August the 25th, 2022 - The Croatian property price increase has been enormous, and so far, this summer tourist season has well and truly outdone that of last year and of couse of 2020.

As Poslovni Dnevnik writes, when speaking solely in terms of income earned, the current tourist season could reach the record year of 2019 at the end of August, Tourism Minister Nikolina Brnjac confirmed in a recent interview for N1.

That's why experts expect that this year's tourism revenue will be 30 percent higher than that often referenced, record-breaking pre-pandemic year. Those who earn their cash from tourism now have "sweeter" troubles to ponder over, such as what to invest their earnings in under the circumstances of high inflation that is rapidly eating away at the value of money itself. The result: the expected new Croatian property price increase.

According to the indicators so far, the season is going more than excellently. We aren't nearing the end of 2022 yet, but Nikolina Brnjac is already extremely satisfied with the income earned this summer from tourism.

"According to some calculations, if this continues, we calculate that at the end of August and the beginning of September, we'll manage to surpass 2019 in that segment," said Minister Nikolina Brnjac.

While that's all well and good, just how much does that satisfaction amount to in the currency of the Croatian future - euros?

"Well, back in 2019, there was some 10.5 billion euros in income earned from foreign tourists, and now the CNB's projects are 11.3 billion," said Brnjac.

"If we're talking about Split, we're talking about Croatian buyers of property, apartment buyers, and if we're talking about destinations like Primosten or Rogoznica, in addition to locals, foreigners also buy property there, and they do so in significant numbers," said Marin Biliskov, director of the Biliskov real estate agency, writes N1.

"If we look at tradition, a good season down on the coast always meant a good property selling season in Zagreb," said Boro Vujovic, the director of the Opereta real estate agency.

A good season means higher demand and higher prices, and when it comes to Croatian property, we're already seeing record growth by as much as 20 percent compared to last year. The average square footage of a new building in Croatia stands at 2140 euros.

Is there room for additional Croatian property price increases?

"Given the average income and standard in Croatia, regardless of a good summer tourist season, I think prices have reached a point that shouldn't be exceeded now. But as long as the demand is greater than the supply, it's an economic law that the price goes up," said Biliskov.

As Vujovic says, if the prices of energy and everything else rise, then real estate prices will rise as well.

"I think it will slow down because interest rates will rise, some people just won't be creditworthy, so that will reduce demand," Vujovic said.

The demand of foreigners for property in Croatia is also constantly growing. Croatia's entry into the Eurozone and Schengen could stimulate both domestic and foreign demand.

"What we mustn't ignore is the significant activity of foreign buyers who, with Croatian entry into the Eurozone and Schengen, will raise awareness of Croatia as an interesting investment destination precisely through transactions in euros. Although transactions were tied to the euro but realised in kuna, they'll now be able to realise everything in euros, which will further stimulate the interest of foreign buyers," said Vedrana Likan, director and partner of the Colliers company.

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

June the 3rd, 2022 - Czechs are purchasing Croatian coastal property en masse, preferring real estate on the Croatian Adriatic coast to property in their own country.

As Poslovni Dnevnik writes, according to the Czech media publication iDnes, Czechs are currently preferring to buy Croatian coastal property than cottages in their own homeland. According to local Zadar portal Zadarski, the reason lies in the fact that here in Croatia, at least according to Czech real estate agents, it is still possible to find an apartment on the coast at a lower price than a holiday home on the Czech continent, and they claim that it is also easier to capitalise on this investment.

"It's true, they're looking for properties, preferably with a garden. The interest is fairly high,'' confirmed analyst Sarlota Smutna for the Czech media.

Namely, this interest from Czech nationals in Croatian coastal property increased especially during the global coronavirus pandemic, and property in Croatia, Portugal, Spain and Italy is very much in demand. According to iDnes, along the Adriatic, an apartment can be bought for as little as 63,000 kroner or 2,600 euros per square metre, while a square meter in the City of Prague now costs 4,900 euros.

According to Tomas Jelinek, the director of the 21 Century real estate agency network, the demand from Czech nationals for real estate abroad is due to the fact that property in the Czech Republic has reached extremely high prices, and Jelinek claims that it's now possible to find real estate at a better price than on the Czech continent further afield.

A similar claim is being made by the well known REMAX agency, which offers Croatian coastal property at prices lower than cottages in the Czech Republic cost, especially those in the vicinity of Prague, where prices are extremely high.

"The average prices of holiday homes are still higher in most countries than the average prices of houses in the Czech Republic, but they're still lower than real estate prices in Prague, where the offer consists mainly of large houses for families," Hana Kontris told iDnes.

