Buying in Croatia
Croatia has certainly come a long way since the early 1990s, when, within the space of half a decade, it experienced the collapse of Communism, a war of national survival and the securing of independence. In addition to being one of Europe’s most fashionable places to visit today, the country, which is precariously poised between the Balkans and Central Europe, is blessed with a wealth of natural riches, including almost 2 000 kilometres of rocky, indented shore and more than a thousand islands, many blanketed in luxuriant vegetation.
Buyer interest in homes in Croatia has risen significantly since the entry of the country to the European Union on 1 July 2013. ‘As a result of EU entry, we are registering significantly more viewing appointments and genuine intentions to purchase from foreign buyers,’ says Michael Grimm, managing partner at Engel & Völkers in Rab and Opatija, Croatia. ‘Compared with Spain or Italy, the prices for homes in Croatia in the very best locations are still relatively low.’
Croatia is a popular tourist destination among European holiday-makers, and benefits from its central location in Europe. It is within quick reach by car from southern Germany, Austria, Switzerland, Slovenia and Italy. ‘First-time- and holiday-home buyers find everything here that they require for life in a sunny climate: glorious scenery, beautiful coastlines dotted with bays, countless islands just off the mainland, historic towns and first-class restaurants,’ Grimm says.
Marija Bojcic, managing director of Luxury Croatia, a real estate and travel agency based in Split, to the south of the country, says, ‘Foreign buyers look mainly to buy on the seafront (prices from €90 000 for a two-bedroom sea-view apartment, or from €150 000 for a two-bedroom house with a sea view) or close to the sea (prices from €65 000 for a two-bedroom apartment, or from €80 000 for a house a few hundred metres from the sea). Seafront villas are priced in excess of €400 000.’
‘Traditional stone houses on the seaside or in traditional coastal villages, some as old as 300 years, are being snapped up by foreign property developers’ – Marija Bojcic
According to Bojcic, there are still bargains to be had: ‘Traditional stone houses on the seaside or in traditional coastal villages, some as old as 300 years, are being snapped up by foreign property developers. Yes, they’re in need of renovation, but these homes are mainly built in protected locations where new construction is today forbidden by law. If you’re lucky you might still find a traditional home in a historic location – often with a sea view – priced as low as €30 000.’
Various other positive factors have stimulated the Croatian property market in recent years, say the experts. ‘The construction quality of properties, for instance, has been improved enormously, thanks to foreign investors,’ says Grimm.
The land registry has been transferred to an electronic system, enabling the official record of property ownership to be processed swiftly. ‘This means that buyers from the EU share the same rights as native Croatians in terms of land-register law,’ says Grimm, adding that since Croatia’s entry to the EU, buyers may now also rent out their holiday homes. ‘This was not possible previously and is now an especially enticing prospect for investors,’ he explains.
Where to Buy
The locations most sought after by foreign investors include the Opatija Riviera, the Istrian Peninsula and Rab Island, says Grimm. ‘Top-class villas in the fashionable seaside resort of Opatija, with particularly exclusive fittings and sea views and located at very good addresses, can reach top prices of €1,5 million,’ says Grimm.
Bordering Slovenia, the peninsula of Istria, the largest in the Adriatic, is also attracting the attention of international buyers, according to Grimm. ‘Natural stone houses are in especially high demand here. Prices of as much as €500 000 are being paid for exclusive residences in very good locations,’ he says.
Grimm adds that holiday properties on the Island of Rab in the Kvarner Bay are also very popular with interested buyers: ‘Most second homes on the island are situated a few metres from the sea and afford views of the islands just off the coast. For a detached property with an interior of approximately 200m2 in a prime location, buyers are paying between €400 000 and €500 000. Prices per square metre of up to €2 000 are being reached for freehold apartments in very good locations.’
How to Buy
In the case of a foreign national buying as a private individual, permission to purchase must be sought from the ministry of foreign affairs (if the individual is not an EU citizen). This permission can take a good deal of time to obtain – typically 12 to 18 months – and you will need a good lawyer to guide you through the process and ensure you supply all of the documentation in the correct format at the right time.
Permission is not necessary, however, if a foreign national has registered a company in Croatia and is buying through that company. There are advantages to buying through a company, chief among them being the amount of time saved in the buying process.
There are also tax gains both at the time of buying and when you come to sell in the future, but this needs to be tempered by the corporate taxes that require paying both at the outset and throughout the life of the company. You will also need to keep proper records of the company activities and submit accounts like any other commercial entity.
Although South Africans require a visa to visit Croatia, owning property in the country as a company allows them to apply for a one-year residency permit, which can be renewed yearly. After five years, he or she can apply for permanent residency.
A property tax of five per cent of the purchase price must be paid by the buyer within two months of the property purchase; the lawyer’s fee is typically 1,5 per cent of the purchase price and the agency commission is three per cent. In Croatia there is still no annual property tax; however, Croatian banks are, as yet, not open to loaning to foreigners.
- Croatian embassy in South Africa: http://za.mfa.hr
- Engel & Völkers (Croatia): engelvoelkers.com/croatia-franchise
- First Property Croatia: firstpropertycroatia.com
- Luxury Croatia: luxurycroatia.net
- Savills Croatia: sav-croatia.com
Text: Jocelyn Warrington