Croatia Property Investment News

Second homes in Croatia top survey for price growth

Second homes in Croatia have enjoyed the highest annual capital growth out of the 13 countries covered in Savills’s Summer 2007 ‘Second Homes Abroad’ survey, with a yearly growth of 30.7% between 2002 and 2006. The report highlighted Croatia as an example of a country receiving increasing overseas investment as a result of its low prices and the perceived difficulty of purchase process.

The largest price increase was seen in Croatia’s emerging tourist destinations, such as Croatia’s Dalmation Coast which has seen an average capital growth in excess of 20% a year for the past five years. According to the report, when an area has an emerging market and is also a popular holiday destination, it is likely to have a high gross income yield. Croatia meets these criteria and has one of the highest gross yields, at 8.6%. The mature markets have the lowest yields, as prices are higher and are growing at a faster rate than rent.

The average price of a Croatian property was the lowest of the countries covered, at £107,500. In its table of capital growth of second homes over the last five years, the report puts Italy second to Croatia, while other high-ranking countries were those in Eastern Europe, Turkey and Bulgaria. Savills based their report on a survey of a sample of second home properties in each country, and the perception of various factors held by property owners in these countries.

Croatia’s expected accession into the EU has driven investor interest in the country’s property market; after starting open accession talks in 2005, it is expected to become a member before the end of the decade. The country’s cheap and educated workforce has encouraged a number of international companies to invest in its larger cities, and the growth in its tourism market (the Croatian National Tourist Board is aiming for 11 million foreign visitors per year by 2010) is boosting investment into other areas.