Regular readers will have noticed that Dalmatia gets a lot of coverage on Croatia on line. Dalmatians might argue that Dalmatia IS Croatia but, in the interests of unbiased editorial independence and balanced geographical coverage, we asked Peter Ellis to give us his insight on Istria, Zagreb and other northern Croatian delights, together with some essential facts if you are contemplating buying a property in Croatia. Peter's company, Croatia Property Services, is based in Istria and is long established in the Croatian property market. Check out the website or contact Peter via the website for more information. Many thanks to him for allowing us to reproduce the article and photo and for helping us to get a real taste of Istria.
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CROATIA - Today and Forever, by Peter Ellis
For some time now Croatia has been top of everyone's wish list for the place to invest in a holiday home abroad. Sophisticated, warm, friendly and most importantly, not far away, Croatia has rightly established itself in buyers' minds as the place to be. Ralf Schumacher is just one of many celebrities who have bought here and Madonna, Princess Stephanie of Monaco and the Sultan of Brunei have all holidayed here in the last two years.
Articles in magazines can set the scene, but what is it really like to live here?
I first visited Croatia four years ago, en route to the Graz Opera Ball, where I met my wife, a Croatian property lawyer. For someone who had travelled widely, it is perhaps surprising that I had never been here before. My first sight was of the glorious Zagreb architecture on coming out of the restored Austro-Hungarian railway station. Despite two world wars and the recent war of independence, Zagreb still has its medieval and magnificent imperial 19th century architecture intact. It is a time capsule. The old upper city, Gornje Grad, where we subsequently bought and rebuilt an 18th century apartment, still has gas lamps and lamplighters, although on a more modern note, we also have broadband internet connections and on the next hill we even have Marks & Spencer’s and a multi-screen cinema in a modern shopping complex.
Zagreb is a city full of art galleries and museums, where pavement cafes offer great coffee for under a pound and hot chocolate you can stand a spoon up in. The strong cultural scene spans everything from opera to international rock concerts, Alan Ayckbourne to ‘Chicago’.
For me, Croatia combines the best of the old with the conveniences of modern living. It combines traditional politeness, where strangers greet each other in the street and wish each other Happy New Year or Happy Easter, with modern facilities. It combines a country where, if I forget to lock my car, it is no big deal, with an ability to pay for city parking using a mobile phone signal. It is a country where not only does the health service function, it doesn’t cost an arm and a leg to go to the dentist.
Croatia isn’t just Zagreb, though. It is probably best known for its amazing coastline, dotted with thousands of islands, many uninhabited and a yachtsman’s dream, with dozens of marinas and a cheaper place to winter a boat than France, Italy or Spain. Dubrovnik, at the southern end, protected by UNESCO, is a complete walled medieval city that attracts thousands every year with an elaborate cultural programme and is a regular stop for the big cruise boats.
At the northern end there is Istria, the ‘New Tuscany’, known to the local inhabitants as Istra Magicka, a land of wooded hills and vineyards, with medieval stone towns perched improbably on the hilltops, and superb local food and wine. In Istria, there is a natural sequence of local produce that starts around Easter with wild asparagus, continuing through early summer with black truffles, cherries, then apples, plums, apricots, peaches, figs and grapes, until the nuts start and the white truffles are ready. The wines come from small producers: the Degrassi Cabernet Franc, the Kozlavic Muskat, the Poletti Malvazia and the Arman Teran are all superb. The acacia honey comes from numerous producers, of whom Jankovic at Livade is particularly good. The fish is fresh from the little boats the night before. Local restaurants don’t seem to know what frozen fish is. Then there is prsut, similar to the Italian prosciutto, made in small batches by farmers’ wives, sold carved from the bone, and venison. Vegetables are fresh, organic even, produced in the traditional way with natural fertilizers, without lots of pesticides. Every Sunday, the border posts are full of Italians coming for Sunday lunch, getting traditional quality at prices unknown in Italy and taking Istrian specialities home with them. Butterflies and dragonflies abound and the air is alive with the sound of bees and grasshoppers.
