Tuesday, 2 August 2022

People Seeking Construction Land as Croatian Property Prices Soar

August the 2nd, 2022 - More and more would-be buyers are seeking out land on which they can construct something for themselves as Croatian property prices continue to soar to extremely high levels.

As Poslovni Dnevnik writes, Croatian property prices and their constant increases are apparently unstoppable at this moment in time, but despite the wildly overpriced square footage, demand is far from abating. In addition to houses and apartments, in the last two years ,there has been a significant increase in interest in building land, as reported by HRT.

For two years, Stefano Ladavac intensively searched for construction land in the very heart of Istria. The offer is weak, and the prices have never been higher, he claims. He now considers a plot of land in Sveti Petar u Sumi perfect for the construction of two villas that he will rent out when they're completed.

"We're absolutely satisfied with the price we got, we paid 22 euros per square metre, and approximately the initial average price of construction land in Sveti Petar u Sumi is 40 euros per square metre, so we did very well in that regard,'' said investor Stefano Ladavac.

There isn't much choice to pick from in the City of Zagreb either. The seller of land near the capital's Franjo Tudjman International Airport is asking for 65 euros per square metre. The price is dictated by the market, and according to the market as it is at the moment, that price is very realistic. At the same time, it is twice as high as it was when the construction land was purchased six years ago.

Cheap borrowing encourages buying, and with the current inflation rate as it is, money invested in property will not lose value. Building plots are most in demand in the cities of Zagreb, Split and Zadar, and Croatian property prices for all types of building are at record highs.

"I don't see a situation in which Croatian property prices will come down in the foreseeable future. The market is active, so I think it will continue in this way, given the country's imminent entry into the Eurozone," said real estate agent Mia Vucic.

The latest data from Eurostat shows that Croatian property prices increased by thirteen and a half percent in the first three months of this year alone when compared to the same period last year, which is above the European Union (EU) average.

For more, make sure to check out our dedicated lifestyle section.

Friday, 8 July 2022

Real Estate Prices in European Union, Euro Area Rise, Croatia Above Average

ZAGREB, 8 July 2022 - Real estate prices in the European Union and the euro area in Q1 2022 saw the highest increase in more than 15 years, and in Croatia their growth was above the European average, a report by the European statistical office has shown on Friday.

In Q1 2022, real estate prices in the EU rose by 10.5% year-on-year, the largest increase since the end of 2006. At the end of 2021, they went up by 10.1%.

In the euro area, real estate prices rose by 9.8% in Q1 2022, which is the largest increase since 2005, when Eurostat started publishing data. In Q4 2021, the prices went up by 9.4%.

All EU member states, for which data were available, saw a year-on-year increase in prices in Q1 2022, and 17 of them saw a two-digit growth rate.

Real estate prices increased the most in the Czech Republic (+24.7%), followed by Estonia (+21%) and Hungary (+20.6%).

In Croatia, real estate prices went up by 13.5% y-o-y in Q1 2022. In Q4 2021, they increased by 9.1% y-o-y.

The increase in real estate prices was the smallest in Cyprus (+1.1%), followed by Finland (+4.3%) and Italy (+4.6%).

Eurostat did not have the data on Greece.

Acceleration in Croatia

In the period from January to March, price growth in the EU was stable, 2.1%.

In the euro area, it slightly decelerated, from 1.9% in the last three months of 2021, to 1.7% at the beginning of this year.

All members saw a quarterly increase in real estate prices, with Estonia recording the largest increase (+7.1%), followed by Hungary (+6.7%) and Bulgaria (+5.2%).

In Croatia, real estate prices in Q1 2022 rose by 5% from Q4 2021, when they went up by 2.5%.

The smallest quarterly increase in real estate prices was registered on Malta (+0.4%), followed by Cyprus (+0.5%) and Germany (+0.8%).

Wednesday, 27 April 2022

Foreigners Are Buying More and More Real Estate in Croatia

April 27, 2022 - Last year, foreign citizens bought 9,514 properties of real estate in Croatia, which is a high increase of 50 percent compared to 2020.

According to research done by Jutarnji List with information from the Croatian Tax Administration, the highest year-on-year growth in the purchase of real estate in Croatia among foreigners was achieved by citizens of Germany, Austria, and Slovenia, reports tportal.hr.