Property prices in the Czech Republic have doubled over the last two years, and according to Eurostat, just last year alone, that growth stood at 25 percent, the highest of all EU member states.

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

May the 23rd, 2022 - Would-be buyers of Croatian luxury property are turning their noses up at it. Despite the fact that this country could make huge sums of money here, there is still one obstacle putting people off from parting with their cash.

As Poslovni Dnevnik/Marija Crnjak writes, the arrival of international property brands such as Sotheby’s and Christie’s, and then the coronavirus pandemic, has put Croatia more than ever in the focus of buyers and investors who want to invest in Croatian luxury property, whether with the goal of moving into it or making good money out of it.

The demand for Croatian luxury property has grown tremendously as a result of the global pandemic, leading Croatian intermediaries and consultants have revealed. Croatia has finally been noticed by buyers who have previously focused on luxury destinations in Spain, Italy or France.

Germans, Poles, Austrians, Czechs want to have a summer home or even a permanent home in which they'd move, and such residents are dramatically raising the levels of their local economies. However, they have high criteria, they want a safe purchase and a top quality product, and Croatia now has a situation where our demand is dramatically higher than its supply.

Although significantly better than in previous years, the Croatian offer is permanently limited by urban policy and legislation, which prevents the construction of separate residential settlements which don't have tourist purposes. Instead, the country usually ends up with wild urbanism with somewhat questionable infrastructure.

"After years of struggling to lure the upper middle class from Lake Garda to Istria or Dalmatia, coronavirus came. It was a game changer for the growing demand for Croatian luxury property, which coincided with the arrival of some of the world's leading brokerage brands.

The pandemic prevented customers from other EU countries from accessing traditional destinations, such as resorts in Spain. They had nowhere to go, so they turned to the much more easily accessible Croatia, and were pleasantly surprised by the beauty of the landscape, the cleanliness, and the local culture.

We ended up with a large number of customers who are very interested and have money to spend, such as the Germans who are less and less satisfied with life in Germany and see Croatia as an alternative. However, these customers have become accustomed to a certain level in terms of urbanism, infrastructure and content, and Croatia hasn't yet been able to offer that. Croatian legislation doesn't allow for the development of new residential areas, outside the existing ones, it only allows for the development of tourist zones primarily intended for commercial activities, not housing,'' said Ivan Kovacic, CEO and partner at Remington Realty, the exclusive subsidiary of Christie's International Real Estate.

The Croatian branch of Christie’s started operating back in 2019, while demand was not yet so strong, but the profession had already clocked onto the fact that 1,800 kilometres of stunning coastline in the very heart of Europe would become a hit someday, and last year they opened a Showroom in Opatija. The pandemic unwittingly helped them, but the system also caused issues.

"Today's customers are interested in a safe purchase and a reliable intermediary, and the presence of leading intermediary names not only reassures them, but raises the credibility of the entire market. The Croatian offer is better than it was before, the quality of buildings is at the level of Western Europe, although there's still a lot of room for improvement when it comes to general professionalisation - for the engagement of the profession, designers, architects... And when it comes to this issue, investor awareness is growing, and the situation is positive. However, in Croatia, urbanism is still being planned on the basis of existing land ownership, instead of the question of whether it is strategic or not dominating the matter.

Designing settlements and drawing up plots, as well as building infrastructure so that projects can be offered to developers and investors, is a model that respects the public interest and is how things should be set up,'' said Kovacic.

"The potential of the Croatian luxury property market is huge, and the market itself is growing significantly, but it all depends on how much decision makers will want to recognise all of that and regulate it," concluded Kovacic.

This seems to be yet another situation in which Croatia's potential is absolutely enormous, but the regulations and laws are slow, cumbersome, and needlessly complex and limiting.

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

March the 12th, 2022 - The number of people purchasing Croatian apartments, particularly newly built ones, in cash, has increased of late. The trend of rising prices on the domestic property market hasn't been significantly hit by the pandemic or two earthquakes, either.

As Poslovni Dnevnik/Suzana Varosanec writes, as many as one third of buyers in 2021, or most of them, were interested in Croatian apartments of 50 and 60 square metres, while only 5 percent of them were searching for apartments of 100 m2.

The most sought-after apartments in Zagreb are 60 m2, there is great interest in those of 40 and 50 m2, and they account for a total of 45 percent of potential buyers, as was revealed by a new customer preferences annual real estate market analysis by Njuskalo.

