You will find that plenty of the real estate Croatia opportunities are located in the overcrowded cities. And, if you have done some initial research on real estate investment opportunities, you will most definitely have heard of Njuškalo, the main and most known portal in Croatia.
This month, Njuškalo held a conference in Zagreb which the subjects approached were tourism, being the main industry in the country, combined with real estate investing. Together they have created a market with huge potential and definitely worthy of investing in.
During the conference, Robert Pakrovac, from Estre, one of the top banks in Croatia, said “ We’re an open book on which other sectors such as tourism, and ultimately the retirement of people in Croatia, lean on”
It is common to find real estate prices in overcrowded areas higher than in other locations. Due to the simple fact that there is more demand for these real estates. This is because many of these areas are popular destinations for both tourists and first time buyers who are less knowledgeable on Croatia and the real estate market.
However, recently more and more tourist and first time buyers are looking away from these popular areas and are in search for authenticity, privacy and unique experiences. These can be found in the lesser known regions of Croatia.
If you are planning on investing in Croatia, in an specific sector, for example real estate, it is important to know beforehand, what is the investment scene of the country you are aiming for.
It is not news that the main industry and sector that receives more investments currently in Croatia is tourism, showing amazing numbers that constantly increase yearly. For that reason, plenty of investments are moving towards Croatia’s tourism. However, the country is aware of other sectors that are growing interest for large amounts of investments, for example:
DAMAC was the first real estate company from the Middle East to list on the London Stock Exchange and they raised 379 million US dollar in the form of an IPO.
Valamar, a large investment group that operates in Croatia, plans to invest 2 more billion kunas by 2020 in real estate in Croatia, being 95 mln only in 2018.
Industrial and Commercial Bank of China has set up a 11 billion dollars fund to invest in Central and Eastern Europe. If you fit this money in a room it would probably reach the ceiling.
Currently the fund invests in projects in Poland, however the fund has already contacted the Croatian government with a request of presenting them some companies to invest in or projects.
If you plan to buy a property for sale in Croatia, you might be wondering about the numbers, how much capital you have to invest, what are going to be the costs and the maintenance and finally, your return of investment.
Surely those numbers are really important, but you should also consider a property for sale in Croatia as a home you could live in. During the building stage of your home, you look for high quality materials, best performance and the effect they will have on your pocket.
Croatia is know as a sunny and warm country, but what many people don’t know is that, during the winter the temperatures can go as low as -5 degrees on January, and as high as 38 degrees on the peak of summer in July.
The temperature variation is a very important factor that you have to consider when buying a property for sale in Croatia.
That is why it is fundamental to check if the property has good appliances but mostly importantly, good thermal insulation that is be able to maintain the heat and the cooling in the house. Like this, you will have to turn those appliances on less often, reducing the bills and increasing the life expectancy of those equipments.
China has a long term history with Croatia, 700 years to be more precise, but recently a smart investment from China opened the doors to Croatia. The potential that the country has for investing is for sure very attractive
Another aspect that raises interest from China in Croatia is its tourism, not only to invest in the industry but also to facilitate the arrivals of Chinese tourists to the country.
Planning and building an investment property in Croatia, or any other kind of project, requires good management and processes. At Candy Brick we researched and planned the project meticulously, developed solid processes, and selected very well our team. In this article we are going to present these key elements to you.
Planning and Execution
Think of a building, there are foundations and structures underneath the superficial layers of paint. Even if you can’t see them, for example the bricks, they are extremely important during the construction and ensuring the building remains stable.
Within a project team, it works the same way. Even though you might not be able to see or hear some team members, they are still fundamental to the successful project execution. It is therefore important that all team members are competent and synchronised.
What is the status of the current industry and market? This is an aspect you should definitely consider. You don’t want to make the mistake of starting in an industry that is already over-saturated. And if you do, then make sure you innovate in this industry.
We started our investment research based on the growth of real estate market in Croatia. Here we noticed increasing rents mixed with affordable property prices, and low taxes and costs compared to other countries. Which made the idea of purchasing an existent investment property in Croatia and reselling it, an appealing investment.
Know the Place
Do extensive research of the area your project is based, and adapt your research to the project needs. If your project is an investment property in Croatia, then location is key for an excellent return on investment.
