Speaking at the 8th Annual International Conference on the Real Estate Market in Croatia, Minister of Construction and Zoning Ivan Vrdoljak has said that without private investment no one is able out of the current economic crisis.
“Government purchase of infrastructure and the real estate sector in the coming period will be considerable, but it is well known that state investment alone are unable to bear the brunt of economic recovery” said Vrdoljak, adding that the Ministry will be ‘at their service’ for private investors wanting to invest in Croatia.
Vrdoljak also announced that new laws changes were being prepared, made to make the realisation of investment projects easier, namely regarding zoning and construction. The Minister says that they should be in place by the end of year.
Also at the two day international conference , British ambassador to Croatia David Slinn reported on construction projects currently going on in London for this summer’s Olympic and Paraolympic games.
Continuing on from the latter half of 2011, first line real estate in Croatia, in particular in Dalmatia has been selling fast. For prime located real-estate such as land, apartments, villas and old stone houses which can be next to the sea it is now a sellers market, while using number of buyers far outweighing the amount of properties available on the market to buy. Therefore we are seeing all the usual hallmarks, price increases, gazumping, agent tricks and general difficulties to summarize as buyers compete to acquire deals done.
Our experience since summer 2011 is that they have risen by approximately 15%. Land prices in Croatia have risen from approximately ?300 to ?400 per m2 and in some cases to ?500 / m2 for the those plots that happen to be smaller (less than 500m2) and of the best shape and position. Needless to say this only relates to those plots where access is obvious, utilities are on or very close to the site and the land influences existing residential building zone, meaning you are able to obtain a building permit immediately. Detached houses that require renovation on land plots from 300m2 to 600m2 were selling for ?300,000 but are now selling from ?350,000 to ?400,000 an expense increase of around 17%. It is now almost impossible to find a small detached house in need of renovation and by the sea for just ?300,000.
We think this trend is going to continue for 2012, although with the newest law of legalization now set up we are seeing more properties coming onto the market in better positions. Even though 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 accepting of the idea of purchasing a house that needs legalization. This is for two reasons, firstly sellers understand that they cannot expect to receive any money for that property until the legalization process has become finished and secondly there’s in fact very little risk on the buyer other than time and some initial upfront costs, notably the lawyer.
Sales involving Croatian properties that require legalization are structured in such a way whereby a contract is signed, a first deposit is given, usually 10% and that’s placed on an escrow (usually the public notary or buyers lawyer’s account) using the balance being paid once the legalization process has taken place. The amount of time required for the process to be completed varies with respect to the local planning office, because some areas have significantly more illegally built real estate than these. Rogoznica, north of Split is an useful one. This area has a vast number of illegal houses and the planning office is swamped with applications for legalization. In Rogoznica for instance it can take 12 months to finish the procedure. One thing that is of importance and dramatically increases the planning process is ensuring that the architect leading it submits each of the correct and necessary planning documentation. Missing or incorrect documentation can slow the procedure down considerably.
The number of Croatia property buyers currently in the market is also up on last year. Real estate agencies in the Central Dalmatian region for example are receiving a lot more activity. The biggest problem agencies face might be the lack of buyable product in the market place. Most of what was left from developments built through the boom period has sold through and what’s left is often poorly positioned or in lesser locations. Most of the current sales are resale properties from foreign buyers who purchased property in Croatia in the last 7 to 10 years or local owners who may have decided to sell for a variety of reasons. Unfortunately you would have it this trend is set to continue as developers are holding back because of poor credit conditions and an uncertain financial outlook.
For more info concerning real estate market inside Croatia you should check at Croatia real estate.