What is the current situation in the Mediterranean real estate markets, what is the right type of property to invest in, what is the real return on such a purchase and what criteria should be used to choose a second home? In our web series, we will gradually discuss the coastal destinations where Central European clients buy the most – Spain, Italy and Croatia.
The series are delivered by Lucie Pilipová Gaffi, Managing Partner, Mediterranea Real Estate Investments.
Croatia
Already in 2022, several international agencies, such as Standard & Poor’s, have upgraded Croatia’s investment potential rating to stable. This is not only the consequence of the adoption of the euro and its use from 2023, but also the improving state of the economy, which is largely influenced by tourism. The year 2024 has so far shown that Croatia has the potential to grow further economically, and so investing in real estate is a great tool against inflation. Inflation is likely to increase in Croatia in the coming years, by a projected 2.7% per annum. Experts also agree that more building permits are being granted – last year alone, the number of building permits increased by 17% compared to the previous year.
On the other hand, however, we also see a decline in international transactions – 25% fewer properties were sold to foreigners in 2023 than in 2022. While there have been more building permits, this is mainly due to the fact that many new properties were sold after the rapid post-Covid expansion, and those that received building approvals only this year, for example, have to wait. Therefore, although international purchases have decreased, it is not that property prices in Croatia have started to fall, as is the case in other countries, for example. According to Eurostat data, property prices have increased by about 50% in the last 5 years, while the EU average is about 30%. Surveys show that the Croatian economy can grow by up to 11% in the next 5 years thanks to tourism and the real estate market, and buying property early can bring interesting returns in the future.
In terms of buying an apartment or a house for private use, the rule of location location location applies – the closer to the sea the better, especially in case of a fast future sale. If you like to rely on your own transport, then Croatia is a great option as you can drive your own car here within the Schengen area, plus it’s also easier as you now would pay in euros in Croatia. For cycling enthusiasts, Istria is a good opportunity, given its remoteness and close links to Italy. There are plenty of new, high-quality projects on the local market, as well as on the nearby island of Krk. The Zadar area has also become very interesting due to regular low cost airline flights and the completion of the largest marina in Dalmatia, Sukošan. As a large percentage of investors in Croatia are keen sailors, marinas and the possibility to park their boat there is an essential attribute for choosing a destination for their investment. As an interesting option seems also to live on nearby islands, such as Pašman or Ugljan, which are not yet well known for tourism but are connected to the mainland by short and frequent ferry lines. The Biograd Tkon bridge is also due to be built soon, connecting the islands to the mainland, so you can easily reach them on your own, similar to the islands of Krk or Pelješac. Popular is the area south of Murter, connected by a bridge to the mainland to Primošten, the historic Rogoznica again with its beautiful marina and the newly gradually reconstructed Kaštela near Trogir.
Always follow the well-known rule "Location, location, location". The closer to the sea, the better the investment, especially for a quick future sale.
In addition, the beginning of autumn is the ideal time to choose a property, especially in Dalmatia, because of the approaching end of the season, when there are always more new properties on the market. If you are considering buying a property in Croatia, we will guide you through the whole process, whether you are choosing a second home or an interesting investment.