If the region has abundant natural resources, take advantage of it, innovate and implement it in your project. Croatia’s 300 sunny days a year gave us the opportunity to innovate our villas by putting solar panels on them. This makes them self sufficient and increases the value of your investment property in Croatia.
Deni Tomisic, our geodesist at Candy Brick, gave us plenty of local advice that was crucial at the early stage of the project. His expertise and knowledge was able to point out fundamental aspects missing from some sites. Such as, no electricity or water and no possibility for connecting them, no usage permits, chemicals in the ground, low quality materials, and even a pending mortgage on a house.
After more in depth research on the local searching tool, http://www.katastar.hr/, more legal problems were found in relation to the sites. Purchasing terrains with issues can be a nightmare in many ways, making you spend more to fix them. If this step is missed then the whole project can fall apart.
The selection starts with defining characteristics that every member of the team must have. It is important all team members share the same fundamental characteristics in order for the group to be synchronised.
When your in a foreign country it can be hard at first to identify your desired characteristics in people. But a local references and advice can help you hugely.
At Candy Brick we choose people who are honest, loyal, driven to make the project go forward, and have a will to evolve.
From the Geodesist, responsible for selecting good and suitable terrain, and taking the right measurements to be used for later stages of the project.
To the architect that has to understand the intention of the client’s project, translating the needs into a drawing. And then has to clearly specify the materials to be used, the precise measurements, and the instructions about their drawing.
To the engineering supervisor, responsible for checking all the stages of the construction, disapproving any step that is not correct, and having the initiative to correct any mistakes.
And the Project manager responsible for controlling the project quality, budget and timing. He does this by checking everyday the construction progress, negotiating with suppliers in order to get better materials for better prices, and working on behalf of the company and not himself.
The choice of a good team of builders is also essential. Many mistakes can be done when constructing if the builders are not experienced and competent. And the fixing of these mistakes can be costly and can slow down the project if the wrong person is chosen. In Croatia there is a scarcity of workers and it can be quite difficult to find honest and qualified workers without the help of local advice.
Importantly, None of this can happen if your not legally allowed to. It is important therefore to have full legal understanding on your team, and a person who is familiar with law, contracts, rules. And not just for one country, but internationally, as laws can change from country to country.
Finally, we working internationally, communication becomes vital. It is crucial to have perfect translators in the team to avoid any error through miscommunication.
Talking about communication, marketing is extremely important for any company and team. Having a really good team and product is essential, but without really good marketing people will never get to hear about them or their achievements.
The sales person also has to understand fully the product and the companies values, and has to be able to transfer those values to the client. It is fundamental having a person who creates a connection with the client.
The administration is key to keep the internal engines of the company running smoothly, initiative and communication skills are necessary for a good administrator.
The accountant’s role may consist of primarily financial data collection, entry and report generation. The accounting structure of a company is an essential component to business operations. It is therefore essential to have an accountant that is honest and does not misrepresent the firm.
The External Team
Beyond your core team, there is also the external team to consider and the same selection process should apply for them. These are your partners and collaborators. Let’s compare them to other external factors in a construction project, such as the weather.
You have everything needed to start your construction project, like materials and constructors, but then it rains and you can’t start building. This is external factor interference.
With your partners and collaborators, it is the same and they can equally influence the progress of your project. The only difference is you can actually choose your partners and collaborators. You can’t choose the weather.
A legal partnership is a contractual relationship involving close cooperation between parties having specified and joint rights and responsibilities. Each party has an equal share of the risk as well as the reward.
A collaboration involves cooperation, parties are not necessarily bound by a contract. This is a relationship, but it is usually less formal than a legal partnership. A good collaboration can only exist when several people pool their common interests, assets and professional skills for a joint project. Importantly, organisations don’t collaborate – people collaborate.
It is better to chose partners and collaborators that are aligned with the project and will respect your goals.
For building investment property in Croatia, we chose partners and collaborators that are available, precise and responsive.
Good planning is fundamental to strategise and reach your goal
We hope that the tips given on this article help your planning and researching process, either if you are starting or already have an on going project.
It is attractive to invest on real estate in Croatia at the moment, and tourists come to enjoy the wonders of the country.
Real estate in Croatia is currently on the spotlight.
