Navigate your home investment confidently with tips from one of the highest-performing real estate agencies in Croatia. Follow the professional advice from experienced real estate agents for every obstacle that could come your way as a first-time homebuyer.
How to Buy a Property in Croatia: A Comprehensive Handbook for First-Timers
When you are investing in real estate, you want to make it as smooth as possible and avoid small mistakes that can be costly. Our guide to finding a property for sale in Croatia explains how to make one of the biggest purchases in your life come true, from the legal requirements to the pitfalls to avoid.
All of the advice in this guide is backed by agents from Knez real estate Croatia. They’re experienced marketers and shrewd negotiators with many successful years in the real estate market in Croatia. They have managed some of the best real estate properties in the Mediterranean. Their recommendations are summed up into this concise and clear beginner’s walkthrough.
This guide contains advice on the following:
- How to find a trustworthy real estate agency in Croatia?
- Who is eligible to buy a property according to Croatian law?
- Where to buy a property in Croatia?
- Five main steps to buy a property in Croatia
- What are the main criteria when looking for hotels for sale in Croatia?
- What to do in the final steps of buying a property?
An Introduction on How to Buy a Property in Croatia
Croatia has the second-highest homeownership rate in Europe, after Romania. According to Croatiaweek 2019 report, the increase in homeownership increased from 88.2% in 2010 to 90.5% in 2019 and it is still growing. Interestingly, Croatia has seen an increase in homeownership over the past decade, despite a global decline trend. However, buying a property can be a complex and time-consuming process. Even before you make the ‘big decisions’ about which property to buy, or which home loan to select, you have a few important decisions to make:
1. Find a trustworthy real estate agency
Although you can buy the property directly, most locals and foreigners deal with a real estate agent when looking for a property for sale in Croatia. Only deal with a licensed real estate company, or an authorized agent’s representative.
2. Be informed and know what you want
Educate yourself about the real estate market in Croatia and the services offered by real estate agents. Buying a property is an ongoing and significant financial commitment. As a buyer, you should spend time working out exactly what you need and can afford.
3. Consider a building inspection
Before signing a contract, consider engaging an independent qualified building inspector to provide a building inspection report. A qualified inspector will ensure that the building doesn’t have any significant defects or problems. Make sure you are committing to the right property for yourself.
How to Find a Trustworthy Real Estate Agency in Croatia?
Choosing a real estate agent is an important part of the investment process. Real estate agents are familiar with the trends in the Croatian market and they speak a native language. With their help, you could speed up the whole process of buying property abroad as it is a delicate operation. Trustworthy and vetted real estate agents will ease the process of finding properties for sale in Croatia, but not all of them can do it professionally and in detail.
In order to successfully find a property for sale in Croatia, it is important to take a closer look at the local market and its regulatory and legal specificities. Make a little research before getting into a deal with someone. Start with the real estate agency’s website or social media activity, and always check the reviews. The real estate agent should act in your best interests, following your lawful instructions and engaging in good estate agency practice. If something is unclear, ask for an explanation.
The profession of a real estate agent is regulated by a diploma which ensures that your agent has legal knowledge relating to the purchase of the real estate. When using a real estate professional with a full service, like Knez real estate in Croatia, you can avoid many pitfalls. It is also highly recommended to have an experienced real estate lawyer (if the agency does not provide it) who will represent you in purchase to understand the property tax regime of Croatia which is a bit complex.
Who is Eligible to Buy a Property According to Croatian Law?
Croatia offers a wide range of property options to choose from, either you are a foreigner or a local. EU Member State foreign nationals can purchase real estate in Croatia the same way as domestic people. However, for the non-EU countries, the property investment in Croatia depends on reciprocity agreements between the foreign buyer’s home country and Croatia. There are two conditions for the non-EU foreign nationals investing in real estate in Croatia that need to be fulfilled. The first one is the consent of the Ministry of Justice and the second one is the reciprocity agreement with the Republic of Croatia. Also, as a foreign national if you are buying a property in Croatia then you must be well versed with the real estate tax laws of the country.
Is international property investment in Croatia a good idea?
It is always a good idea to buy property in Croatia. This country is very attractive to foreign investors and expats. Recent data by the Global Property Guide shows that over 70.000 foreigners own property real estate in Croatia. Most of the real estate properties in Croatia were bought on the seashore, mainly in the region of Dalmatia. According to the same research, only 3% of foreigners choose to invest in the area around the capital city of Zagreb. Although the prices of the properties located by the sea are higher, considering the tourism potential – buying a property in Croatia is considered to be a good investment for many foreign nationals.
