still it's a good sign of market recovery.
- What advice would you give property owners in your area now who are thinking of selling up?
Croatian property market is somewhat slower than its competitive markets and patience is a virtue. Sellers need to get over the idea that they will reach 2007 prices quickly. This particularly refers to old homes in need of renovation. As for the developers, we would advise them to focus on contemporary design and architecture as Croatian market is missing those projects.
- Does property in your country represent good value for the investor and if so, why?
Tourism in Croatia is doing better than ever and for many property owners, tourism rental is a good source of income. Now that the interest rates on savings have fallen down, even the locals are investing in properties, as they can easily get 6% net rental yields in attractive locations and with good booking management.
- How long before the property market in your country returns to pre-crisis levels and what can we do to avoid the same situation again?
The Croatian property market is highly dependant on cash and is aligned to wider European economies. How the economies of Europe fare reflects on our market. At the moment we are extremely busy, and a stable economic background in Europe is good.
- From which country do you find the majority of your property buyers are coming from? Has this changed significantly over the last 5 years?
In pre-crisis years we had a lot of British, Irish, Swedes, Belgians, Dutch buying in Dalmatia and traditionally Germans and Austrians in Istria. Western Europeans have been joined by many purchasers from central Europe (Poles, Czechs, Slovaks etc) and they still remain strong property buyers in central Dalmatia. However, since 2015 we have seen a return of interest from both "old markets" and the Scandinavians.
- What attracted you to selling property in the region?
All of our team members have been doing it for over 10 years. I don't think we would want to do anything else. Buying a property abroad is not an easy decision for the purchaser and dealing with international clients is a more specialist - but it feels great when you help someone to find a perfect home.
- What would you estimate the percentage split is between local buyers and international buyers?
Local buyers have kept the market alive in crisis years. They too can be great buyers in terms of the sales values. While they equally share the market in 50/50 rate, we have always been dealing with overseas buyers primarily and we intend to keep it that way.
- Do you believe the local Government in your market country is actively encouraging or discouraging foreigners into buying property? How and why?
Just as in any country, there is always space to improve the market. It's just a matter of the will. For example, land registries are sometimes slow and the process of obtaining construction permit may take a while. But we have an excellent network of lawyers and other property specialists to overcome all possible issues.
- What's the biggest benefit for investors of buying in your country over anywhere else?
Croatia is not suitable for investors looking for quick returns or bargain offers. It's a market that offers solid returns in the long run. Compared to other Mediterranean destinations, it is a very safe country with very diverse and preserved coastline, easily accessible from everywhere in Europe. Our towns and beaches are continuously filling top charts of travel magazines worldwide and that counts for something. We have very good builders too and construction and renovation costs are still only a fraction of those in UK, for example.