The biggest differences

Despite the trials and tribulations of the last two years, the Croatian real estate market has continued with the trend of rising prices, they say, and asking prices have risen by 4.05 percent for Croatian apartments and by as much as 7.73 percent for houses. The average asking price per m2 of an apartment in Zagreb now stands at 2,297 euros, or 1,441 euros per square metre in a house, and the earthquakes of 2020 have failed to really affect these prices in the long run.

The director of the Operetta real estate agency, Borislav Vujovic, believes that ongoing inflation will make property rise for some time to come, and this effect is already visible through the growth in the number of buyers who are ready to finance their investments in cold hard cash.

He pointed out that as a result of both the 2020 earthquakes and the global coronavirus pandemic, the demand for houses and land in the vicinity of the City of Zagreb is still higher than it is in the city centre, where the sales of old apartments have slowed down, and new construction is an absolute hit.

According to the DSZ in 2021, the average price per square metre of a new apartment sold in Zagreb stood at 14,672 kuna, which is 4.7 percent more than it was back in 2020, and 13,713 kuna at the state level, which is 7.8 percent more than it was back in 2020.

Interest in smaller communities in the vicinity of the City of Zagreb and neighbouring also counties continues to grow, and in addition to Zagreb, Krapina-Zagorje and Virovitica-Podravina counties also recorded the largest difference between supply and demand last year, in which demand for houses exceeded their supply.

The same trends are present in Karlovac County and the City of Zagreb, with Karlovac County recording a 21 percent increase in the price per m2 of a house in the past two years, but even today it is very affordable and costs an average of 657 euros.

The most sought-after houses are of 100 and 150 m2, and there are fewer of them on offer than the level of interest of buyers, and the least sought-after are between 300 and 400 m2. In the City of Zagreb and in the wider Zagreb County, houses spanning 100 m2 are in high demand - accounting for 12 percent of total demand.

There are more houses available on the market than in demand in the country's coastal counties (except in Dubrovnik-Neretva and part of the interior), but this trend isn't being reflected in asking prices, so Dubrovnik-Neretva, Split-Dalmatia and Istria are still the most expensive counties when it comes to houses.

In the City of Dubrovnik, the average asking price is as much as 4151 euros, in Split 2033, and in Rovinj 2620 euros. Apart from the coast, foreigners are increasingly looking at making purchases in both Zagreb and Gorski kotar, but according to Vujovic, the trend of demand for Croatian apartments has altered into a ''second home'' type search in Croatia, so the most sought after holiday homes with swimming pools.

For more, check out our lifestyle section.

February the 21st, 2022 - Despite the devastating effects of the global coronavirus pandemic on leisure, travel and tourism, we've managed to avoid a mass sale of hotels. The Croatian villa market is also blossoming.

As Poslovni Dnevnik/Marija Crnjak writes, the popular Croatian online buying and selling portal, Njuskalo, has some interesting statistics for us. They show that the number of active accommodation ads across the country increased by 20% from 2019 to the end of 2021, with a total of 12,015 active ads published last year.

Although in these two years there has been a slight increase in sales of property in which accommodation facilities operate, it seems that the coronavirus pandemic crisis in tourism in Croatia hasn't actually caused a significant wave of sales of hotels, boarding houses or hostels. It has had quite a surprising effect on the aforementioned Croatian villa market, as well.

In addition to the above, there are indications that the property market in this segment has well and truly recovered, especially compared to the first pandemic year of 2020, judging by the asking prices of buildings that grew everywhere except down in the infamously expensive Dubrovnik, according to Njuskalo.

The relatively fast recovery of the country's tourism, which stimulated the optimism of investors, is evidenced by the data of the consulting company Colliers, which presented this in their new review of the commercial real estate market in Croatia for the year 2021.

Colliers' analysis shows that last year as many as 39 percent of all transactions related to commercial real estate on the Croatian market were conducted in the hotel sector, after a relatively low share of 22 percent one year earlier, when the retail sector had absolute primacy in transactions.

The biggest transaction in tourism last year was the acquisition of Sunce Hoteli, a company formerly owned by Dalmatian businessman Jako Andabak, and which was taken over by the development company Eagle Hills, announcing in December an investment of 44.2 million euros in the already impressive Bluesun hotel portfolio.

While investors from Central and Eastern Europe were active investors in the retail sector, domestic institutional investors, pension funds and insurance companies remain important investors in the hotel sector. Together with Valamar, PBZ CO and AZ pension funds are embarking on a new investment cycle in Valamar's hotels on Hvar, Makarska and Rab.

Njuskalo's statistics show that the number of accommodation facilities that were for sale in the first month and a half of this year (6735) is 30 percent higher compared to the same period in pre-pandemic 2019, but the number of ads at the beginning of this year is lower than it was last year.