Last year, German citizens bought 2,637 properties in Croatia, which is an increase of 1,089 sales or even 70 percent compared to 2020, Austrians made 1,109 purchases (472 more properties or an increase of 74 percent compared to 2020), while Slovenians last year became the owners of 2309 properties in our country, achieving an increase in purchases compared to the previous year by 32 percent or 550 more properties.

"The data do not show the total purchase and sale of real estate in 2020 and 2021, but only the sale of real estate for which the Tax Administration conducted the procedure of determining the tax base. In addition, data on real estate sales are still being updated ", they note in the Tax Administration and suggest that, in the end, the growth in the number of real estate sales made by foreigners with sellers in Croatia could be even higher.

In any case, the registered growth of foreigners' demand for domestic real estate confirms the recent allegations of entrepreneurs and real estate market experts who told Jutarnji list that the increased interest of foreigners in domestic real estate is one of the reasons for unprecedented growth in new apartment prices in the last quarter of last year.

Namely, according to the Central Bureau of Statistics, the purchase prices of new dwellings in the last quarter of last year were 15 percent higher than the prices realized in the last quarter of 2020: such growth has not been recorded in the last decade. In addition, the average prices of all residential real estate purchases in 2021 were 7.3 percent higher than in 2020.

For more, check out our business section.

Friday, 22 April 2022

Final Day of Applications for APN Subsidies, not all to be Approved

April 22, 2022 - Another round of applications for the APN subsidies ends today. Croatia's State Real Estate Agency (APN) say that they have never received more applications, almost five thousand, but it remains uncertain if all of them will receive the subsidies. Demand is growing, and the rise in housing prices which is directly linked with the provision of subsidies does not help either.

As SiB writes, there aren't that many apartments, while potential buyers are numerous. For a few years now, the demand for apartments has been just as wild as the rising prices of these precious square metres. 

"For what was the price of a two-bedroom apartment a year ago, now you can only buy a one-bedroom apartment. In Zagreb, the average price per square meter is 2,300 euros, in Rijeka 1,900, in Split 3,000, and in Osijek 1,050 euros," shared Luka Prica, the owner of a real estate agency, with RTL.

Less than 24 hours remain until APN applications are closed. A record 4,870 requests were received, and funds are limited, with HRK 50 million provided.

First come, first serve
"All the applications that were submitted in time, up to the request number 4,100 if all documents are complete, will be processed and approved accordingly", said Goran Golenić, assistant director of APN.

In previous years, it never happened that someone did not receive the subsidies, but APN warns - we can not guarantee that it will be the same this time around. Those who have submitted their applications first are at an advantage. So far, 2,462 applications have been approved in this round.

"When the funds are spent, we will inform the competent authorities and make decisions on further actions accordingly," Golenić claims.

Better days with cheaper square metres, it seems, are not in sight.

"We are entering the Eurozone, inflation has been announced, we are witnessing an increase in the prices of materials and labor - we cannot expect a drastic drop in prices," Prica claims.

Surely, the new round of APN subsidies announced for next year will come in handy for many.

For more, check out our lifestyle section.

Monday, 29 November 2021

Foreign Nationals Have Purchased 60,000 Flats in Croatia in Last 10 Years

ZAGREB, 29 Nov 2021 - The proportion of foreign nationals among property buyers in Croatia was 14 percent in 2010, while last year one in four real-estate buyers was a foreigner, Večernji List newspaper wrote on Monday. 

In the last 10 years, 314,000 residential properties have been sold, with the number of flats and holiday apartments sold ranging from 23,000 in 2020, which was their lowest number, to nearly 40,000 in 2010.

Foreign nationals have an increasingly important role in the real estate market as they have purchased 60,000 flats and holiday apartments in the last 10 years. While the proportion of foreigners among buyers was 14 percent in 2010, last year every fourth buyer of a flat or a holiday apartment was a foreign national, Večernji List said.

In 2020, foreign nationals bought four in ten properties sold in Istria County, three in ten in Primorje-Gorski Kotar County, one in four in Zadar County, one in five in Dubrovnik, and Šibenik, and 16 percent of the properties sold in Split-Dalmatia County.

