The Right Time to Purchase Real Estate
The end of the tourist season marks the beginning of the audit of the financial results of the tourist season. This is also the time when many important decisions are made in terms of future investments. According to numerous sources, this season was the best season on record. According to Bloomberg, this year, the revenues in Dubrovnik increased by 24 percent compared to the same period last year. Even prior to the release of the official figures, we can safely say that the tourism sector in Croatia is sure to reach a 10 percent increase this year, from 10 billion euros in 2016, making up more than a fifth of the economy.
However, even though we are the number one destination in the Southern Europe among other European Union members, it is obvious that we are lagging behind in terms of per visitor spending. In line with the trends in the rest of the region, we are also striving to avoid tourist congestion. Mr. Gari Cappelli, the Minister of Tourism, in cooperation with other officials, is conceptualising a new approach that will focus on increasing the average per visitor spending in the upcoming period as well as on increasing the number of visits beyond the summer months. The same plan has been announced in the City of Dubrovnik primarily by decreasing the number of cruise ship visitors, that is, by limiting the number of cruise ships for the purpose of preserving the ancient stone walls of the Old City in accordance with the UNESCO recommendations. That should ensure more space for overnight visitors who would also generate higher spending.
In addition to the domestic investors who believe there are investment opportunities, more and more foreigners are becoming interested in houses on the coast. If we observe the situation on the real estate market, it becomes quite clear that the prices of real estate on the Adriatic are continually growing. During August, house prices were the highest according to the data from the Crozilla.com classifieds. Dubrovnik was in the first place with the price of a square meter, including the price of the yard, costing an average EUR 3,959. In Opatija the average asking price for a square meter was EUR 2,273 and EUR 1,991 in Split. Potential foreign buyers, mostly from the neighbouring Bosnia and Herzegovina, Germany, Switzerland and Slovenia, were mostly interested in houses for sale in the area of Zadar and Crikvenica, and the islands of Vir and Krk.
Apartments are still more expensive than houses. During August, the apartment prices were higher than the house prices. The difference amounted to 18 percent according to the data from the Crozilla.com classifieds. If we observe the prices in September, we can see an increase on the monthly and the annual level. In comparison to August, the average asking prices for apartments increased by 0.3 percent during September and by nearly 5 percent on the annual level. The highest prices in September, but also the highest monthly increase, were, as expected, noted on the Adriatic coast. Just like with the houses, Dubrovnik remained in the first place as the price of a square meter increased by 2.1 percent and reached EUR 3,874 during September. Opatija is keeping up with Dubrovnik as the apartment prices there additionally increased by 0.2 percent and reached EUR 2,958 per square meter.
Why would this be the ideal time to buy real estate on the Adriatic coast? As the tourist season nears its end, the number of inquiries by foreigners interested in buying real estate is decreasing. The announcements made by the Minister and the city officials regarding the new approach to the tourist offer is sure to generate a need for more accommodation units. And, in the end, the most important thing – the increase of real estate prices in Croatia is the result of an increase in the “seasonal demand“.
The Croatian Chamber of Economy explains the main reason behind the price increase; the two percent growth of the real estate prices is primarily of temporary character, and this is the standard seasonal growth that starts in May of each year and continues throughout the entire season, primarily in areas popular among tourists, such as the coast and Zagreb. The “seasonal demand“ decrease is a good investment opportunity.