The big news in the overseas property market is that of Croatia; something of a cliché, but 'Europe's best kept secret' has opened its doors to foreign buyers, reports Nicci Perides

February 2009 has seen new legislation allowing for an easier purchase route for foreign investors. So what does that mean for you and me? Maybe a slice of the beautifully untouched coastline, azure waters, a thousand or so islands to explore, basically a piece of the good life at a fraction of the coast of its neighbours. EU citizens now have the same purchase rights as its natives with only agricultural and forestry land excluded from the agreement.

Croatia, nicknamed the ‘Pearl of the Adriatic’ by Sir Bernard Shaw, is wonderfully more timeless than trendy, pristine forests favour over adrenalin extremists, ancient roman ruins and walled cities replace its hectic, traffic prone European rival cities and the pace of life is often described as Italy some 50 or so years back.

But don’t get me wrong, Croatia certainly isn’t drab, it has its fair share of trendy spots with celebrities buying up its Caribbean feel islands, no cruise ship’s itinerary is complete without a stop in Dubrovnik and the Dalmatia region throbs with one hand firmly placed on the pulse of its nightlife and the other steeped in its ancient historic ruins. Croatia is becoming a firm favourite with both holidaymakers and investors with predictions of a property boom in the coming years.

Country overview
Population: 4,491.543 (July 2008est)
Currency: The Kuna
Capital City: Zagreb
Major Cities: Split, Dubrovnik,
Languages: Mainly Croatian
Climate /Weather: Mediterranean and continental: hot summers and cold winters
Location: South Eastern Europe with an Adriatic Sea coast. Situated between Bosnia and Herzegovina and Slovenia
Economy:

•    Inflation rate (consumer prices): 1.7 percent (2005 EST.)
•    GDP (official exchange rate): $63.95
•    GDP (purchasing power parity): $73.36 billion

Croatia was once one of the wealthiest Yugoslav republics, but as a result of the 91-95 war, output was reduced and the country consequentially missed the early waves of investment that the rest of Central and Eastern Europe enjoyed after the collapse of the Berlin wall. However, nowadays due to a boom in tourism and credit lead consumer spending, Croatia’s economy has begun to grow again. The country still has its problems though. High unemployment, uneven regional development and the huge reliance on tourism means that in the current financial climate, Croatia will struggle. Privatisation has been an issue addressed as of recent years but still comes under scrutiny from the public and private sectors.

Property facts
Main property markets
Dubrovnik was once the most popular region to buy in, however, property prices have soared in the last few years thus making a firm favourite of the north western region of Istria- known locally as the ‘Tuscany’ of Croatia.
North of Zagreb, rural retreats and farmhouses come at a fraction of the cost and with more and more low cost airlines flying in; again, this region will become increasingly popular in the following years. The islands are already a firm favourite with celebrities; in fact the whole of the Adriatic coast boasts some quite outstanding investment opportunities.

Forms of ownership
There are two main ways in which you can own property in Croatia, buying as an individual or via a company. Both have different tax implications so be sure to investigate all possible paths to obtain the correct buying route for your needs.
−    Individual - this is the most common way of owning your house.
−    Via a registered company - this is good way to benefit from a reduced tax fee.

Restrictions
The Croatian property market has become much more accessible to foreign buyers since the new legislation came into force. With lighter administration and much less red tape to wade through - the process is now fairly straightforward. Restrictions do still exist on forestry and agricultural land.

How safe is it?
Generally buying in Croatia is relatively safe, however always enlist in the services of a legal advisor that acts in only your interests, preferably who speaks both languages and has knowledge in both the English and Croatian property markets.

Always be sure to check contracts thoroughly and watch out for all documentation on older buildings, as titles can sometimes be unclear. Also if you are planning to rent out your new property, do check that there are not any restrictions, as some places have been built purely for residential use only.

Again, due to Croatia’s turbulent past a huge downfall in their property market is land registry. Always make sure your lawyer thoroughly checks that no one else can make a claim on your land.