In continental Croatia, the proportion of foreign nationals among real-estate buyers was around 2 percent in Međimurje and Varaždin Counties and was negligible elsewhere.

The eastern Slavonia region expects to see a surge in the number of foreigners after July 2023 when the ten-year ban on the sale of agricultural land to foreign nationals expires.

Last year, about 34,000 agricultural plots were sold for slightly less than HRK 1.5 billion, at the average price of about €3,300 per hectare. The price of farmland per hectare in Croatia is six times cheaper than in neighboring Slovenia and 13 times cheaper than in Italy. A hectare of arable land costs about €4,700 in Hungary and about €5,000 in Romania, the newspaper said.

"Whoever buys land in Slavonia, not for speculative reasons but to engage in agricultural production, will face the problem of labor shortage, because we do not have enough people even to pick apples," Željko Lovrinčević, an analyst at the Zagreb Institute of Economics, was quoted as saying.

He said that many people have become experts for grants and are adjusting to the tender terms in order to invest as little as possible and get as much money as possible without considerably increasing production.

For more news about Croatia, click here.

Thursday, 11 November 2021

One in Four Pays Over Half of Monthly Income for Housing Loan

ZAGREB, 11 Nov, 2021 - The average monthly housing loan installment for people who took out the loan between November 2020 and June 2021 ranges from 41 to 44% of their monthly income, according to a Croatian National Bank survey, Večernji List daily said on Thursday.

Housing loans total HRK 67 billion, up by over 10% year on year.

The high demand for real estate is accompanied by a constant rise in prices, which are up by six to seven percent. At this rate, the price of a square metre of a flat could double in ten years' time.

"Croatia is a country with too many motives for the high demand for properties, from the tax treatment, tourism and low interest rates to the moving of the capital of the extra rich from banks, the APN (Croatian Real Estate Agency), the fact that some indeed need a place to live, that some buy properties in companies' names to pay less taxes, and the presence of foreigners," Maruška Vizek of the Zagreb Institute of Economics told the daily.

"The market can't offer enough properties for so many motives for there to be a drop in prices. The only solution is an adequate tax treatment, which won't happen," she added.

The central bank is worried about potential risks and that the crisis might spill over to the banking sector. Governor Boris Vujčić said recently the prices of housing properties were increasing more than incomes but not construction costs. All of that increases the risks of their corrections in future.

Most of the new housing loans (28% of the principal) are paid out with debt-to-income ratios of 30 to 40%. For another 26% of debtors, the ratio is 40 to 50%. For as much as 23% of the new housing loans, the monthly payment is more than half the debtor's income, Večernji List said.

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Friday, 9 July 2021

Total Value of 2020 Real Estate Market Transactions Up 0.5% to HRK 40bn

ZAGREB, 9 July 2021- In 2020, there were 103,000 transactions on Croatia's real estate market, or 7.7% fewer than in 2019, probably due to the COVID-19 pandemic to some extent, however the total value of real estate reached HRK 40 billion, 0.5% higher than in 2019.

The value of real estate transactions was equivalent to 11% of Croatia's Gross Domestic Product, and these figures were outlined at a news conference held in Zagreb on Friday on the occasion of the presentation of the annual publication "Croatia's 2020 Real Estate Market Overview", prepared by the construction and physical planning ministry and the Zagreb Institute of Economics (EIZ).

The ministry's state secretary, Željko Uhlir, said the residential real estate segment had the largest share in the market in terms of value of transactions, however most transfers were on the market of farmland and construction land and plots.

Every one in three transactions (33.3 %) were on the farmland market, and 16% of all transactions were sales of construction land.

Commenting on price rises, Ivana Rašić of the EIZ said that in 2020, the biggest increase in prices when it came to the real estate market were registered in the Adriatic counties of Croatia and in the capital city of Zagreb.

"The median flat price per square metre for the whole of Croatia was approximately HRK 9,600 in 2020," she said.

In Dubrovnik, for instance, the median flat price was HRK 19,000 per square metre and in Zagreb about HRK 11,000, she added.

Demand for new residential properties rose across the country, however houses in Zagreb, Split Rijeka, Pula and in their environs were also in high demand, Rašić said.

For more on business, CLICK HERE.

