Croatia's Dalmatian Coast Lures Property Investors

Legions of property buyers have been marching in on the Adriatic coast of Croatia to buy houses, apartments, hotels land and even islands themselves, say area realtors and investors. Much of this activity centers around the city of Split, the capital of Dalmatia, the region which contains most of Croatia's islands and prime coastal locations. Opportunities exist, these market watchers say, but as with other investments, so do challenges and pitfalls.

"The most popular kind of property," said Lara Vekic manager of the Adriatic's largest realtor, Broker Nekretmine Real Estate Agency in Split, "is an old style Dalmatian stone house. This is also at the moment the most difficult to find. In bad condition they can cost EUR 50,000. But they can be as dear as EUR 250,000, depending on the condition and the area and condition of the surrounding land."

The search for these stone houses, according to Vekic, preferably on an island surrounded by a large plot of land, has drawn both small investors looking to gain from both capital appreciation and from rental income and a mix of holiday makers looking to buy the perfect getaway and older adults hoping to fetch their retirement dream home. The vast majority of Vekic's clients come from the UK. Other agents, such as NC Real Estate's Marjan Mallak, sell to a mix of French and Irish with a new wave of buyers coming from Germany and Switzerland.

"The idea that you can buy in Croatia and double your money in a year is a well-known fantasy," said Mallak. "But if you buy at market price, it is quite possible to earn 15%-20% from a combination of rent and capital appreciation."

Vekic put the figure of annual capital appreciation at 7%, based on performance in recent years. "But it won't be like this forever," she said. "It will be like this for the next 1 or 2 years. Then it will stop. If you were to buy this year, it would be the right time. In the period after the war prices were going up 30% to 40% per year. 10 years ago you could buy an apartment in split for EUR 500 m2. Today you pay EUR 1100 m2 in the worst part of town."