Mortgages
To secure your house in Croatia a few options are available to the buyer. You can choose to
−    Raise finance on your existing home in the UK
−    Obtain a loan from an English provider

For the above two, do remember that although the price of your house will remain constant in the local currency, the exchange rate will fluctuate.

−    A Croatian mortgage
This option is possible, however most foreign buyers tend not to choose this.

The buying process
Traditionally buying in Croatia was somewhat of a headache due to restrictions and red tape. This largely reflected a long history of being predominately owned by other countries. Croatia has spent a significant period of time under the occupancy or otherwise controlled by other governments. However nowadays, with Croatia hoping to join the EU they are conforming to easier procedures for foreign investment. The process is now somewhat straightforward with the only restrictions being on forestry and agricultural land. Croatian property experts are predicting great interest from foreign investors, with the Germans expecting to top the bill.

Choosing an area
One of the first questions you should ask yourself is why are you buying, is it purely for investment, relocation or a holiday home. This should give you a good idea of what type of property and location you are searching for. Your research should be thorough and visiting a few regions is always advisable. Croatian property is cheaper then that in England, however certain areas are becoming increasingly more expensive as they become more popular with foreign investors. Croatia still has many unspoilt and untouched regions to explore, with prices soaring in the beautiful walled city of Dubrovnik; the northeast is enjoying an influx of interest. Do make the necessary checks into future developments within your immediate area that could affect any views and access routes. As Croatia becomes more popular with foreign investors, land will be bought up for infrastructure to meet the growing demands.

Viewings
The Internet nowadays provides a source of invaluable information on properties. This is definitely not a replacement for actual physical viewings though. Once you have selected a few properties off your agent’s list you will be taken to view each one. The first viewing is all about falling in love, the second, third and forth is about the logistics. Take a tape measure, to get an idea of dimensions, a torch, to get a proper look into all dark loft spaces, cupboards etc and enquire about transportation links to your new home.

Legal representation
As in all investment dealings you will need legal representation, taking short cuts to reduce costs can result in expensive complications. A notary will oversee all paperwork and register your property; this is a legal requirement of Croatia. The notary will be acting as an impartial legal representative for the government and therefore will not be looking after your personal interests. It is always advisable to employ a private lawyer who will be working solely on your behalf. Always try to find a lawyer that is bilingual and knows both the Croatian and English property market inside out.

The sale
When choosing an agent always opt for a reputable firm acting under the name of NEKRETNINE or a name ending in the initials ‘d.o.o’. Once you have found your property, an offer can be made. It is not a legal requirement in Croatia to get a survey completed but it is always a smart idea to do so. If you are obtaining a UK mortgage, it is a legal necessity anyway before any provider will lend. It is also not uncommon to sign a reservation note at this point. Once an offer has been made and accepted a pre- sale contract is drawn up. This needs to contain the following details-

−    All property particulars
−    Buyer and seller details
−    Completion date
−    Whether the deposit is refundable if either party pulls out

A ten percent deposit is usually then required to secure the property. This contract is not yet legally binding however it is presumed that the sale will go ahead unless there are extreme circumstances. This contract should be immediately passed to your lawyer to ensure compliance with Croatian laws. Your lawyer may also undergo any other legal checks at this stage.
Completion usually takes place about three to six weeks later. The notary will draw up all paper work; it then needs to be signed in person by both the vendor and buyer in the local notary’s office. It is good practise to have your personal lawyer present to translate the contracts to ensure you know exactly what you’re signing. The notary will oversee the signatures and then (if you’re not an EU citizen) send an application to the Croatian ministry of Justice or Ministry of Foreign affairs depending on where your property is located.

Always ensure that this contract protects your interests and allows you immediate use of the property, not when all paper work has been finalised as this could take months. The notary will also register the sale on the land registry; once all this has been completed the property is now yours.

Legal matters
Once your lawyer has your pre- sale contract, he/she legally has the right to start any legal checks. This should include
−    A review of the contract to ensure compliance with Croatian laws
−    A thorough report on the contract highlighting any clauses that need to be revised or discussed further; any other matters to ensure the buyer is happy.
−    All checks on land registry, planning permission, habitation licences, building permits.

