Expert corner - opinion of specialists on real estate in Croatia

Real_estate_in_Croatia

Every real estate market has its peculiarities explained by geographical position, historical development, and consumer behavior. And Croatian realty market is not an exception. Here is the expert opinion of the Croatian realty market on its inadequacy .

Istria confusions

Most of Croatia's property buyers come from neighboring Slovenia, Austria, and Germany. They travel mostly by car and the nearest point in Croatia for them is the Istria peninsula. They come to be closer to the sea, to the beach, to enjoy the sea, swimming and sunbathing. First of all, they want to look for properties on the first and second lines to the sea, not 5-10 km away from the coastline. It concerns all the segments of the market: smaller apartments, modest houses, and luxury villas. Although Tuscany-style villas are strongly present in the mainland real estate market of Istria, still 80-85% of the buyers want to stick to the coast of Croatia

But if you look at the coastline from Umag to Medulin we will find just a few new developments on the first line, practically no houses for sale, up to 10 seafront villas, and no land plots for sale. This situation is very disappointing for Croatian property buyers, as they see huge undeveloped masses of forests, and agricultural lands along the sea with no signs of intended construction. The considerable area from Umag to Novigrad, Peroj, and Barbariga to Rovinj along the sea is a remarkable oasis preserved for construction of future generations. Seafront belts from Liznjan to Krnica stay virgin, same as the areas from Duga Uvala almost to Rabac, and then areas from Plomin to Brsec. Multiple seafront residences with apartments, and villages of modern villas could be built there for the Germans, and for the Austrians but they are mostly zoned as T1-T2 (hotel purpose) or agricultural lands. No considerable development is foreseen by local plans. And it continues to generate inadequacy in the market. The Istria peninsula continues to be a most demanded area in Croatia, closest to Europe and perfect from the point of view of transport connectivity. But it offers the least adequate property supply. It is now partially compensated by modern residential construction on Krk Island connected to the mainland by the bridge. Realty on Krk can satisfy both Zagreb buyer's and international buyer's demands. But again – most of the properties are 100-200 meters from the sea, 1 km away, but not on the beachline. This makes the buyers go down to the south. Most often they set Zadar as the utmost point of their journey and they find what they were looking for in the Zadar area. In 70% of cases they do not want to go further to Sibenik and Split area and make a mistake: most attractive villas, houses, and seafront apartments are located there. But it is already a very long journey, more suitable for buyers from Hungary, Bosnia, and Serbia.

So, the first and major problem in the real estate market of Croatia now is the absence of proper seafront properties in Istria. Existing demand could easily embrace more than 50 seafront villas in the lux segment and over 500 apartments of seafront location per annum.

Road by the sea

No real estate can exist without good connectivity and infrastructure but since the beginning of times in coastal countries it was customary to place the road along the sea. First comes the beach or rocks, then the road, then the buildings. It was hardly ever justified from the point of view of higher tides and storms endangering roads and connectivity. Nowadays it has grown into a different problem: huge territories are developed by this urban structure leaving hundreds of kilometers of coastline lost for residential and other development and construction.

The cries for public interests prevailed for a long time. But now it is evident that such an urban concept with a first line road is good for no one. No one can enjoy the beach in these zones, no one can bathe there, no hotels can be built there, no villas, and no apartments in Croatia. Usual concern about public good evolved into public bad. No one wants to live upper from the road, everybody wants to be down the road, closer to the sea.

Some municipalities have already started the program of road and highway removal from the first line. Others are still thinking about how to sort it out. Relocation of the road up the hill means purchasing private lands (where the road now would be) from private persons or exchanging their lands for some other ones. Here municipalities have vast resources of municipal lands but they are not often so eager to promote this program.

But look at the Italian experience: there was not only an auto road but a railway right by the sea from France along Ventimiglia, Ospidaletti, and San-Remo. Now it is turned into an ecological bicycle path. The same approach can be used in Croatia or even wiser urban planning to leave space for beachline, cyclists, and property owners in Croatia.

So, the second confusion for real estate in Croatia is the road by the sea which should be removed.

Tourism orientation

Croatia has a beautiful coastline famous for its lonely bays, pebble beaches, crystal-clear water, and ecological surroundings. However, in recent years it has become exceedingly difficult to find isolated private locations with no hundreds of tourists on the beach in the summer period. In this connection formerly popular destinations are lacking property buyers. Eco-concept of leisure can no longer attract buyers to Opatija, Trogir, and Split. Many towns like Medulin, Rogoznica, and Porec become overpopulated in summer period, and construction of tourist facilities is continuing. Property buyer’s demand is shifting towards the islands of Croatia.

So, the second problem of Croatia is tourist-oriented infrastructure. We understand that tourism is a locomotive industry for the Gross National Product of Croatia. But sometimes it is being developed with no reasonable limitations. Everything is done to stimulate tourist flow and even overflow. The main target is the growth of overnights, and occupancy rates. But it means intense business during three summer months and still low season during the rest of the year. The program of the 365-days-a-year tourist season in Croatia is very good but still far from implementation. Instead of attracting property buyers who could stay in their homes in Croatia for several months a year or all the time and ensure steady development of local facilities and their functioning all year round, Croatia is enhancing the seasonality of coastline business.

People who could live in Croatia 365 days a year are in a way Croatian property buyers. This is not a tourist-development program but an immigration program. Many areas of Croatia miss normal infrastructure because of a lack of constant economically active population or high ranked population, not because of lack of tourists.

People should buy their homes in Croatia and live in Croatia all year round to develop infrastructure. Something should be done to stimulate purchases of high-budget real estate in Croatia and the flow of high-end inhabitants to Croatia. Best recipes are practiced in Monaco and recently in Italy. Lump-sum income tax solutions (when the taxpayer pays flat 100 000 euros if he earned millions), and low-income-tax solutions stimulate rich people to spend more than 183 days a year in a pleasant country that uses these practices.

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