Expert corner - opinion of specialists on real estate in Croatia

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Every real estate market has it’s peculiarities explained by geographical position, historical development, consumer behavior. And Croatian realty market is not an exception. Here is the expert opinion of Croatian realty market Elena Nevskaya on disproportions of Croatian property market:

1/

Istria confusions

Most of Croatia properties buyers come from neighboring Slovenia, Austria and Germany. They travel mostly by car and the nearest point in Croatia for them is Istria peninsula. They come to be closer to the sea, to the beach, to enjoy the sea, swimming and sunbathing. First of all want to find 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, luxury villas. Although Tuscany-style villas are strongly present at 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 massives of forests, agricultural lands along the sea with no signs of intended construction. 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, villages of modern villas could be built there for the Germans, 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 of the market. Istria peninsula continues to be most demanded area in Croatia, closest to Europe and perfect from the point of view of transport connectivity. But it offers 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 buyers and international buyers demand. But again – most of 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 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 travel, more suitable for buyers from Hungary, Bosnia, Serbia.

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

2/

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 turned to grow into different problem: huge territories are developed in accordance with this urban structure leaving hundreds of kilometers of coastline lost for residential and other development and construction.

The cries for public interests were prevailing for a long time. But now it is evident that such urban concept with first line road is good for noone. Noone can enjoy the beach in these zones, noone can bath there, no hotels can be built there, no villas, no apartments in Croatia. Usual concern about public good evolved into public bad. Noone wants to live up the road, everybody wants to be down, closer to the sea.

Some municipalities have already started the program of roads and highways removal from the first line. Some are still thinking how to sort it out as relocation of the road up the hill means purchase of private lands (now meant for the road) from private persons or exchange of their lands for some other ones. Here municipalities have vast resource of municipal lands but they are not often so eager to promote this program.

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

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

3/

Tourism orientation

Croatia has a beautiful coastline famous by it’s lonely bays, pebble beaches, crystal-clear water and ecological surrounding. However, during latest years it is becoming exceedingly difficult to find isolated private location with no hundreds of tourists on the beach in summer period. In this connection formerly popular destinations are looking property buyers. Eco-concept of leisure can not longer attract buyers to Opatija, Trogir, Split. Many towns like Medulin, Rogoznica, Porec become overpopulated in summer period of time 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 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. Main target is growth of overnights, occupancy rates. But it means intense business during two-three summer months and still low-season during the rest of the year. Program of 365-days-a-year tourist season in Croatia is very good but still far from realization. Instead of attracting property buyers who could stay in their homes in Croatia several months a year or all the time and ensure steady development of local facilities and their functioning all the year round, Croatia is enhancing seasonality of coastline business.

People who could live in Croatia 365 days a year are in fact Croatian property buyers. This is not a tourist-development program but immigration program. Many areas of Croatia lack normal infrastructure because of 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 the year round to get infrastructure developing. 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 eur if he earned millions), low-income-tax solutions stimulate rich people to spend more than 183 days a year in a pleasant country which affords such regime.