Saturday, 15 May 2021

4,739 Applications for Home Loan Subsidies Submitted

ZAGREB, 15 May 2021 - The APN Real Estate Agency received 4,739 applications for home loan subsidies submitted in the sixth call, the Physical Planning, Construction and State Assets Ministry said on Saturday.

Applications could be submitted from 29 March to 14 May and the sixth call saw the highest number of applications submitted to date.

The amount planned for the subsidies this year is HRK 50 million, but Minister Darko Horvat said that given the record interest, if that was not enough, additional funds would be ensured.

He said young families recognised this government measure as a good one and that in the past four years more than 17,500 subsidised home loans were approved. During that time more than 3,000 children were born, which he said made this also a demographic measure.

APN has so far processed 2,134 applications submitted this year, approving 2,066. The average amount of a subsidised loan is €76,000 and the average repayment period is 22 years.

Most of the applications approved this year so far were submitted in Zagreb.

Applications could be submitted by persons under 45 who don't own a flat or a house.

On 26 February, APN signed agreements with 14 banks on home loan subsidies. The highest interest rates offered ranged from 2.09 to 3.50% for kuna loans and from 2.15 to 3.50% for euro loans.

For more news in Croatia, follow TCN's dedicated page.

Friday, 5 March 2021

Interest in Houses in Zagreb Down 10%, Says Online Classified Site

ZAGREB, 5 March, 2021 - Over the past 12 months interest in buying a house in Zagreb dropped by 10% while at the same time interest in house purchase in Gorski Kotar, Lika and Istria grew significantly, shows an analysis by the Njuškalo online classified site.

Even though there have been no major changes in asking prices for real estate in Zagreb over the past 12 months, trends related to demand point to changes in customers' interest, which is probably due to a series of earthquakes that hit central Croatia in 2020.

Whereas last year clients increasingly searched for houses in Zagreb, rather than flats, over the past 12 months the interest in buying a house in Zagreb dropped by 10%.

In the entire country the interest in house and flat purchases grew less than one percent on the year but some regions have become much more attractive.

In the central mountainous Primorje-Gorski Kotar County, the interest in buying a house rose by 26.75% in the last 12 months, while in Istria it went up by 25%. Ads for properties in Lika-Senj County, too, saw an increase in views of 22.4%.

The average asking price for houses in Primorje-Gorski Kotar County was €1,595 per square metre, in Istria County it was €1,799 and in Lika-Senj County €1,160.

Potential buyers also increasingly searched for houses in Zadar County, as well as in the region of Međimurje, with interest in buying real estate there going up by 11%.

Interest in flats in Zagreb up 5.6%

From February 2020 to February 2021 interest in buying a flat in Zagreb grew by 5.6%, with the average asking price exceeding €2,150 in February 2021.

Among the cities where asking prices have continued growing are Osijek, Zadar and Pula, with Rijeka seeing the highest increase, of 6.4%, for the second consecutive month. Even though Split was previously in this group, it has been stagnating now in terms of the average asking price, Njuškalo says.

Rent in Zagreb down 9%, demand down 6%

Over the past 12 months, the rent on flats in Zagreb dropped by 9% and demand in the first two months of this year dropped 6% compared to the same period of 2020.

The average rent in Zagreb was €539, with most flats for rent having an area of 40-70 square metres, and the only flats to see an increase in the cost of rent on the year were those with an area of 20 square metres. The cost of rent for such flats went up by 3.2% to an average €231 per month.

The cost of rent dropped the most in the downtown area of Zagreb, by 11%, however, the average cost of rent still exceeds €700 a month, the online site says.

Wednesday, 1 January 2020

Croatia Hotel Renovation Project Abandoned in Downtown Pula

A well-known Croatian entrepreneur has abandoned his plans to transform a historical building in Pula, Croatia into a hotel and lost his 785,000 HRK (105,000 EUR) deposit after he was informed by government officials of unexpected additional costs.

Another Failed Croatia Real Estate Venture

Another real estate venture has failed in Croatia, this time in the historical center of Pula according to Barbara Ban/Novac/Jutarnji List on December 31, 2019. This project involved the renovation of Scracin building, which formerly housed the Croatian Pension Insurance Office (HZMO) and Croatian Health Insurance Office (HZZO). The building is located next to the Zlatna vrata (Golden Gate) or Slavoluk Sergijevaca (Arch of Sergius) landmark.

