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Go to Croatia’s heart-stoppingly gorgeous Dalmatian coastline...and go now. Word about Europe’s land of a thousand islands is getting out. At this moment, you can buy fixer-uppers for $36,000 and island studio apartments for $47,000. By next year, such buys will almost certainly be gone.  Move-into houses costing less than $200,000 are increasingly difficult to find in coastal Europe. But a fully restored stone house with courtyard on Croatia’s Hvar island—rated by Condé Nast as one the world’s 10 most beautiful islands—can be yours today for $169,500.  On Korcula island—which locals claim as Marco Polo’s birthplace—building land is around $5.70 per square foot. This means you could buy a 5,500-square-foot plot and build a three-bedroom villa with pool for around $175,000.  Korcula Island is poised to go big time—I’ll explain why in a moment. First, though, some background on Europe’s emerging holiday hot-spot. “The new Tuscany” Croatia’s 4.5-million inhabitants were once part of the former Yugoslavia. No doubt you’re thinking “conflict in the Balkans,” but the war ended in 1995. Realizing Croatia is now as safe as anywhere else in Europe, foreign vacationers are returning. Before Yugoslavia’s breakup, some 10-million visitors a year came here. With numbers still more than 30% below pre-conflict levels, tourism is projected to grow by 6.9% annually.

Croatia -an unspoiled picture book This article is from International Living Magazine For over 21 years International Living Magazine has been writing an up-to-date magazine / newsletter about living overseas. Subscribe today - Click the link for further information -  Subscriptions Are A Bargain!

The 1,100-mile-long coastline delivers sheer drama. Swathed in pines and cypress trees, carpeted with wildflowers and aromatic undergrowth, it meanders past medieval walled towns, vineyards, and orange-roofed fishing villages. Nightingales sing, hillsides blaze with golden gorse, and everybody seems to have a well-tended vegetable patch.

Every corner of the indented coastline serves up grandstand views of secret coves, little harbors, and calm turquoise waters. Out in the Adriatic Sea, the galaxy of islands—1,184 of them—shimmer like a cache of emeralds. For both island-hopping and sailing, Croatia easily rivals Greece.

Admittedly its pebbly white beaches aren’t perfect if you enjoy sand underfoot. But the coastal waters are crystal-clear, so translucent you can see shoals of fish. “This is the Mediterranean as it used to be,” extolled one real estate agent.
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Build your own home  As long as it has clean papers, buying “building” land and constructing a house can make more sense than buying an over-priced resale. Depending on finishing levels, building costs are generally $67 to $79 per square foot. As a yardstick, square-foot construction costs are $112 to $158 on the Greek island of Crete. The price of land zoned for building depends on location. Listings for plots between Dubrovnik and seaside Cavtat are $13.50 to $16 per square foot. But inland—with no sea views—you can find plots for 68 cents to $1.70 per square foot. On Hvar island, agent Paul Bradbury explained it can range from $6.75 to $17 per square foot. Should you wish to speculate on agricultural land getting rezoned, this costs approximately 57 cents a square foot on Hvar.

A property feeding frenzy Croatia isn’t scheduled for EU membership until 2008, but a feeding frenzy is under way. Property prices are rising 20% to 30% per annum. Medieval Dubrovnik—hottest spot on the country’s real estate map—has experienced such rises in the past six months alone. But when you compared this market with other European vacation destinations, you realize that this Dalmatian coastline still has significant growth potential.  It’s unlikely, however, that EU entry will result in a huge price explosion. The way things are shaping, big gains will already have been made long beforehand. Don’t underestimate current pricing levels. Prices are not dirt-cheap, even now. Many real estate agents I met with on my most recent trip told me about foreign clients expecting to buy immaculately restored three-bedroom stone houses—with sea views—for an equivalent $65,000 or less. They leave disappointed. Although the average Croatian monthly wage is around $600, that means little when it comes to house prices.  The locals aren’t daft. They know that along Europe’s other sunny southern coastlines, old stone-built seaside properties change hands for senseless sums. Croats don’t yearn to live in these properties themselves, but they realize their value. Vendors often seek sums that will result in them being able to build two brand-new houses for their offspring, for example.

