40 REAL ESTATE special
Regional overview: Croatia
Return of the Buyer With pirvate investors returning to the country, it looks as though 2011 may be a slightly betteryear for the Croatian propertymarket. However, it is stlifar from the case that “anything goes” – atpresent, onlysensibly pircedlocatoi ns andrelativelyinexpensive hodilayproperties are in demand. By Mateja Novak
A
lthough some reports have suggested a five to ten percent fall in Croatian property prices, the actual decline has been a much steeper 20 to 30 percent. The reason for this disparity? The difference between advertised and actual sales values. This is especially true for coastal areas where much of the property is purchased by foreigners and where transaction volumes are low and data is limited. Furthermore, the current system of monitoring Croatian real estate prices is fairly ineffective due to a lack of accurate data. The main source of data is the tax office, where contractual prices of property sold are registered. However, the practice of manipulating contractual prices for tax purposes is still common in Croatia making available data highly unreliable.
Coast still the most popular
What data is around indicates that seaside properties in Croatia are selling well and for reasonable prices, five to 10 percent below the
2010/2011 are also up from the previous year, yet they remain far from pre-crisis levels. Transaction volumes are still low but the number of sales converted is rising and investors who have been showing interest over the last 12 months are beginning to commit, estate agents report. Nonetheless, property consultants still expect there to be continued downward pressure on real estate prices in Croatia in 2011.
EU prospects
Split old town is currently very popular with foreign buyers
peak price. Apartments around the EUR 100,000 mark and not too far from the sea are most popular. An oversupply of such properties means heavy discounts which are proving attractive to buyers. Enquiries for properties in Split old town are on the rise as buyers are
looking for a holiday home as well as an investment property. Since prices in the area have dropped by 20 percent since the peak, properties are now more affordable and yields more attractive. Overall enquires for properties in Croatia during the winter of
In 2012 Croatia is expected to join the European Union, but it remains to be seen how much of an effect this will have on its real estate market. Agents suggest two distinct possibilities, a moderate and stable effect or an inflationary drive. Real estate firm First Property Croatia believes the impact is likely to be somewhere in the middle: “in which case we don’t expect to see the same price inflation post-EU accession as seen in those countries that joined in 2004, but we do expect to see confidence returning and expect moderate but stable price rises.”
Regional overview: Montenegro
Keeping Up Appearances Montenegro’s property market is still grabbing headlines across the world, despite the ongoing slowdown in the real estate market. Tourist numbers continue to grow with agents hoping this will reflect in an increase in demand for holiday homes. However, despite all the promising news, both local and foreign buyers are still in decline. By Mateja Novak
T
he media often likes to paint a picture of Montenegro as the next jewel on the European coast; a place of significant natural beauty and a good location close to many other European destinations. The number of announced and undergoing developments supports this image. The government’s plans for improving infrastructure and creating a friendly environment for foreign investors reinforces the feeling that the future is bright. Significant money is currently being channelled into improving the The Slovenia Times
coast’s water supply. The northern section of the regional water supply system is already completed – at a reported cost of EUR 81.7m – and a second phase covering the southern regions due for completion shortly.
Preparing for the future
In addition, a number of initiatives are underway to improve power provision in the country. They include multi-million euro investments into hydro and wind power plants. Power lines link-
ing Italy and Montenegro are proposed from 2015 in a partnership with Italian investors. And as a part of wider European initiatives to expand transport logistics across south eastern Europe, Montenegro is investing into routes connected to ‘Corridor X’ which links western Europe to Greece.
Dealing with the present
In spite of all this investment and promise, the property market in the country continues to
struggle. The volume of property transactions in Montenegro peaked in 2007 while in 2009 transaction levels shrank dramatically. Data for 2010 suggests the market remained at the same level as the previous year. According to the annual real estate market analysis conducted by the Central Bank of Montenegro, 20.1 percent of real estate agencies in the country registered the same traffic in 2010 as the year before, while 45.9 percent of agencies said they registered less traffic for the same period. Decline in demand for