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Croatia Is Emerging As A Good Residential Property Investment Option.

06 June 2012 - News

Croatia is a beautiful country in Central Europe with a coastline on the Adriatic Sea. The capital, Zagreb, is a cosmopolitan, modern city with a lively, chic café culture.

Croatia is still in the process of shaping its new identity as a peaceful new country, born out of the end of the troubles of the 1990s. However, the process is slow, due to regional divisions. The country has over a thousand islands, 66 of them are said to be inhabited. Add to that the differing attitudes and dialects, it’s understandable.

The government is working towards making progress, but the country’s pending membership in the European Union adds to the ideological and economic tension, and somewhat impedes any further progress that the government is aiming for. Croatian EU membership is scheduled to start on 1 July 2013, representing the end of a process started in 2001.

Croatia is a growing tourist destination, particularly among Germans, Austrians and Italians, who have continued to visit the country even before organized tourism was developed in the region. The highlight of Croatia's recent infrastructure developments is its rapidly developed motorway network, largely built in the late 1990s and especially in the 2000s. By September 2011, Croatia had completed more than 1,100 kilometres (680 miles) of motorways, connecting Zagreb to most other regions and following various European routes and four Pan-European corridors.

Croatia has an extensive rail network spanning 2,722 kilometres (1,691 miles), including 985 kilometres (612 miles) of electrified railways and 254 kilometres (158 miles) of double track railways.[77] The most significant railways in Croatia are found within the Pan-European transport corridors Vb and X connecting Rijeka to Budapest and Ljubljana to Belgrade, both via Zagreb.

All rail services are operated by Croatian Railways. The property market has been somewhat affected by the country’s stale economy and the Eurozone debt crisis. Croatia’s economy is expected to shrink by around 1.3% in 2012, after 0.4% growth in 2011, following the trend of 1.2% in 2010, and 6% in 2009.

Croatia’s long-term rental market is small, mainly on short-term holiday rentals for tourists. Long-term rental properties are concentrated more in the large, metropolitan areas of Zagreb, Dubrovnik, and Split. In Zagreb, a 120-sq. m. apartment rents for about HRK9,290 (€1,250) per month while a 200-sq. m. apartment has a monthly rent of HRK16,945 (€2,280).

Three-bedroom coastal flats located on the Adriatic Coast, rent for about HRK8,919 (€1,200) per month. However, two-bedroom houses in the same area bring around HRK13,378 (€1,800) per month. Gross rental yields in Zagreb, are moderate, at around 5.5% to 6.0%, according to our sources. There seems to be no connection between size of apartment and yields.

What are the steps in buying property in Croatia?

You have two choices for purchasing houses in Croatia.
As an individual, foreign buyers can own real estate provided that the ‘condition of reciprocity’ is satisfied. Proof is attained from the Croatian Ministry of Foreign Affairs which can take a few months.
Alternatively, a foreign individual can register a company in Croatia in order to purchase a house, with that permission is not required. However, purchasing a house via a company does impose tax implications.

Three key stages exist in the buying process:

1. Reservation Contract in order to reserve the house.
2. Preliminary Contract for a foreigner to apply for permission to buy a house via a deposit which is around 10%
3. Final Contract upon signing, the final payment is made and the purchase registered with the local Land Registry. A ‘Power of Attorney’ can be granted if the buyer is not in attendance at this stage.
Points to remember about property transactions:

• It is advisable to appoint a reputable, independent lawyer who is not associated with the estate agent or seller and who speaks Croat and English.
• It is essential that your estate agent has a solid reputation and professional credentials.
• Foreigners have the option of buying property in their individual capacities or through private companies that they set up.
• It is best to survey the market and compare property prices as well as the service charges of lawyers, agents and other professionals before making any commitments.
• A thorough title check should be undertaken to verify that the seller is the registered owner of the property, that the property is free from mortgage dues, right of way issues and other legal encumbrances. The physical identification of the property must tally with that on the certificate.
• You are advised to verify the legal validity of the Sales and Purchase Contract.
• It is essential that a Croatian notary public verifies the vendor’s signature.
• Information pertaining to the vendor’s identity on the contract must be the same as that in the land registry certificate.
• Property description as specified in the contract should correspond fully with the description in the land registry records.
• Sale price, mode of payment and date of hand-over must be clearly mentioned in the contract.
• The transaction is complete only once land registration formalities have been concluded. New ownership registration should take place within 30 days of the sale. The permit for land registration needs to be verified by a notary public.

By News (June 6, 2012)
Croatia Property sales | Croatia holiday rentals | Croatia Lets



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