What is it like for foreigners to live in Croatia?
The geopolitical structure of Croatia as a member of the European Union and a member of NATO provides the safety framework and stability for every real estate activity. According to specialists and reports in the real estate sector, the strong demand for properties in Croatia in recent years is highlighted by the booming tourism sector and increased prices for the past period. Tourism, like a big magnet for foreign investors, attracts buyers and that is where the biggest investments come from. For overseas buyers, Croatia is a great opportunity due to the good infrastructure of the country, and popular seaside destinations. It is one of the most unpolluted and ecologically preserved countries in the world. The beautiful coast and rich heritage are a guarantee that tourists will continue coming.
Where to Buy a Property in Croatia?
Only a few years ago, the foreign property investors didn’t believe the Croatian real estate market was worth investing in. However, interest in buying a property in Croatia suddenly grew. As of now, the Croatian real estate market is relatively well developed, the investment sector is booming and gives great returns.
In the last decade, real estate prices in Croatia have been rising, especially if you are looking for coastal property for sale in Dalmatia or Istria, i.e. Dubrovnik, Split, Hvar, Trogir, and Rovinj, whose prices have risen dramatically. However, compared to some other Mediterranean destinations, Croatia offers investors both new and traditional properties at reasonable rates. All different property types in Croatia are in-demand due to the sunny coastlines, azure waters, the mild and moderate Mediterranean climate, and other pros which makes it appealing to both holidayers and long-term inhabitants. Whilst properties nearby the cities on the coast are more expensive you can look for a property in the surrounding area. Only a few minute ride from the center could cut your costs and provide you with an even more beautiful sea view. Availability of villas with the pool, penthouse apartments, hotels, seafront land plots, stone houses, and luxury houses make a great database of choices to investors having varying budget capacities.
Property for sale Croatia coast: Dalmatia
When you buy property in Dalmatia, you will have the best weather conditions in Croatia, especially when it comes to sunshine hours. As a whole, the region gets on average around 2650 hours of sunshine a year. There is a high demand for modern Dalmatian-style villas and authentic stone-built houses. Therefore, many locals have successfully turned their old stone houses into modern luxury villas.
There are excellent properties in Dalmatia in the prime locations of the historic towns at reasonable prices:
Southern Dalmatia is of particular interest to potential real estate investors in Croatia. It includes the area of the Dubrovnik Riviera, around cities Dubrovnik and Cavtat, including ever closer and further islands like Korčula and Mljet, but also Pelješac peninsula.
In Central Dalmatia, the areas of particular interest to potential real estate investors in Croatia are the Makarska Riviera and the Omis Riviera, but also cities like Split and Trogir, as well as the islands Hvar and Brač.
However, as the old town centers in Dalmatia are becoming increasingly expensive, investors are looking for the areas around the historical centers in order to get a better value for money. Also, the lack of parking space is one major downside of owning a property in the old center of Dalmatian towns. The Dalmatian inland area has a huge potential for developing eco-friendly tourism and it is predicted to become a new hot niche for foreign investors.
Property for sale Croatia coast: Istria
To own real estate in Istria is for the outdoor enthusiasts with a wide variety of sports, climbing, cycling & walking. With quite limited available lands, the supply is restricted and as a result, it sustains strong price growth over the medium to long term. The areas of particular interest to potential real estate investors in Croatia are the cities Rovinj, Opatija, and Pula.
Most of the real estate properties in Istria are penthouses and apartments by the coast, as well as modern houses, authentic villas, and land plots in the green part of the peninsula. Buyers are mostly looking for a smaller seashore apartment near Rovinj, Porec, and Pula, and stone houses on the peaceful hills of the inner of Istria.
Access to Istria is simple because of the highway, which reduces drive time significantly. This is the most important during the peak summer season since Istria is one of the oldest and the most popular tourist areas in Croatia. Real estate properties in Istria keep the price stable compared to other regions, and destinations abroad. With the right advice and guidance buying a property in Istria could be a very smart investment.
