How has Croatia's accession to the Schengen Area and the Eurozone affected the real estate market?

Croatia's accession to the Schengen Area

Since the beginning of 2023, on January 1st, Croatia officially became part of the Schengen Area, marking a new chapter in the country's history. How has this significant event impacted the real estate market, and what has been happening with housing prices over the past six months? Additionally, how does all this affect the lives of local residents? We conducted an analysis and surveyed experts to better understand the aforementioned issues.

Earlier, we discussed the real estate market in Croatia in detail, highlighting its attractive aspects, available ways for foreign citizens to acquire property, and the most appealing regions. However, after the recent changes related to joining the Schengen Area, we became interested in exploring how the market is changing and what forecasts experts are making.

Expert opinion

Peter Pollak and Suzana Jurica, specialists from IC-Real, shared their thoughts on the current situation in the real estate market. They noted that despite joining the Schengen zone, there have not been any significant price jumps in housing so far, and none are expected in the near future.

Croatia has also adopted the euro as its main currency, which has significantly simplified the transaction process for foreign investors. There is no longer a need to convert to kunas, which has positively impacted the market. Experts are talking about a slight decline in housing prices, amounting to about1%which made it more accessible to foreigners.

Over the past year, fluctuations in apartment prices have been minimal, and experts do not predict a sharp increase in prices, especially in popular coastal areas where maximum rates are already observed.

Average apartment prices in Croatia

To better understand the current market situation, it is worth paying attention to the average prices of apartments in various cities in Croatia.

• Zagreb:The cost of housing with an area of about 90 square meters ranges from €260,000 to €380,000.
• Split:Prices range from €230,000 to €315,000.
• Porechi:from €320,000 to €420,000.
• Dubrovnik:from €225,000 to €325,000.

These rates are quite competitive, especially when compared to prices in other European capitals.

Comparative analysis with other European markets

If we compare it with other real estate markets in Europe, experts believe that housing prices in Zagreb are on a comparable level with other cities in Europe, while in other regions of Croatia, property prices remain below the average of most European countries.

The reason for this phenomenon can be found in the fact that the average income of local residents is also relatively low, which in turn affects their purchasing power and demand for apartments.

The future of the real estate market in Croatia

Thus, it can be concluded that after joining the Schengen Area and considering the overall economic context, Croatia, especially its coastal regions, has the potential for stable development in the real estate market.

Nevertheless, the dynamics of changes will occur gradually, and sharp price fluctuations are not anticipated. In the future, Croatia will continue to attract foreign investors, which will help keep the real estate market stable.

Such circumstances create favorable opportunities for both new buyers and those considering investments in Croatian real estate as a means of increasing their capital investments.

The unique real estate market of Croatia

Croatia has a unique and attractive real estate market that is a true find for foreign investors, especially along the coast. This is no coincidence, as the length of the coastal areas exceeds 6200 kilometers, including regions such as Istria in the north and Dalmatia in the south, where many picturesque islands are located.

Popular cities

In particular, among the most popular cities in Istria, the following can be highlighted:

• Rovinj
• Poreč
• Opatia
• Medulin

In Dalmatia, the popular places include:

• Zadar
• Split
• Dubrovnik
• Brač Island

Comparison with other countries

Comparing real estate prices in Croatia with those in Italy, one can notice that in some cases they can even be higher. However, in the context of popular Spanish resorts like Mallorca, Ibiza, and Marbella, Croatia appears to be a more affordable option for vacationing and investing.

For many foreign citizens, it is important that they can safely invest their funds here without worrying about the complexities associated with the local tax system.Strict requirementsanddissatisfaction with tax policybecoming a noticeable obstacle for many people, especially for the residents of Germany.

Examples of successful projects

An interesting example demonstrates how even the most ambitious projects can be realized in Croatia without excessive bureaucracy. One of our clients, for instance, decided to build a helicopter landing pad on a plot of land designated for agriculture in Rovinj. Initially, we were skeptical about the feasibility of such an undertaking, as the plot was located outside the urban development area and there were no power lines. However, thanks to these aspects, we were able to quickly obtain all the necessary permits to implement this plan.