Croatia’s emigration problems are almost on a par with what Ireland’s used to be. Dozens of people, many living abroad, can have claims on a particular piece of property. All the agents I spoke with said title on their properties was clean, but ask lots of questions. And ensure your chosen agency uses a reputable lawyer. The real estate market isn’t highly regulated—there are cowboys about.
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The 1,100-mile-long coastline delivers sheer drama Dubrovnik, one of Europe’s most photogenic walled cities

In the aftermath of conflict, a great deal of carpet-bagging went on. Croats bought Serb houses for a pittance. What any driven-out Serb thinks when he hears his former home got resold for a vast sum to a foreigner isn’t comfortable to contemplate... 

One last warning: Once you think you’ve agreed terms, they’re all too likely to change. Some Croats will up the stated price once they believe they’ve netted a gullible foreign fish. The new Tuscany, indeed! 

Guaranteed 6% returns 

The safest play is a brand-new apartment, built on land disposed of by the government privatization fund. This means title is clear from the start. Paul Keppler, managing director of Croatian Sun, told me about Marina Marco, Croatia’s first five-star resort and marina development on Korcula island. 

Along with a Crowne Plaza hotel, the first phase of 860-square-foot luxury apartments will have parking and terraced gardens with 180-degree water views. Completion is due early 2006. “Year-round tourism” is Croatia’s new buzzword, and the marina here will provide sailing, cruising, diving, and fishing, plus a “boardwalk lifestyle” with restaurants, bars, a nightclub, specialty boutiques, and a health spa and fitness club. There will also be boardwalk access to an offshore island with tennis courts and other sporting facilities.

The project hadn’t officially launched at the time of writing, but Paul says the apartments will cost between $242,000 and $327,000. Plus there’ll be a guaranteed rental return of 6% over three years.

A British real estate agency, Croatian Sun is Marina Marco’s main agent. With offices in Split and Dubrovnik, their extensive portfolio includes land, new developments, and resale properties—and nothing gets listed unless title has been checked by a lawyer recommended by the British Embassy. They’re also tied in with Savills—a long-standing UK estate agency.

More brand-new island buys

Less than an hour’s ferry-ride from Split and the mainland, Brac is central Dalmatia’s largest island. The population is almost 14,000. Along with idyllic coves, traditional villages, and bustling fishing harbors, one of Croatia’s most famous beaches is here—tongue-shaped Zlatni Rat (Golden Cape). It looks Caribbean-like on posters, but be prepared for pebbly golden shingle, not soft sand. Brac’s other claim to fame is its white marble—the island provided the stone for the White House in Washington, D.C.

Croatian Sun has two Brac developments. One is a 66-apartment complex, but, although completion date is mid-2005, only four units are left. Parking is included, and the complex will have a swimming pool. Prices for the two- and three-bedroom apartments range from $94,500 to $121,000. The first-row apartments from the sea cost $94,500 to $175,500. 

Linked by a causeway to the medieval walled town of Trogir, Ciovo island is a favorite playground for Split’s residents, many of whom have holiday homes here. You could say they’re emulating Trogir’s medieval nobles, who used to build summer villas here.
 
Also through Croatian Sun, Ciovo properties include studios and one- and two-bedroom apartments for $69,500 to $210,000 in a first row to the sea complex at the fishing village of Slatine. With views toward the mainland, the complex has a pool and landscaped gardens. At Okrug Gornji village, studios and one- and two-bedroom units range from $47,000 to $81,000.

New developments without guaranteed returns? Don’t expect fireworks from the market yet. Croatia heaves during July and August, but you’d struggle for tourists in low season. Although a number of golf courses are in the planning stages, it isn’t yet a year-round destination like Spain. Dubrovnik’s Old Town and the Dalmatian coastal resorts are deadly quiet in winter.