- The country offers beauties, unspoiled natural paradises, activities, and rich heritage.
- Private, government, and European Commission investments are taking place in Croatia, improving infrastructure, services and accessibility.
The combination of both factors attracted Candy Bricks attention to develop luscious investment properties in Croatia.
The location of the villas are crucial for stress free financial return.
For that reason, Candy Brick is currently building two projects in Marcana, central Istria area.
The Municipality of Marcana has an area of 131 km2. According to the Ministry of the Interior at the end of 2014, in its area of residence there are 4,566 citizens.
The area has an indented coast with a total of 36 km of coastline starting from the Raska bay in the north to the Budava bay in the south.
With the data collected by the Istria Tourist Board and analysis made by Candy Brick, it is possible to note and compare the monthly increase of tourists and show you why Marcana is an advantageous location for your investment property.
Last month, June 2018, the region of Marcana shows an increase of arrivals of 43% in comparison to June 2017, generating 4000 more overnight stays.
Out of 32 regions, Marcana was where the number of tourists increased the most in June 2018 in the whole Istria, meaning that tourists prefer staying in further regions than overcrowded central areas and making it the perfect region for investing in real estate in Croatia.
That is due to the profile of high spending tourists, who prefer distant and private locations to relax alone or with their family and enjoy the things Croatia has to offer.
Another interesting data from Istria Tourist Board is a half yearly analyses of arrivals to Istria, divided by regions, in which Marcana had an increase of 100% arrivals and around 50% increase of overnight stays.
Germany is still the responsible for the greatest amount of tourists coming to Croatia, a total 140 thousand arrivals generating the incredible number of 1.1 million overnight stays.
You can also compare the statistics of May 2018 on the link below
Candy Brick is progressing with the construction of its luscious investment properties in Croatia, and soon will be ready to receive the guests at your villa in Marcana.
I know that you are focused on the minimum income that you can get with Candy Brick villas (at least 20.000 – 25.000 euro each summer).
And I agree with you: it is a very high income (protected by the CANDY BRICK RENTAL GUARANTEE) .
Probably you are also very focused on the opportunity to sell the villa in the future, at a higher price.
Candy Brick villa is an asset that improves dramatically your financial situation, creating income and value at near-to-zero risk.
But all this is not possible with a property that is not covered with the CANDY BRICK LEGAL GUARANTEE.
Foreign buyers in Croatia: stressful journey with no happy end in sight
Meet John (Birmingham, UK), Anna (Padova, Italy) and Peter (Potsdam, Germany).
3 foreign property investors, who wanted to have their house in Croatia: a luxury escape, few minutes driving from the seaside, where to spend time with their partner and monetizing with rental to tourists during the season (from June to September).
Unfortunately, their journey as investors in Croatia is not the one they wanted
And what makes them even more furious is that it will continue on a difficult and stressful track also over next years
Meaning that, instead of enjoying their villa with pool in Croatia and renting it to tourists, today they are still struggling to end their nightmare in Croatia.
But WHAT has happened?!
Signing a purchase contract with NO legal guarantees
John, Anna and Peter have been watching closely the real estate market in Croatia for over a year before taking the decision:
“Yes, I want to be the owner of a villa with pool in Croatia”.
They learnt where should be located and how many rooms should have a villa to get the highest profit.
In 2016 they found a real estate in Croatia of their interest.
The arrangement of the rooms and the location seemed to be exactly what they were looking for since a long time.
They knew, they should have controlled the documents of the house and plot before going to the notary. But….
(If you are thinking now, hmmm… I’m buying a house in Croatia… why should I control the plot, your money are at risk and YOU NEED TO LISTEN to the podcast with geodesist Deni Tomisic: click here to listen to the podcast).
… the man from the real estate agency pressed them. He wrote the agreement, organised the translation and set the meeting with the Seller at the notary.
Fast. Faster. Fastest.
Commission of 3% was too attractive to let go 3 foreign buyers.
If you can read in the agent’s head, you would read:
You know… if I give them 2 more days to analyse, they may change their mind or change the conditions of the contract. I need to close the sale quickly. Immediately!
“Don’t worry our boss has 13 years of experience, our agency operates since 1997, we know how to protect you, Buyer”
This is what the investors heard from the agent. They checked and in fact it was true. The agency has been opened since 1997 and the boss started working in real estate 13 years ago.