Property for sale Croatia: Countryside
If you are aspiring for quality living amidst natural and peaceful surroundings, the countryside in Croatia is the right place to invest in your dream house as it has a moderate climate with plenty of sunshine, breezy nights, and natural beauty. The countryside of particular interest to potential real estate investors in Croatia includes the area of Gorski Kotar and Lika, and the suburb of Zagreb the capital.
Croatia’s picturesque countryside has a lush green landscape, sun-kissed hills, high mountains, and historical monuments, making it a preferred real estate investment destination for discerning buyers. The countryside of Croatia is blessed with vineyards, lavender fields, olive groves, fruit orchards, pine forests, and national parks, making it ideal for nature lovers to buy a property in its pristine surroundings.
Five Main Steps to Find Property for Sale in Croatia
As a member of the European Union and NATO real estate in Croatia is constantly increasing in value offering a wide range of options to choose from. For expats and investors from across the world, Croatia offers some of the most beautiful seafront houses in the Mediterranean.
Here are the five main steps you should follow when buying a property in Croatia:
- Select a property and agree on the price
- Consider the pros and cons of making the purchase as an individual or within a company
- Sign a pre-contract agreement that outlines the intent to buy
- After making the full contract, you can finalize payment of the balance
- The sale takes place and the property is registered in the land registry
What are the Main Criteria When Looking for Hotels for sale in Croatia?
There are many small and family-owned hotels on the real estate Croatian market as well as bigger hotel complexes, among which you can choose and find good investment opportunities. While many are called hotels, most should be considered small boutique hotels based on the level of personal service and variety of guest experiences offered. Small hotels for sale in Croatia are producing significant revenues that exceed industry norms.
The value of hotels for sale in Croatia
Beautiful sceneries and an excellent geographical position make Croatia easily accessible from all the major European cities. The real estate market in Croatia is expected to remain strong in the upcoming years. Tourism potential is an important factor for the growing real estate market. As such, Croatia is increasingly becoming attractive for business investments.
Whilst most property investments have a certain degree of associated risk, this is one of the fastest-growing real estate markets in Europe. By investing in emerging economies, you have the added benefit of a higher potential rise. For serious investors and entrepreneurs, there is a group of investments like small hotels for sale, including beach hotels and waterfront guest houses. Small hotels for sale tell their own very individual story, offer different possibilities, and inspiration to explore authentic Croatian values.
Three main criteria when looking for hotels for sale in Croatia:
1. Proximity of the hotel
Hotels that offer the best locations tend to have higher occupancy rates and profitability. Small hotels for sale in Dalmatia are conveniently located in attractive places, either by the seashore or nearby the city center to attract customers. Hotels located by the sea, usually have private beaches and other watersports amenities. Hotels, apart from the sun and the sea, might have easy access to other attractions, or proximity to the airport.
2. Hotel type to identify the right target
Hotel chains and small hotels for sale have distinguished offers. Some of them are holding on to the basic offer of accommodation and food, others can offer various entertainment facilities such as private beaches, lounge bars, concept stores, indoor swimming pools, etc. Although you can’t impress everyone, appealing to the specific type of tourist will go a long way to influence their decision-making.
3. Value for money
Contact the right professionals in the real estate Croatia industry to see what opportunities are out there. Travelers want the best value for what they are paying. Are you interested in benefits from tourism? A proper pricing strategy is important when looking for a hotel for sale in Croatia to stay competitive with other hotels in the tourism sector.
What to Do in the Final Steps of Buying a Property?
Once you decide to find property for sale in Croatia which you decide to buy, it is recommended to hire a real estate agent with a qualified lawyer and organize a visit. The professionals will explain the documentation and guide you through the purchasing process. It is necessary to sign a pre-contract agreement between the investor and the owner by making a payment of 10-20 percent of the total value of the property, depending on the agreement. The investor is required to submit personal documents and proof of citizenship in order to be registered by the Municipal Cadastral Department.
On every property transaction between the owner and a buyer, a transfer tax of 3% is applied. Also, in the case of newly built properties 25% VAT of the total value of the property is applicable. The real estate agent charges a commission of 3 to 6% of the property value and the lawyer usually charges 1% as legal fees in case that is not already included in the price. After the documents are carefully scrutinized by the concerned authorities, it usually takes up to four months to finalize the property deal.
After all, Croatian properties offer an excellent return on investment as you can expect good rental yields and long-term appreciation. Real estate can generate income all year round. When you are looking to buy a property in Croatia here are some options worth considering.