Golf and up-market resort developments may make a difference, but the tourist season currently runs only mid-May to mid-September. Winter and spring are mild, but it can be rainy (it rained six days out of seven during my early June visit). However, summer and fall are positively balmy. In July and August, temperatures reach 90° F.
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Europe’s “walled city” You’ll be smitten by Dubrovnik, one of Europe’s most photogenic walled cities. After heavy shelling from Serbian and Montenegrin forces during the Balkan conflict, this pearly city of marble sidewalks, palaces, bell-towers, and green-shuttered houses has been meticulously restored to its former glory. The only sign it received a pounding is when you walk the 80-foot-high walls and look down on the huddle of terracotta-red rooftops. Before the shelling, its medieval roofs were made from straw-colored roof tiles —now impossible to find.  Restored properties within Dubrovnik’s walls are already expensive, fetching $395 to $563 per square foot. If a property for refurbishment hasn’t already been snapped up, there’s a distinct possibility of title problems. Averaging $225 a square foot, apartments in Dubrovnik’s residential districts are cheaper. Lapad is a green-belt district just over two miles from the center. As much residential area as tourism center, it could be a good choice for a vacation rental property. In a Lapad residence built in 2001, a 322-square-foot apartment is $66,000 through Atlantic Maritime. Small seaside villages northwest of Dubrovnik include Orasac and Slano. Dubrovnik Nekretnine has a 1,290-square-foot Orasac house with garden for $121,000 and a 644-square-foot Slano apartment for $97,000. Katarina Brailo, the girl in this agency’s makeshift office in Dubrovnik’s Old Town, could only show me computer pictures. Although they looked OK, I can’t give you first-hand knowledge of whether the house is livable. “You will have to speak to the director.” But when I found the main office at 3 p.m., it had already closed...

Dubrovnik - The Pearl of the Adriatic Rental guide for new apartments The approximate weekly rental guide for new development apartments in the Dubrovnik area is: Studios: $302 low season; $417 mid-season; $575 high season.  One-bedroom apartments: $423 low season; $575 mid-season; $787 high season  Two-bedroom apartments: $514 low season; $678 mid-season; $1,058 high season

Roads aren’t great, and you can’t see many properties in a single day. Although the distance is only 140 miles, it’s a four-hour drive from Dubrovnik to Split. Few foreigners have bought in Split, but things could change if resort prices keep spiraling. Prices in the city range from $124 per square foot in less attractive neighborhoods to $372 a square foot for new apartment residences in elite locations on Marjan mountain. The average cost is around $225 per square foot.

Lavender-blue Hvar

Two hours from Split ($4.60 each way with Jadrolinija Ferries), Hvar has become a yachting hangout for Europe’s rich and famous. Can’t say I spotted any celebrities, but it’s a verdant island of pretty settlements and azure-blue waters. If I’d timed my visit a couple of weeks later, wild lavender would have been blooming. Hvar is perfumed with the smell during summer.

Properties sell quickly, and bargains are few. Though I wasn’t taken with the $103,000 burnt-out shell at Vira Bay, the stone village house I saw for $169,500 in the ancient settlement of Starigrad was a perfectly restored gem. It won’t linger on the market long.

Paul Bradbury says his agency (Hvar Property Services) aims to offer new-build from $73 per square foot this month. The rough guide to other island properties is as follows:
Less than $50,000: Complete ruins (few left)
$50,000 to $120,000: More substantial ruins and livable houses in need of updating
$120,000 to $240,000: Restored houses, family homes, and apartments
$240,000-plus: More substantial homes