But will they really prepare the contract to protect mine, buyer’s interests? That question was in the head of John, Anna and Peter.
Meeting at the notary has been organised. Monday morning at 9:00.
Time is running, but let’s consult the agreement with a lawyer.
First lawyer was busy.
Tick tack, tick tack.
The second one spoke only Croatian.
Tick tack, tick tack.
Should I sign what they give me without even proposing any conditions?!
Tick tack, tick tack.
Let’s do it. I am tired of searching for a house for sale in Croatia.
Tick tack, tick tack.
And if they have bad intentions? Uff, I need to delay the notary. Find another lawyer. Where is my phone to call the agency?
Tick tack, tick tack.
But… if that property is my life time opportunity? Location is perfect and so is the interior design. The season is about to start. If I don’t buy now, I’ll loose a year. And then… investments carry some risks. Even if I get the consultancy from the lawyer, I can’t be 100% sure. Lawyer I don’t know. He thinks to earn a small percentage of the purchase contract and there are little changes he will enter all the aspects (with all the workload he has).
Million thought. But there was really no time left to think. Go, go.
Phone is ringing.
John, we are waiting for you at the notary. Where are you?
9:15. Notary. Signature. Stamp. Done.
7 months has passed and the Seller still did not transfer the ownership on John.
John has transferred the agreed sum to the Seller, but he is still not the owner of the house in Croatia.
Agent tried to find the Seller, but he left Croatia and went back to Russia.
John’s lawyer (yeahhh now he got him) is sending letters to the Seller. They are coming back to Croatia.
He changed his residence address.
John do has the keys to the house, so in theory he could enter the place or rent it somehow, but there is a problem.
The house requires a little renovation (around 19.000 euro investment) and John doesn’t want to pump money in a house that is not of his ownership.
Sooner or later John, with his lawyers (that cost a lot too) will find the Seller. And the ownership will be finally transferred. But nobody will give John’s the money back for the lawyers and his time back to solve this case.
And he will also never get back his time and health.
When it will finish? Nobody knows.
Until today the situation is blocked.
After the purchase, Anna went with her husband to celebrate the start of their new journey as investors in Croatia in a nice bar, just on the coast of Rovigno.
They posted a photo on Facebook, got 200 likes, 100 comments with congratulations.
Today, after a year, Facebook remind that day to Anna.
Anna is a calm person. Even if someone is rude to her, she tries to ignore without getting angry.
But now, when she thinks that, on the “purchase day” she has even offered the flute of champagne to the Seller – Ivona, she rather looks like a mad Rottweiler with drooling saliva.
Ivona, tall and light blonde doctor from Zagreb, over her 40-ties.
Anna trusted her quickly.
Maybe it was because Ivona seemed to be a woman Anna always wanted to be – independent, smart and quick in making decisions?
Ivona was also quite attractive too. But Anna will never tell you that it was also a factor that pushed her to trust her so quickly.
Today, at Anna’s house nobody remembers Ivona’s name. When talking about the house purchase in Croatia, they call her THAT SL*T.
But, what did Ivona do to be called that badly???
Well, at the day of purchase the documents of the property were fine: Anna and husband controlled many things, but most importantly there was no mortgage on the property.
Unfortunately, Ivona was a real b**ch and the contract they signed had no legal guarantees to Anna, the Buyer.
How should it be? Anna transfers the money to Ivona’s account. Ivona transfers the ownership to Anna.
But how it was? Anna transferred the money. Ivona got a mortgage on the house – object of the contract. And only after she had transferred the ownership.
What a surprise to Anna when she discovered to have 100.000 euro mortgage on her new house in Croatia! Nightmare!
When you’re buying a plot. A list of things to check is really long.
In fact, it’s very easy to buy a plot that will be a nail in the coffin of your investment
One of many points on the “to do list” before the purchase is checking the distance from the electricity pillar and the power left that the closest pillar has.
And it’s not something you are used to check when you’re buying a house, as you think that a house is already connected to the electricity.
Peter was also thinking like you.
He bought a house in Croatia.
And only then he discovered that his new house is not connected to the electricity.
