Speaking at the 8th Annual International Conference about the Real Estate Market in Croatia, Minister of Construction and Zoning Ivan Vrdoljak states that without private investment it’s impossible out of the current economic crisis.
“Government investment in infrastructure and the real estate sector inside coming period will be considerable, yet it’s well known that state investment alone cannot bear the brunt of economic recovery” said Vrdoljak, adding that this Ministry will be ‘at their service’ for private investors needing to invest in Croatia.
Vrdoljak also announced that new laws changes were being prepared, designed to make the realisation of investment projects easier, namely regarding zoning and construction. The Minister states that they should be in place by the end of the season.
Also at the two day international conference , British ambassador to Croatia David Slinn reported on construction projects currently taking place in London for this summer’s Olympic and Paraolympic games.
Continuing on from your latter half of 2011, first line real-estate in Croatia, in particular in Dalmatia has become selling fast. For prime located real estate such as land, apartments, villas and old stone houses which are next to the sea it is now a sellers market, using the number of buyers far outweighing the number of properties available on the market to buy. As a result we are seeing all the usual hallmarks, price increases, gazumping, agent tricks and general difficulties in conclusion as buyers compete to have deals done.
Our experience since summer 2011 is because they have risen by approximately 15%. Land prices in Croatia have risen from approximately ?300 to ?400 per m2 and in many cases to ?500 / m2 for the those plots which can be smaller (less than 500m2) and of the right shape and position. Obviously this only relates to those plots where access is clear, utilities are on or near the site and the land is within the existing residential building zone, meaning it’s possible to obtain a building permit immediately. Detached houses which need renovation on land plots from 300m2 to 600m2 were selling for about ?300,000 but are now selling from ?350,000 to ?400,000 an amount increase of around 17%. It is now extremely hard to find a small detached house wanting renovation and by the sea for under ?300,000.
We think this trend will probably continue for 2012, although with the new law of legalization now in place we are seeing more properties coming on top of the market in better positions. But they still need to be legalized, due to the drastic shortage of prime located real estate in Croatia and in particular Dalmatia, buyers are increasingly happy with the idea of purchasing a house that requires legalization. This is for two reasons, firstly sellers recognize that they cannot expect to receive any money for the property until the legalization process continues to be finished and secondly there exists in fact very little risk towards the buyer other than time and some initial upfront costs, notably the lawyer.
Sales involving Croatian properties which need legalization are structured you might say whereby a contract is signed, an initial deposit is given, usually 10% and which can be placed on an escrow (usually the public notary or buyers lawyer’s account) with the balance being paid as soon as the legalization process has taken place. Just how long required for the process to be completed varies depending on the local planning office, because some areas have far more illegally built real estate than others. Rogoznica, north of Split is a great one. This area has a vast number of illegal houses along with the planning office is swamped with applications for legalization. In Rogoznica by way of example it can take 12 months to finish the process. One thing that is of importance and dramatically speeds up the planning process is making certain the architect leading it submits every one of the correct and necessary planning documentation. Missing or incorrect documentation can slow the process down considerably.
The number of Croatia real estate buyers currently in the market is additionally up on last year. Real estate agencies inside Central Dalmatian region for example have a lot more activity. The biggest problem agencies face now’s the lack of buyable product in the market place. Much of what was left from developments built over the boom period has sold through and what’s left is frequently poorly positioned or in lesser locations. A lot of the current sales are resale properties from foreign clients who purchased property in Croatia over the last 7 to 10 years or local owners that have decided to sell for a variety of reasons. Unfortunately you would have it this trend is set to remain as developers are holding back due to poor credit conditions and an uncertain financial outlook.
For more info concerning real estate market inside Croatia you should check at Croatia real estate.