Some properties cost far more. On the outskirts of Hvar town (a renaissance beauty with marina, citadel, and marbled main street), we viewed a 5,370-square-foot house and business opportunity for $1.5 million. In excellent condition, it has three-bedroom/three-bathroom owner accommodation; the rest of the property comprises six studio/one-bedroom vacation apartments. 
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Real estate contacts Croatian Sun (Paul Keppler), Iva Vojnovica 61A, 20000 Dubrovnik, Croatia; tel.  (385)20-312-228; fax (385)20-312-226; e-mail: paul@croatiansun.com; website: www.croatiansun.com -  Adriatic Maritime (Ian Simpson), Ballymaice House, Bohernabreena, Co. Dublin, Ireland (agents are on the ground in Croatia); tel. (353)86-805-5402; e-mail: adraiticmaritime@hotmail.com; website: www.croatiaproperty.ie.  Hvar Property Services (Paul Bradbury), Jelsa, Hvar Island, Croatia; e-mail:  info@hvarpropertyservices.com; website: www.croatianhouse.com.  Dubrovnik Nekretnine (Katarina Brailo), Dordiceva 4, 20000 Dubrovnik, Croatia; tel.  (385)98-178-7877; e-mail: dalmacija-nekretnine@du.hinet.hr.  How to buy—and save 22% You can purchase property either as a private individual or through a Croatian company. The company route is quicker—six weeks as opposed to at least six months for individual buyers who need permission from the Ministry of Foreign Affairs.  Another advantage when buying through a company is that if you buy a property constructed after January 1997, you can claim the 22% VAT back. Private individuals cannot.  The costs of setting up a Croatian company are as follows: · Initial capital: $3,400 · Accountancy fees: $360 to $1,300 (prices depend on several factors, including whether the accountant speaks English). · Legal fees of around $1,200 plus 22% VAT · Public notary and court fees of approximately $410 Taxes, fees, and utility costs  There are no annual property taxes, but purchase tax is levied when buying real estate. Payable by the buyer, this tax is 5%. For individual buyers not wishing to set up a company, legal fees and stamp duty are approximately 1.5% of the total sum. Agents generally charge between 3% and 6% commission. If a property in private ownership gets sold within three years, capital gains tax is levied at 35%. After three years, you’re not liable for CGT.  Monthly utility costs generally amount to $30 to $40. You’ll pay a rental management service approximately $60 monthly and an agency that sources rental clients for you  20% commission.  The food’s not bad either Croatia has more in common with pasta-crazy Italy than Eastern Europe’s meat-and-stodgy-dumplings diet. Certainly along the coast, you’ll find a rich choice of seafood and organic vegetables.  I found eating out in Split, Croatia’s second-largest city, was around 30% cheaper than in the Dubrovnik area. Prices in tourist resorts are pitched at West European levels. In Split, I paid $7.65 for a starter of prsut—smoked Dalmatian ham. In Dubrovnik’s Old Town, it’s on most menus for $10.20.  Pizzas are generally between $6.50 and $8.50. The local specialty, black cuttlefish risotto, costs $8.50 to $11.50. With steamed mussels averaging $7.65 and a portion of swordfish at $17, few locals can afford seafood. Decent wine costs $17 to $22 a bottle; house wine costs around $10 for a liter jug.  Three recommended restaurants: Konoba Pjatanca, a short walk outside Dubrovnik’s Ploce Gate on Kolocepska Street. Its terrace looks over the old port and city walls. Konoba Kolona (2 Put Tihe Street) in the seaside resort of Cavtat—40 minutes by boat from Dubrovnik. Outdoor terrace, great choice of seafood, and a delicious stuffed eggplant starter for $5.10. Sarajevo (6 Donaldova, Split). Cavernous old place, popular with locals, in Split’s medieval heart. Excellent veal schnitzels for $6.80

European residents with a yachting habit can make big savings in Croatia. As this country isn’t yet an EU member, yachties can legally avoid the sales tax (VAT) on the purchase price of yachts if they’re exported out of EU territory. Owners are allowed to moor their yachts in Croatia indefinitely without paying import duties. To obtain a residence permit, you need only moor a yacht in a Croatian marina. Once you have a residence permit, you can sail into EU waters for up to 18 months in any two-year period without paying VAT on your yacht.

* Although Croatia has its own currency, the kuna, property in this country is priced in euro.

This article is from International Living Magazine For over 21 years International Living Magazine has been writing an up-to-date magazine / newsletter about living overseas. Subscribe today - Click the link for further information - Subscriptions Are A Bargain!
 

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