Dubrovnik Property

The concept of near-shoring as opposed to offshoring is rapidly developing as many Western European countries capitalize on the lower costs of living, housing, commercial space and staff in Eastern Europe; and a recent report commissioned by Thompson Holidays in the UK revealed that the number of UK citizens now classed as overseas commuters has dramatically increased.  One country witnessing a boom in near-shoring activity and an influx of overseas commuters is Croatia, and in the Croatian city of Dubrovnik property prices are beginning to soar as a result.

Near-shoring is gaining popularity because countries like Croatia which are positioned to join the EU in the next few years place no restrictions on companies doing business from within their borders, in fact they actively encourage companies to near-shore because it creates employment, boosts the economy and generally has a positive effect on the country.  However, in Dubrovnik property prices are rapidly spiraling upwards out of reach of the local Croats and the country is beginning to worry about the long term effects this could cause.

Dubrovnik is one of the main cities cited by the Thompson Holidays report into the development of an overseas commuter belt as increasing in popularity with those who herald from the UK originally but who will either be looking to live abroad and find a lower cost of living, or who will be working across Europe and therefore looking for a central location in which to reside during the working week.

The rise in popularity of this ancient and walled city has resulted in startling price increases.  Dubrovnik property for sale within the ancient walls of the city is now reaching the heady heights of almost GBP 7,000 a square meter putting the properties on a par with those for sale in Kensington and Chelsea, the most expensive districts in London according to Slavica Gavranic from Dubrovnik Sun.  Outside of the city’s walls properties in Dubrovnik are available for sale for a similar price per square meter to Fulham in London and anyone now looking for affordable Dubrovnik property will be surprised by the prices estate agents are asking on behalf of their clients.

The Croatian government are actively aware of the price increases and are watching as the main cities and employment centres across the country follow suit.  Many local people who own land and property in Croatia are currently happy to sell to achieve the short term gains available, but the government has clearly read a few history books and realised that in countries where land is sold off and a large influx of international citizens follows and then further profits from Croatian land and real estate assets, resentment is harboured.  The Croatian government neither want this situation to occur nor do they want local citizens priced out of the property market which may well lead to a house price crash and an economic destabilisation in the future – but what can they do?

According to the terms Croatia signed up to in order to achieve EU admission the nation has to further simplify and expand its property market to allow citizens of all other EU member states an unrestricted right to buy and sell freehold property in Croatia.  Property analysts keeping a close eye on the situation suggest that Croatia may appeal to Brussels and ask them for similar clause in their accession terms to that which Slovenia had in place back in 2004 to allow a transition period towards total acceptance of the right of all EU citizens to own freehold property in Dubrovnik and elsewhere in Croatia.  Such a clause would restrict the activities of international property investors, restrict market expansion and generally slow the housing market down – however those hungry for the obvious profits to be made from property in Croatia are already finding ways around any potential restrictions by forming basic Croatian companies through which to purchase and own land and real estate.

The situation in Croatia and in particular in the city of Dubrovnik is interesting and worth keeping a close eye on.  Clearly the demand for Dubrovnik property is not abating and if the report commissioned by Thompson Holidays is right - and we have no reason to believe it is not! - Dubrovnik ain’t seen nothing yet in terms of the volume of overseas interest in its property for sale making it a potential property investor’s paradise…

Special Reports: Property News for Croatia

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