It had only a temporary access that has been provided for the construction phase (it’s an electricity with a lower voltage not enough for you).
Ok, let’s fix it.
Electricity company is saying:
We have no voltage available for you in the village. We need to build a new pillar.
Cost of this is 900.000 kunas. It’s over 120.000 euro. OVER 120.000 EURO FOR ELECTRICITY?!
But, but, how can it be? Who should pay for this?
Who needs electricity pays: you will pay, Peter.
Peter, you should have though about this before!!!
One simple condition in the contract and the Seller would be obligated to pay for this.
Or… maybe… one simple check and you would never buy this house???
Peter, we are very sorry for you, but now you are with this problem alone. And soon you will be also with 120.000 euro less on your account. Profitable investment in real estate in Croatia? If you expect to live 1000 years, maybe you will start seeing some returns 😉
Solution for Investor in Croatia: Candy Brick Legal Guarantee
All this problems (property not transferred on time, mortgage out of nowhere, well, out of Ivona, unexpected and huge cost of electricty connection) and more (join mailing list) have as a reason a certain type of Seller – a person who is selling you a property with legal problems or who intends to create legal problems after the signature, with intention.
Is it rare to meet such Seller? Anna, Peter and John met and it may happen also to you.
But you can learn how to identify them.
You want to put conditions in the contract, the Seller rejects or says it will never happen or he’s telling you that you are exaggerating or that you don’t trust.
You are the first one asking us so many things. Trust us more instead of delaying the signature of the purchase agreement!
Blah blah blah
Be careful. When the Seller looks only at money and not your satisfaction, he will present you the simplest contract possible to close the deal quickly.
A simple contract of 2 pages means there are no paragraphs which explain what will happen if you…
- discover the mortgage as Anna
- can’t get the property transferred on you as it happened to John
- see that to connect the house to electricity you need to spend 120.000 euro
- … THERE ARE MANY OTHER “IFs” to be explained, IN THE CONTRACT!!!
Don’t worry. If it happens we will solve.
No, no, no. Before you sign all the “IFs” must be on the paper, leaving no doubts or hidden unexpected risks.
And this is what the Candy Brick Legal Guarantee covers – all the uncertainties.
So, what’s this CANDY BRICK LEGAL GUARANTEE?
When signing the contract for your Candy Brick villa you will never hear “you don’t trust us”, accompanied with a sad, unsatisfied face of an agent or a no-name seller:
What’s important for you from the legal perspective must be written clearly in the purchase agreement, with no beating around the bush, in a language that you understand.
It happens that although you don’t know Croatian language, agencies or no-name sellers make want to sign the agreement in Croatian, providing no translation.
For buyers who can’t get a Candy Brick property, even the start of their journey is painful.
At the notary in Croatia everything will seem like a video in which they push the SPEED UP x 16 BUTTON.
Agent will bring them contract, 2 seconds after, they will be pointed where to sign.
The sellers will be staring at them, waiting with their turn to sign.
The notary will be staring at them too, showing where to sign.
Then, they will realise they signed the last paper of the contract without even seeing the first page.
And if the first one is today different that the one they have seen on their mail a day before?!
They will see when it will be all over.
Anyway, even if they give them 2 more minutes to re-read the contract, what can they understand in Croatian??
This is what happens far from Candy Brick, although on the same planet of Istria in Croatia and what you will never experience.
We will suggest you a series of conditions to put in the contract that protect your interest.
And we can do this, because Candy Brick villas has no legal problems of any type.
We’re realising a long term plan of brand development that in few years will find an interest of important international capital groups and our mission states our values and the quality of our projects.
- If the ownership is not transferred in a period of 10 working days, the Seller needs to refund the Buyer and pay a penalty.
- The Seller guarantees that the property do have the usage permit. Shall this be missed, the Seller will refund the Buyer and pay a penalty.
- The Seller is not allowed to burden with mortgage the property for which it has signed the sale agreement. Shall this happen, the sale agreement is invalidated.
Additionally, the sale agreement will contain all necessary conditions to ensure that you will be the only owner of a villa Candy Brick and to exclude any undesired surprise that could occur when things are not done in the right way.
20.000 euro (at least) each summer sounds great.
But being secure from the legal side is even more important for your investment in real estate in Croatia.