CROATIA REAL ESTATE GUIDE 2013
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At First Property Croatia, we believe that life is a mosaic of choices. From our point of view, choosing a place to live or to spend holidays with your family and friends plays an enormous role in overall quality of life, because not all places are the same. With its enchanting natural beauty, abundance of historical and cultural monuments, vibrant, beautiful cities and pleasurable lifestyle, Croatia is one of the few places in the world where all of this beauty can be experienced in such a small territory. If you realized that Croatia is the place you want to spend holidays or the rest of your life, or you just want to enjoy healthier, wealthier life, we will be happy to help you settle in your new home.
Economic overview When talking about Croatia real estate market in year 2013, in order to get a complete overview, we have to consider a number of economic factors that create the general economic situation in Croatia, affecting relations of supply and demand, price level, purchasing power etc., and thus the real estate market. Economic indicators in Croatia in recent years have been largely negative, which is indicated by negative rates of GDP growth, inflation, unemployment growth and reduced purchasing power of Croatia’s citizens. GDP is in decline for the fourth consecutive year: 2009 the fall was 6,9%, 2010 1,4%, 2011 has achieved zero growth rate, while in 2012 GDP declined again by 2%. Initial government forecasts predicted growth rate of 0,8% for 2013, but later corrected the forecast to 0% growth, while financial institutions predicted a decline of 0,2 to 0,4 percent. The data about inflation growth, unemployment and declining purchasing power follow these indicators and clearly illustrate the depth of Croatia’s economic crisis. Foregoing has its obvious repercussions on the Croatian real estate market. According to the indicators of Property Center, real estate prices in Croatia continue to decline, so that average real estate price in January 2013 dropped 4,6 percent compared to previous year, and 0,7 percent on a monthly level. Prices also continued to decline in February (1,1%) and March 2013 (0,9%). “Economic indicators in Croatia in recent years have been largely negative, which is indicated by negative rates of GDP growth, inflation, unemployment growth and reduced purchasing power of Croatia’s citizens”
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Croatia real estate prices Average asking price for an apartment in Zagreb in March 2013 was 1.625 Euros/ m2, which is a 1,5% drop compared to February 2013. Along with Zagreb, real estate prices also declined along the Adriatic coast (3,5%). On a monthly level, compared to February 2013, prices are 0,4 percent lower. Average asking price for a house on the Adriatic coast in March 2013 was 1.562 €/m2, which is a 0,7% decline compared to February, and a 2,6% decline on a yearly basis. Prices of apartments on the Adriatic coast recorded the smallest decline, with the average square metre price of 1,990 € in March 2013, which was a 0,5% price decline compared to February 2013, and a 0,9% decline compared to last year. Apartments are still most expensive in Dubrovnik-Neretva county and Split-Dalmatia county, where the average price is around 2.140 €/m2. On the other hand, properties with best prices were holiday cottages in Lika county with the average price of 1.618 €/m2. Average Adriatic apartment price had not changed significantly compared to February 2013 (increase of 0,2%), while it declined significantly compared to previous year (7,3%). Prices of real estate (apartments) in Split in March 2013 declined by 5,4%, and in Rijeka by 3,2% compared to last year. Average asking price of apartment square meter in Split is 2.310 €, in Rijeka 1.540 €, in Osijek 1.092€, which once again confirms that due to the high demand, Dalmatia is the most attractive place for buying and selling property in Croatia. But what conclusions do the above data leave us with? Is it the right time to buy real estate in Croatia? Average real estate prices in Split, Rijeka and Osijek is presented in the table below: City
Average price in March 2013 - €/ m2
Average price in March 2012 - €/ Yearly change (%) m2
Split
2310
2441
-5.4%
Rijeka
1540
1591
-3.2%
Osijek
1092
1103
-1.0%
Source: Property center
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Possible scenarios Generally, there are three possible scenarios regarding the real estate prices in Croatia: pessimistic, realistic and optimistic. According to the pessimistic scenario, previously mentioned economic indicators (high life costs, unemployment, reduced purchasing power, uncertainty about future earnings, the outflow of young educated people who are the most frequent buyers of real estate, etc.) will contribute to further decline of demand and therefore prices of real estate (-20%). The realistic scenario involves stopping the economic downturn and slow recovery of economic activity in the 2013, gradual recovery of the labour market and the end of younger working age population overflow. In the short term, the growth of VAT, slower labour market and increased costs of living will result in declining real estate prices by about 10%. In the medium to long term, the decline in interest rates, economic recovery and an increase in disposable income will initiate increase in demand for real estate and an increase in their price. In an optimistic scenario, all of the indicators that affect the demand for real estate, whether short term or long term, have a positive index, and after the fall in 2012 and the 2013, we can expect steady and sustained growth in real estate prices at a slightly lower rate than before the economic crisis.
“In the short term, the growth of VAT, slower labor market and increased costs of living will result in declining real estate prices by about 10%. In the medium to long term, the decline in interest rates, economic recovery and an increase in disposable income will initiate increase in demand for real estate and an increase their price�
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Conclusion We at First Property Croatia (who are mainly dealing with real estate in Dalmatia and the Adriatic basin) believe it is the right time to buy real estate Croatia for several reasons. The first reason is the Croatian accession to the European Union, which is the definitive confirmation of a high degree of political stability and respect for the highest standards of democracy, which is an indicator to investors that Croatia is a safe country to invest in. The second reason is the definite trimming of the Land Registry, with current legalization process in full swing. The third reason is the continuous increase in foreign demand for real estate in Croatia (especially in Dalmatia), which together with other factors favours the theory that real estate prices in Croatia have reached their lower limit, and that the process of price increase is about to hit the door. Real estates in attractive locations such as Split, Hvar and Dubrovnik have always had their customers, and it is likely that the demand will go up for these estates, and so will their price. Whether you are buying a property in Croatia as a second home, for holidays, relocation, resale or profit from renting, we believe that now is the right time to buy it. If you have any questions or need advice, please contact us or sign up for our newsletter. International expert team of First Property Croatia is made up of professionals from the field of real estate, which has helped hundreds of people to find their home in Croatia. We will be happy to help you too to find a property in Croatia you have always dreamed of!
“Real estates in attractive locations such as Split, Hvar and Dubrovnik have always had their customers, and it is likely that the demand will go up for these estates, so as their price. Whether you are buying a property in Croatia as a second home, for holidays, relocation, resale or profit from renting, we believe that now is the right time to buy it�
www.firstpropertycroatia.com | Your Croatia real estate partner