Fri, 11 May 07
For Investors who want the feel of Tuscany but at lower prices, Istria in northern Croatia is proving to be a popular choice...
For years most of the foreign interest in Croatia's real estate centered on its southern coast. But over the last five years, as prices along that 5,000-kilometer, or more than 3,100-mile, strip climbed steadily and the supply of vacation homes dwindled, Istria emerged as a region where prices were still relatively affordable and foreign buyers were welcomed.
By 2005, the region led the country in foreign ownership, with 34 percent of its properties in the hands of non-Croatian owners; the rate in the popular tourist city of Dubrovnik was less than 10 percent, according to the Croatia Chamber of Economy.
Upper-end homes in Istria are priced for sale at about €1,500 per square meter, or almost $192 per square foot. For comparison, property near the beach in Split, a city of 200,000 residents in the middle of the country's Adriatic coast, sells for €3,000 per square meter and equivalent properties inland are €2,250 per square meter.
And in Dubrovnik, it is very hard to find anything for less than €3,000 per square meter, agents said.
Today, the region's past and proximity to European centers is reflected in its real estate market. Germans are frequent buyers - Munich is only a five-hour drive away - as are Hungarians and Austrians. "It's like an Austrian empire" in parts of Istria, said Brian Gallagher, the editor of the online Croatia Business Report newsletter.
Hurdles to buying in Croatia
There are some hurdles to buying real estate in Croatia, primarily the complexity of land titles. For instance, it is not unusual for a father to bequeath a few acres of the family land to one child and the olive trees growing on that land to another.
Peter Ellis, director of Croatia Property Services in Istria, recommends that potential buyers hire a Croatian lawyer who understands the market and can ensure that titles are in good order. He also stresses that it is important to visit a potential purchase. "I've been amazed by the people who buy property without visiting," he said.
Right now, agents say, many foreigners are buying here with the expectation that Croatia will join the European Union in 2009 and property values will skyrocket, much like the excitement that surrounded Bulgaria's entry this year and the Czech Republic's in 2004.
A mix of Provence and Tuscany
Traditionally, Istrian houses are built of stone, with small windows and thick walls. While some new homes fit that description, many others imitate the white stucco and sprawling style of Mediterranean villas.
Also, the work of Robert Dallas, the self-taught British architect who uses reclaimed materials to construct homes in Provence, is having an influence on the area's style, real estate agents said.
Provence also is mentioned when Istrian officials talk about their development goals. Denis Ivosevic, the region's tourism minister, said the government would like the region to resemble a mix of Tuscany and Provence. "Provence because it's gentle and Tuscany because it's developed a diverse type of tourism," Ivosevic said.
While each region has its own development plans, the Croatian government overall has been tightening regulations in recent years to slow down development and have more control over new construction.
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