Area guide
Istria
The rising appeal of Croatia has hit a high in the beautiful northwestern region of Istria. The unquestionably stunning 44km of coastline, with its turquoise seas and ‘landscaped’ beaches allures and captivates its visitors.

The choice of land and water sports will keep even the most outdoorsy of us occupied, if it’s wine you love, then sample some of the local produce. With over 70 wine producers in this region you really will be spoilt for choice. Food enthusiasts will have their fill too. Istrian food is fast becoming world famous with dishes such as ‘manestra’, homemade pasta with truffles or the ‘prsut’, known to you and me as prosciutto (smoked ham) to choose from will ensure happy mealtimes.

Accessibility to this region is very good with daily flights from low cost airlines into Pula, or with its location right next to Italy, flights go frequently into Trieste, it’s about a two hour drive through some of the most dramatically beautiful scenery.
Prices here are still relatively low in comparison to its other Mediterranean neighbours and with growth rate rising by an average of 20 percent per annum, this little gem makes for a very good investment hotspot.

Kvarner and Highlands
This region has a long-standing tradition as a favourite spot for holidaying Europeans. Royalty, statesmen and other eminent personalities favoured the scenic islands and coastline that are set against a backdrop of lush green forestry and mountains as far back as the early 19th Century.

Visitors today will still stand in awe of this dramatic piece of natural beauty that has its feet dipped in water and its head in the clouds. The region starts at the coast and winds its way inland to the forests of Lika and Gorski Kotar. The local people know all too well how make a house a home and this is clearly demonstrated in the way many of the rural houses have been designed and maintained.

With so many attractions on its door step such as the Gorski Kotar region, which is home to the Risnjak National Park , rental potential is huge. The forests are a million different shades of green with an abundance of wildlife in the summers and covered in a thick blanket of snow during their winters. The islands and craggy coastal line, which are gently stroked by the warm waters of the Adriatic, provide an idyllic playground for sun and sea worshippers.

Rijeka is the regions capital and boasts having some of the most exquisite architecture, from the baroque influences to being the home to one of the oldest sanctuaries in the world- the Franciscan Monastery. The city is a lively mixture of old and new, it will never leave one without something new to explore.

North Dalmatia- Zadar
The North Dalmatia is a vast collage of antique villages, roman ruins, dramatic mountain ranges and flat plains. It also owns most of Croatia’s more populated islands. Zadar is the regions capital and again takes its roots from a roman past. As well as being under Venetian and Austrian rule, Zadar was assigned to Italy in 1920, and still today you can see the Italians influences.

Central Dalmatia- Split
The central strip of Dalmatia plays host to the largest Adriatic city in Croatia; Split. A lively port with ferries leaving hourly, taking excited tourists over onto the Adriatic islands. Split is a must for any visitors to central Croatia. Although from a quick glance its apparent ugliness actually masks a beautiful city. The inner city area is dominated by the large walls of the Diocletian’s Palace (a World Heritage site) and the surrounding marble streets gives shop-a-holics a wide selection of goods.

Property prices can be relatively high but just pop 30 minutes inland to find some rather amazing bargains. The rivers that run through this area cut deep into the green landscape, allowing for picture postcard ancient villages.

Southern Dalmatia- Dubrovnik
Set deep in the south of Croatia is the remarkable city of Dubrovnik. Another walled city, which takes you deep into Croatia’s turbulent past, with its many reminders of recent war days. The town itself is filled with the Mediterranean pace of life. The many outdoors cafes and bars, street gatherings and locals gossiping really give it that personal touch. Prices have soared in this area, but once again head inland to find some real gems at very good prices.

Croatia, as a whole is predicted to be on the verge of a property boom, especially with the introduction of its new legislation. When it finally joins the EU, property prices are rumoured to increase dramatically. Whether it’s a holiday home or a new life out of the rat race you’re after – the pearl of the Adriatic will never fail to amaze.