THE LETTINGS MARKET

Currently, Croatia is not the location for buy-to-let investors or those seeking to cover their costs through rentals – you simply won’t make your money back on the same scale as you would in Turkey or Tallin. That’s not to say there isn’t demand – the rentals market is just not keeping pace with the burgeoning property market, especially in areas such as Dubrovnik, where property prices are four times higher than northern Istria, yet rental values are only 1.5 times higher. The rental season is also shorter than in countries such as Italy and Turkey.

Renting an apartment in a place like Zagreb is relatively expensive thanks to the large numbers of UN personnel who have populated the capital, causing rents to rocket, particularly for city centre apartments. The cost of renting on the coast is dependent on the time of year, although you can expect to secure an average rental income of 7% per annum.

Despite all this the market is constantly growing. An article in The Sunday Times recently highlighted the shortage of villas that are available for rent in Istria when compared to the huge demand in the area.

While the opportunities for long-term lets are limited in the coastal areas, the potential for short-term lets is growing fast, as media and tourist interest continues to expand. The season has begun to extend and the future for year-round lets will continue to improve once the many golf course projects are completed. Istria is ideal for winter golf, and could soon be home to up to 21 courses and residential complexes.

An apartment represents a more lucrative investment than a house due to better rental potential and lower maintenance costs. Expected annual rental income is €4,000 to €6,000 in Istria, €3,000 to €5,000 in Dalmatia, and €4,500 to €7,000 in Dubrovnik. Zagreb is not suitable for holiday rentals but long-term rental income can yield anything from €400 to €600 per month.

RENOVATING A PROPERTY

You shouldn’t have too many problems finding a builder who is willing and able to renovate your property, although they may be harder to find in the summer when many are employed in the tourist industry. An architect should be able to advise you on the renovations and put you in touch with reliable builders and you won’t need to secure planning permission to carry out minor renovations. However, the bureaucracy in Croatia can make the process very unreliable, so make sure you triple check the requirements for building construction or renovation before applying for planning permission.

While the cost of materials is about the same as that in the rest of Western Europe, wage levels are around a third of their UK and Irish equivalents, meaning the labour costs are lower.