Each year the Spring brings blooming of life, and this year it brought bloom to the real estate market in Croatia. Sales in the Adriatic jumped nearly 15 percent!
Economic recovery in the world returned customers to Croatia, and most of them are after luxury villas by the sea. Customers who have such finances were never actually poor, but the crisis impacted their consumer habits. No matter how strange it may sound, psychological blockage is much harder to break than financial.
They are looking for apartments too, but they are also mainly luxury. This is to some extent a problem, because the middle class citizens, who are also the most numerous class, still fear for the future, so decisions for investments in new homes are difficult for them. Although the news of the market recovery are most welcome, it is not good that the property market in Croatia depends exclusively on foreigners.
Prices also influenced this positive move. All prices fell, regardless of the type of property, so flats and houses are automatically accessible to more customers, regardless of whether they are foreign or Croatian citizens.
All this is still quite far from the “golden years” of Croatian real estate agencies and construction companies. A large number of agencies have shut down and smaller construction companies have endured severe strokes. However, the cyclical movements of the economy is normal in capitalism, and it can also be expected in Croatia. After each rain, the sun has to come.

Real estate market in Croatia is simply too expensive, but this statement applies only to Croatian citizens, which is correct if viewed from the standpoint of purchasing power of citizens.
Viewed only from the standpoint of property values, Croatia is not that expensive as far as we can tell, especially if one looks only at the market of houses. What does it mean to Croatians? Not much really… And it is not a consolation when the calculations include the economic situation in the country. However, it certainly means a lot to real estate agencies and investors, and ultimately could improve the economic picture of the country, which would probably do some good fix the situation for Croatian citizens as well. It is all a circle.
Not to complicate, the houses in Croatia are among the cheapest in Europe, and in the neighborhood as well. In Slovenia, they cost a lot more, and in Montenegro too, mainly thanks to a huge breakthrough that the country has had on the tourist map of Europe. When all is taken into account, it is not unrealistic to expect foreign buyers, with a dose of optimism caused by the economic recovery in their countries, will soon be able to begin their return to the Croatian property market in large numbers, especially to the traditionally popular Adriatic.
As usual, the banks were among the first to recognize this trend, and Erste Bank has already introduced housing loans for foreigners. Conditions are extremely favorable and offer various benefits, and loans are granted with a currency clause and mortgage insurance.
Good news for all who are engaged in the business with real estate in Croatia!

Sale of apartments in Croatia is almost completely stopped. Last three years the market has fallen by over 30 percent and in some locations over 50 percent. Who’s to blame?

Professor Josip Tica from the Zagreb Faculty of Economics believes that builders who stubbornly hold prices and thus maintain the status quo are most responsible, which will not suit anyone in the end. He believes investors should be reconciled with a certain loss of profits, sell out homes and move into new investments. Otherwise there could be a new escalation of the crisis, which this time woul influence the employment and cause a large loss of jobs in the construction sector. Increase in unemployment would sooner or later impact related activities.

The consequence of lower sales of housing affects the rest of the economy, thus the banks changed their policy of financing, and the role of government has changed, because the focus is not to encourage new construction, but the real estate market itself.

Also, Professor Tica said that the problem of taxation is also important, namely lack of same when it comes to real estate. People are simply accustomed to having a real estate as one form of savings. When a tax-free part of the household would be established, and everything else taxed, then savings would be redirected to other parts of the economy and obtained tax could be invested in other areas, such as health or education.

All this would ultimately strengthen the economy, and thus indirectly the real estate market, that is encourage new projects.

World analysts expect that this year the market will finally touch the bottom, but this is not that bad … Why? Cause this means that next year the recovery starts!
The growth of the real estate market in whole of Europe is expected to start next year, everywhere except in Eastern Europe. Does this mean that Croatia will continue the negative trend in the market? Yes and no. Although Croatia is among the critical countries, our market is still on a some sort of border between East and West from an economic point of view. This means that, depending on the sector of the market, recovery can be expected during the 2011 and 2012.
Investors in Croatia will have to be reconciled with lower rates of return on investments, and banks can expect to have to finance projects through some other models. Large residential projects can be expected in 2012, and the same goes for new shopping centers and office buildings. Further stabilization of prices will also help the recovery of real estate market in Croatia, but that does not mean that all existing apartments will automatically be sold. Regarding industrial property, the situation is quite uncertain and new investments can not be predicted. Tourism should be successful as usually, but here there are also various, mostly legal issues.
In the end, optimism comes from neighboring Slovenia. Apartments market in the first three months grew by over 70 percent! Unfortunately, this trend is not followed by houses.