Global crises had a profound effect on Europe and especially on the Mediterranean countries. Croatian Mediterranean coast was also heavily impacted in economic terms. Real estate market, together with tourism as a primer propeller of economic growth before the crises, suffered beadily. As a consequence, prices on the coast became much more affordable compared to pre-2008 period and the market much more demand-driven. We witnessed the swift recovery of incoming tourism demand as early as 2009 and we have been experiencing strong growth of the tourism sector ever since, although the rest of the economy is still in recession.
Major demand propellers of the coastal real estate market presently manifest themselves as short term demand for second homes and long term demand for strategic projects in healthcare and golf facilities. Several researchers have indicated the Croatian coastal area as interesting in perspective as target markets not only for tourist, but also for international migrations of retired persons.
Although the entire Croatian coastal area is very popular in terms of classic tourism demand, six major airports along the coast, combined with quite developed healthcare infrastructure in the vicinity of major urban areas (Pula, Krk-Rijeka, Zadar, Split-Šibenik, Brač and Dubrovnik) are mainstream targets for the second home market of the retired persons residing in north and western EU countries. Cheaper healthcare services, high quality airline connections, lower price level compared to Spain, Portugal and Greece (measured via Purchasing Power Parity and Purchasing Power Standard) and economy that is lagging out of recession are turining Croatia, a new EU member, into a new rising star of second home real estate market.
When it comes to golf/resort projects for tourism and out-of-season second home real estate market, local and national political and economic conditions are almost perfect for big investment projects. Priority number one of the Croatian Government in its fight against five year-old recession is to offer all the necessary support in order to attract foreign direct investments.
Local real estate market of the area between Šibenik and Split are one of the most popular areas for tourism due to excellent network of highways, two big airports and huge variety of natural attracts such as national parks of Krka and Kornati, natural park of Telaščica, and several ancient cities such as Zadar, Trogir, Šibenik and Split. When it comes to second home for retirees, extremely high percentage of sunny hours, two major airports within the 60 minutes drive and network of major hospitals in Zadar, Split and Šibenik are turning this area into a big potential.
When it comes to price levels, they are quite high along the coast compared to Croatian averages, but still much more affordable compared to pre-recession period and/or other competitors of Croatia. Furthermore, living expenses in Croatia are lower if compared to Italy, Portugal, France, Spain, Portugal and Greece (according to PPP and PPS) which means that for a given income, living standard of potential retirees in Croatia is much higher compared to all other EU Mediterranean countries.
Forty years of tradition of work in tourism along the coast, combined with a huge number of Croatian citizens working abroad (Germany, Austria, Italy, Sweden, etc) resulted in a huge number of fluent English, Italian and/or German speakers along the coast who are conveniently making the language barrier much smaller when compared to Spain, France or Italy (for northern Europeans).
Present lagging recession combined with slow recovery of tourism sector are still creating deflationary pressures on real estate market and the EU membership (scheduled for July 2013) will open Croatian economy and real estate market to a profound impact of international migration of not only labor force, but also of the retirees (especially from north Europe). Such an environment is making moderately priced coastal and hinterland areas of Croatia a potential for an investment and/or purchase of a second home.
Author of the article
Prof.dr.sc. Josip Tica
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