The buyer, renowned Istrian entrepreneur Kristijan Floričić, allegedly abandoned the purchase of the building priced at 15.7 million HRK (2.1 million EUR) and lost a sizeable deposit of 785,000 HRK (105,000 EUR) after he realized that, due to the number of unanticipated conservation projects and required research, he would not be able accomplish everything he had planned, which was to transform the property into a hotel. In December, TCN covered another much larger failed real estate venture, which was abandoned by investors for eerily similar reasons, on the island of Pašman. Back in Pula, the Scracin building is on the market again as of December 11, under the exact same conditions and for the exact same price.

croatia_hotel_renovation_pula_02.jpg

Kristijan Floričić | Facebook

Buyer Informed of Costs and Restrictions After Deposit

Unofficially, problems arose after Floričić submitted his offer, and he found out that he would have to invest a considerable amount of money in research before he could move forward with his renovation plans. The conservators would not allow specific renovations to the building and the conditions they set for the buyer allegedly amounted to a multi-million HRK investment, which is why Floričić decided in the end that the project would be unprofitable. What kind of research was necessary and whether that research required a multi-million HRK investment could not be confirmed because the Pula Conservation Department could not be reached for comment. But this building, built between 1880 and 1881, and destroyed in a 2014 fire, will unfortunately remain vacant until further notice.

The building owners are claiming that Floričić knew what kind of property he was buying because the tender noted that the building was a cultural asset.

Building Registered as Protected Cultural Property

“According to the provisions of the Law on Protection and Preservation of Cultural Property, before the procedure of sale by public tender, the real estate was offered to the Republic of Croatia (Ministry of State Property), the County of Istria and the City of Pula. These authorities showed no interest in the purchase, and on October 10, 2018; a public tender for the real estate sale was published in Narodne novine, Glas Istre, and on the HZZO and HZMO websites.”

“The tender stated that the so-called Scracin Palace is a property of a cultural value and had been entered in the Register of Cultural Properties of the Republic of Croatia and the List of Protected Cultural Properties. Each potential bidder had the opportunity to inspect the real estate, as well as access to the Register of Cultural Properties of the Republic of Croatia. The buyer also had the opportunity to inform the ministry of their potential plans related to the renovation of a cultural property,” the Croatian Health Insurance Office pointed out.

They added that the bidder had fulfilled all the conditions of the tender and his bid had been selected as the most favorable one, but he eventually decided that he did not want to finalize the purchase contract.

croatia_hotel_renovation_pula_03.jpg

Zlatna vrata and Scracin Building | Vintage Postcard | Facebook

Buyer Abandoned Purchase and Lost 105,000 EUR Deposit

“After the conditions for the finalization of the real estate purchase contract were fulfilled (the prior consent of the Governing Council of the co-owners and the Government of the Republic of Croatia), the selected bidder-buyer was invited to finalize the purchase contract. However, the buyer abandoned the finalization of the purchase contract because, according to him, the real estate has certain material defects which make it impossible to use for the specified purpose, which was the completion his planned project. Since the co-owners of the real estate do not believe that the material defects were not known to the bidder at the time of submitting the bid, the selected bidder has lost the right to recover the deposit,” according to a statement from Croatian Health Insurance Office.

They add that it was stated in the conditions of the public tender that the successful tender applicant was obliged to finalize a purchase contract with the sellers of the real estate within 30 day from the invitation to finalize the purchase contract. Otherwise he would forfeit his deposit.

Building Back on the Market: Same Price and Conditions

The building is now on sale again for the price of 15.7 million HRK (2.1 million EUR) as it was previously and is available to view as of January 14. Bidders are required to pay a five percent deposit of the initial price of the property, or 785,000 HRK (105,000 EUR). The deadline for bid submissions is January 17, and bids will open to the public on January 23. The building itself is about one thousand square meters, with an additional 576 square meter building and a 15 square meter auxiliary building. They state that the property is for sale in its current state, which is "as-is".

Follow our Business page to keep track of failed (and successful) business ventures in Croatia.

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