Buying real estate: motivation of foreigners

On the Istrian Peninsula, a typical stone house has a very appealing exterior. However, the challenges associated with purchasing property on the coast are becoming increasingly apparent.

The villa, located in the charming town of Rovinj, has sparked discussions about changes in the real estate market following Croatia's entry into the Schengen Zone. It is necessary to investigate whether new buyers have emerged in the Croatian market from countries that previously showed little activity.

State of the real estate market

Currently, the majority of buyers are citizens of European Union countries. According to recent data, about 50% of all tourists visiting the northern regions of Croatia, especially Istria, come from Germany and Austria. However, since the beginning of this year, there has been an increase in interest from foreign investors from various European countries, who are more actively investing in the construction of new facilities and the implementation of their own projects.

Funding for acquisitions

One of the key points is that many individual buyers prefer to fully finance their purchases using their own funds or through loans obtained in their home countries. It is worth noting that the process of obtaining a loan from Croatian banks often becomes quite complicated and can take a long time, and the interest rates on such loans are generally significantly higher than those offered by financial institutions, for example, in Germany.

Changes in real estate purchase regulations

Since July 1, 2023, there have been changes in the rules for acquiring real estate, which primarily affect foreign citizens wishing to purchase agricultural land.

• InnovationsCitizens of EU countries are allowed to purchase plots of land up to 10,000 square meters.
• People with larger holdings should remember that the state has the right of first refusal.
• There will also be monitoring of the possibilities for foreigners to purchase such land.
• It is recommended to register a company in Croatia to simplify the acquisition process.
• Establishing a company will provide access to significant subsidies from the EU, which can reach up to 70%.

Creating a company

It should be noted that we discussed the process of setting up a company in Croatia and all related procedures in detail during one of our previous interviews with experts.

Residential market for local residents

When it comes to the housing market for local residents, the situation becomes much more concerning. Young families are facing significant difficulties in finding suitable housing, as many owners prefer to rent their apartments to tourists. This leads to a shortage of affordable rental apartments and an increase in housing prices.

The future of the real estate market

Despite this, demand for new residential construction in the form of apartments and condos is expected to remain high in the future.

As for the future of the real estate market in Croatia, optimistic forecasts are also valid. Active construction continues in the country, with many new developments being rented out specifically to meet the needs of tourists, which indicates significant interest in this segment.

It can be confidently said that the real estate market in Croatia continues to evolve and attract attention, providing both local residents and foreign investors with new investment opportunities.

Conclusion

In conclusion, it can be noted that Croatia's entry into the Schengen Area and the transition to the euro did not lead to a sharp increase in real estate prices, as many had expected. On the contrary, the situation remained stable, making the market even more attractive for both locals and foreign investors.

I aimed to understand the current trends and observations, and the results are truly impressive. Croatia maintains its charm thanks to its picturesque coastal regions and comfortable climate, which remain key factors for buyers.

State of the housing market

Considering the stable prices, the absence of significant growth, and the unexpected decline of 1% have brought optimism to the market. It's interesting to note that cities like Zagreb, Split, and Dubrovnik are valued on par with other European capitals, while the relatively low prices across the country still allow foreigners to make profitable investments in real estate.

Popular goals of foreign buyers

The number of people wanting to buy a second home for vacation or future rental purposes continues to grow, and it seems that solving the problem of the shortage of properties with a sea view is becoming increasingly difficult.

The main goals of foreigners in the Croatian market:

• Acquisition of a second home in southern Croatia.
• Investing in real estate for rental purposes.
• The combination of both factors: comfort for oneself and earning income.

Advantages of the Croatian market

One of the striking features of the Croatian market is its ability to attract investors due to the easier implementation of projects and the absence of excessive bureaucracy. For example, the successful realization of our client's idea to build a helicopter landing pad on an agricultural estate is a vivid confirmation of this.

The future of the Croatian real estate market

All the information gathered over the past six months shows that Croatia, despite the challenges, continues to be a convenient and accessible destination for investment, as well as an ideal place to live and relax. As a result, more and more people are becoming enchanted by this country, eager to be a part of its unique culture and beauty.

I am confident that the future of the Croatian real estate market will be characterized by moderate but steady growth, making it attractive for anyone looking to confidently invest their funds in a reliable and growing economy.