Key Advantages and Disadvantages of Croatian Real Estate Investment Processes

Prices for 2023 remain positive, albeit slightly higher than previous figures. At the same time, the 2023 figure is based on a limited amount of Croatian real estate, so estimating the real demand is quite a difficult process. This is due to the small size of the country itself, the complex procedure for obtaining a building permit, and the large number of protected areas where the construction of real estate is prohibited. What is the return on investment in real estate in Croatia in 2023? How to invest in the new apartment for sale in Begonici, Croatia, and get a solid profit? Find out the answers to these questions in materials from qualified experts who understand the intricacies of the real estate market in Croatia. Croatia is a small European country on the coast of the Adriatic Sea, which connects the Mediterranean Sea with Western Europe. Croatia is a member of the EU and NATO, which guarantees economic stability. Since tourism is actively developing in Croatia and is quite a popular phenomenon, real estate as an investment is profitable not only for further sale but also for renting it out and receiving a stable income.

Croatian real estate market: realities of 2023

Croatia has become profitable to invest in real estate since 2013 after the recovery of the real estate market after the crisis of 2008. Most buyers who want to buy properties in Croatia do not have citizenship. In 2021, the share of contracts with foreign participation was 75%. Most investors in the real estate market of Croatia are from Germany, Austria, and neighboring Slovenia. The outbreak of the pandemic significantly reduced the flow of tourists and affected the dynamics of supply and demand. However, the number of real estate transactions increased by 50% in 2021 compared to the previous year due to the increased tourism sector.

When planning investments in Croatian real estate, one should take into account the regular, rather active growth of the market. While median house prices rose 4.1% over the past year, house prices rose 7.7%. The greatest interest of buyers is attracted by coastal real estate, which has historically been the most popular among tourists. The annual rate of price growth is 12%. Buyers increasingly prefer properties in the suburbs, then consider purchasing apartments in larger cities such as Zagreb and Split. Property prices in Croatia vary widely. The key factor affecting the price per square meter: are the total area of the property, where exactly the property is located (near the sea or close to the city center, such property will always be more expensive), and the presence of new renovations or renovations.

The most expensive property remains the property located a few hundred meters from the sea. When you want to invest profitably in Croatian apartments, pay attention to the average prices currently present in the real estate market. A compact studio apartment costs about 100,000 euros. About 200,000 euros costs a recently renovated standard two-room apartment. From 300,000 to 400,000 euros costs a private house located on the seashore. A villa, which is quite large in area, costs about 500,000 euros. Premium villas located near beaches cost 600,000 euros. At the same time, the average value of each category of positions is expected to grow by 5-7% this year. Regarding the short-term forecast, the Croatian economy is uncertain, as it is affected not only by internal but also external factors. Russia’s war against Ukraine has created uncertainty in energy prices. Because of this, many Europeans decided to spend their holidays in inexpensive Croatia, rather than in more expensive resorts. Also, due to the foreign policy situation, foreign investors now want to actively invest in Croatian real estate for a comfortable beach holiday in the coming years. Another key factor to consider when investing in different types of real estate in Croatia is the replacement of the national currency with the euro in 2023, which in turn affects the price level. Because of this, Western analysts expect that 2023 will be profitable in terms of buying real estate compared to last year. The war hurt Croatia’s construction industry and caused problems in the supply chain of vital materials. However, developers are confident that the crisis will not seriously destabilize the country’s economy and real estate market.

Affordable and profitable types of real estate investments in Croatia

To make an informed decision, it is important to understand the types of real estate investments in Croatia. Residential real estate is the most attractive segment for many foreign investors, given the large influx of tourists and the annual increase in the price of Croatian real estate. Such purchases provide an effective opportunity to earn from the rental or resale of the purchased real estate. In addition, having a residential property is a big advantage if the investor wants to get a Croatian residence permit and citizenship shortly. Foreigners cannot buy land for development (even a very small one) and agricultural land.

Commercial real estate

Investing in commercial real estate in Croatia is also very popular and in high demand among numerous investors. Key preference is given to real estate purchases related to logistics, warehousing, and commercial infrastructure. This segment of commercial real estate can be purchased at a bargain price. In addition, due to the popularity of numerous online stores and international delivery services, these commercial properties are in high demand in the long term. For commercial purposes, registration of a legal entity in Croatia is required. When choosing the type of object, it is necessary to carry out individual depreciation calculations taking into account current demand and modern trends.