The fact that the pandemic didn't encourage the sale of hotels is shown by the distribution of these ads by segments, where it can be seen that from 2019 until today, the most which have been sold lie in the Croatian villa market, with a share ranging between 88 and 90 percent.

Hotel sales ads make up only 7 percent, and in 2019 they stood at 8 percent. The number of currently active ads on February the 15th this year was 4476, once again dominated by the Croatian villa market, followed by hotels and the lowest percentage being taken up by boarding houses and hostels. In addition, most hotels, boarding houses, hostels and villas are located on the coast, and about five percent are located in the City of Zagreb.

The highest number of advertisements relate to property located on the coast in Istria County, with the highest sales in Porec, Medulin, Umag and Labin. It is followed by Kvarner, then Zadar County with an 8 percent share. Only two percent of Njuskalo's ads over the previous three years were located down in the Dubrovnik region. In Primorje-Gorski Kotar, most of them are in Crikvenica (18 percent), followed by Opatija and Krk. The largest share of hotels in the number of ads is in Zadar County, standing at 12 percent, while in Istria, the Croatian villa ads dominate.

For more, check out our dedicated lifestyle section.

February the 14th, 2022 - Could the Croatian property market be at risk of collapse? It seems so, as with a handful of other countries to whom the European Union (EU) has sent out warnings.

As Poslovni Dnevnik writes, the aforementioned EU warnings were sent to Croatia, Hungary, Liechtenstein and Slovakia. In addition, recommendations were sent to Germany and Austria after they both failed to meet the requirements of the ESRB from back in 2016 and 2019, as reported by Index.

“Financial stability risks related to residential the property market continued to grow in the context of macroeconomic risks associated with the coronavirus pandemic and the continued strong dynamics of the property market, housing loans and household indebtedness. The key vulnerabilities highlighted in the ESRB's assessment are medium-term in nature and relate to the rapid rise in property prices and the possible overvaluation of residential real estate, the level and dynamics of household indebtedness, the growth of housing loans and signs of easing lending standards,'' it was said,

A special warning for Croatia in regard to the Croatian property market notes that "after a long period of correction and subdued growth, real property price growth accelerated to 8% year on year back in early 2019."

"According to the estimates of the Croatian National Bank (CNB/HNB), property prices are increasingly deviating from their long-term basis. This is influenced by a number of supply and demand factors. First of all, in some regions, a significant part of the demand for housing comes from foreigners (about 10% in total). While total transaction activity was lower after the outbreak of the coronavirus pandemic, the share of foreign buyers remained at pre-crisis levels.

Secondly, Croatia suffered two earthquakes back in 2020, both of them hitting the Zagreb region and causing significant property damage. These events revealed some shortcomings in the quality of standards of the housing built before the 1960s. As a result, fewer apartments were advertised for sale, potentially leading to higher overall price levels. At the same time, the gradual reconstruction of damaged housing, the cost of which is estimated at 23% of gross domestic product (GDP) in 2020, could increase house prices through greater construction activity.

Finally, back in 2020, the Croatian Government extended the housing subsidy scheme, which has now been in force since the end of 2017, and provides higher subsidy rates in less developed regions for the purchase of the first real estate,'' the warning about the Croatian property market reads.

Although only about half of housing transactions are financed through loans, according to the ESRB, real growth in mortgage lending accelerated back during the second half of 2019, and especially during 2020. It averaged approximately 7.5% between January and August 2021.

“To some extent, this dynamic has been driven by the state housing subsidy system, with an increase in the share of subsidised loans from 18% in 2019 to 35% in 2020. Many new loans have been state-subsidised loans. In addition, in the first half of 2021, in the case of some new loans, the maturity exceeded 30 years. In June 2021, the share of mortgage loans represented about 12% of the real estate market in Croatia,'' it has been stated.

“At the same time, household indebtedness in Croatia is relatively low compared to other EU countries. During 2020, loans to households increased in real terms, but at lower rates than loans to apartments. This was the result of a decline in general consumer confidence, while government subsidy schemes for housing maintained a high level of demand for real estate,'' it added.

The EU has since called for the adoption of measures that would prevent "an increase in household indebtedness, ie state subsidies for housing loans."

Finally, the ESRB states that there is "potential for serious negative consequences for the economy" in Croatia in regard to the Croatian property market and its risks.

"The ESRB believes that the key problems are the rapid growth of retail loans and the overestimation of real estate prices due to the lack of explicit measures that could mitigate the risks associated with residential real estate and the real estate sector," as reported by Index.

For more, check out our lifestyle section.