Every time I go from Zagreb across to Istria and emerge from Ucka tunnel to see the amazing vista unfold, I remind myself that I could be stuck in traffic jams in Shepherds Bush twice a day. Living and working in Istria is like winning the lottery. Of course it also has coastal resorts, marinas and the clearest water imaginable. Sitting at a café at Novigrad, listening to the water lapping against the quayside while the sun goes down, makes a hard day’s work very worthwhile.
If the whole lifestyle grabs you, what next? If you are British or Irish, the process for buying is relatively straightforward, if bureaucratic, but that is what you pay your lawyer for.
Before putting any money down, get the title checked. Even newly built property can still have problems if the builder has deviated from his planning permission so it is essential to have everything checked first. All too many agents will assure you that the papers are correct when they are defective.
Once you are certain, the usual process involves a Pre-Contract, closely tying a deposit of typically 10% to the property while you get your main funds together, with a full Contract following at a mutually agreed date. If the property is still being constructed, this may involve stage payments. Otherwise this is usually about three weeks later, although if you have money on term deposits or if you need longer to obtain equity from a building society on an existing property, discuss this with the vendor’s agent, as it is important to ensure that the contract date is attainable. If you cannot come up with the funds on the agreed date, you run the risk of forfeiting your deposit. At least if the vendors pull out, they must pay you double the deposit, which deters gazumping. It is common with new property to include a small retention, whilst the builder obtains a Usage Certificate, as this can only be applied for once the property has been completed.
As soon as the final payment has been made, you will be able to occupy and use the property, although there will be a delay while your lawyer applies for the acknowledgment of reciprocity from the Ministry of Justice (until recently the Ministry of Foreign Affairs) that is a prerequisite for getting your name in the Land Registry. If you need to register the property quickly, or if you are from a country that does not offer reciprocity to Croatians wanting to buy property, the alternative is to form a Croatian company and use this to buy the property. It may also be essential if part of the property is not in the building zone, as foreigners cannot otherwise own agricultural land. It is possible to do a Pre-Contract in your own name, while you form the company and clause it so that the Final Contract will be in the new company name. This may be useful if there are other buyers and the vendors are unwilling to wait.
What is worth buying?
Apartments in tourist areas are always in demand and in places like Novigrad, where a new marina is currently being constructed, they will be readily lettable. Much has been written about Dubrovnik but prices there are now so high that the ratio between costs and earnings is not as good as up in Istria. Accessibility, particularly with availability of low cost airlines is important, both for buyers and anyone they may wish to rent to. Prices start around £60,000, with good two bedroomed ones around £75,000. Prices locally are usually quoted in Euros. Places like Bulgaria may offer ultra cheap apartments, but if they are difficult, time consuming or expensive to fly to, neither you nor your clients will want to visit very often. Novigrad is in Istria and the current boom in Istria is being fuelled by Ryanair flights into Trieste that are only an hour away. Even the Easyjet flights in to Ljublijana are only 90mins away and now we have them in to Rijeka, too, only an hour away. That is on top of flights direct from Heathrow to Pula and Rijeka in the summer. Flight times are around two hours, significantly less than flights to Greece, Turkey or Bulgaria.
For buyers looking for something more luxurious, the other popular type of property is a stone house. Restoring an old one is very time consuming and even at low Croatian labour rates can prove expensive in the long run. A better bet are the ones being built to traditional designs with reclaimed stone by local firms that offer all the magic of an old stone house with modern plumbing, electrical wiring and insulation. They sell even before they are completed, such is their popularity. At prices from £200,000, including a pool, they offer good rental potential and with the price per square metre comparable to that of an apartment they offer excellent value. Their scarcity also means that they are likely to exceed the current capital appreciation of around 20% per annum that property in general is enjoying in Istria. If Croatia follows the same trend that other countries like Hungary, the Czech Republic and Slovenia had immediately prior to joining the EU, this is likely to rise sharply, as Croatia is online for joining the EU in 2009.
In short, this is a good place to invest in, with the bonus that it is a truly lovely place to live in and where increasing numbers of people are buying with a view to eventually retiring to.
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