In which sector of the real estate market should you invest?

Once you have decided to invest in Croatian real estate, you need to determine exactly where you want to invest. All items on the market can be divided into primary and secondary. Which option is right for you depends on your budget, investment strategy, and other key factors. The comparison will help you evaluate the main characteristics. Outstanding properties in Croatia. In most cases, foreign buyers start by looking for premium properties that are already in operation or in the process of obtaining such permits. On the one hand, this is a proven way to protect yourself from buying a long-term building, on the other hand, it is difficult to meet unscrupulous developers in Croatia, and the high purchase demand here adds to the constant increase in the cost of a square meter, so it is necessary to follow a completely different strategy when looking for real estate. More and more foreigners want to invest in real estate under construction in Croatia. Buying real estate at the stage of construction is 20-30% more profitable than buying real estate immediately after the house is put into operation. Secondary real estate in Croatia is also in demand among investors because it offers wide opportunities and many different profitable options for purchase. The secondary market in this country is much larger than the primary real estate market, making it much easier to find a perfectly located property at an attractive price. When your initial purchase budget is low, you can choose properties from the secondary market. Over the past year, the vast majority of real estate on the secondary housing market has fallen in price. When we talk about investment in real estate for resale in Croatia that needs repair or reconstruction, the secondary housing market is filled with various properties in the lower price category. However, with improvements, investors can very quickly increase the market value of the property for further profitable resale. The new price offers a significant return on investment. This option is for those who want to resell their residential or commercial property within a short time after purchase.

Choice: primary or secondary real estate market in Croatia

Summing up, we can say that new buildings and secondary real estate markets, and objects in them are almost always bought for resale or to receive regular income from real estate rental. Each option has its pros and cons that should be considered when deciding to invest in real estate abroad. However, buying in the primary and secondary markets can be very profitable in the long run. The advantage of investing in real estate in Croatia is that this holiday country remains an attractive destination for European investors and in itself speaks of the reliability of the investment. Let’s consider the key advantages of investing in Croatian real estate. Stable economy. External geopolitical events affect inflation, domestic supply, and demand, not to mention serious or prolonged crises, Croatia’s real estate market is stable and offers many opportunities to buy quality housing at a good value. Due to limited building space and strict control by developers, the construction of various objects is prohibited. Practically all transactions for the purchase of selected objects can be carried out through authorized agents. When making a payment, the bank does not ask for information about the origin of the money.

Many people choose to invest in apartments in Croatia because there are enough potential tenants. The country has seven international airports, from which you can reach many major European cities in less than two hours. Active development of tourism. The country’s authorities are trying to attract tourists with comfortable resorts, and a wide selection of entertainment activities that are held here throughout the year. No additional taxes. As in most European countries, owners do not have to pay annual fees for the land and the buildings on it. In Croatia, you can obtain partial ownership of your real estate by paying a one-time small real estate transfer fee (maximum 3-4% of the final value of the real estate). Key disadvantages of investing in real estate in Croatia. Although this country may seem like a very cool place to invest in real estate, you should carefully weigh all the pros and cons of investing before buying. Let’s consider the key disadvantages. The swimming season is relatively short. This requires careful selection of real estate. For those who want to enjoy the beach, we recommend buying properties that can be rented out, these properties are quite expensive, an additional disadvantage can also be noted that the bathing season is short, so the purchased property near the beaches will not bring rental income for a long time.

There is no automatic obtaining of a permit or residence permit. There are certain restrictions for foreign investors, but the potential for making a solid profit when buying residential and commercial space in Croatia is at a high level. Almost all objects on the market have certain advantages. Thus, your specific choice of real estate will determine your budget and investment goals. Qualified real estate agents will be happy to help you choose the most suitable object, taking into account your strategy. At the same time, the profitability, payback of the new real estate, and the possibility of renting it out and carrying out repairs, if necessary, are calculated in advance. In addition, when working with a qualified real estate agent, clients have access to legal support agreements and legal representation services for signing purchase and sale documents. All this makes cooperation profitable and reliable, which is a key aspect when investing in real estate in Croatia.

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