| 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.
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.
Here’s an example:
I saw one ruined property on Hvar island priced at $103,000. The house
has stunning views of Vira Bay and is located less than four miles from
Hvar Town...but it had no roof, and access was difficult.
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.
Another
thing: Before the war and Yugoslavia’s break up, Croatia’s population
was around 22% Serbian. They all fled, and Croatians occupied their houses.
Presumably these were houses intact. It’s rarely mentioned in travel articles,
but the Adriatic coastal drive between Makarska and Split is scarred with
burnt-out dwellings.
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.
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...
Vineyards...small
coves...wildflowers. Farther west, the Peljesac Peninsula points into the
Adriatic like a craggy green finger. Again through Atlantic Maritime, a
612-square-foot seaside apartment with extra terrace space in Orebic village
is $43,000. Orebic is popular in summer as it’s a ferry crossing point
over to Korcula island. Old peninsula houses to restore start at $36,000.
At the other end of the price scale, they have a 2,200-square-foot sea
captain’s villa—with a sea captain’s view—for $423,000. As the revamped
house has a separate upstairs entrance, this section could be let out as
two holiday apartments.
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.
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
Tax-free yachting
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.
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