Istria is only a short hop from Venice, and the similarities in architecture and lifestyle are obvious. Another great selling point is the combination of “Italian” culture and food, such as pasta and fish, but with cheaper prices. And all this makes the Croatian coast a seriously viable option for holiday-home buyers.

According to agent Savills, the price of an apartment in Croatia is one tenth of the price of an apartment in London. If you do choose to buy, then capital appreciation – where the big bucks are to be made – is strongest for apartments built post 1990. So if you’re looking to move and make some money, it’s a good idea to go modern – or at least choose somewhere with a good, recent renovation.

Prices have been going up by about 15% a year for the last two years, and with Croatia looking set to join the EU before 2010, market watchers are expecting a further increase of 50% in the next three years. However, data from the Global Property Guide found that of the main locations in the top 38 European countries, Croatia ranked 10th from bottom in terms of prices, and is cheaper than countries such as Greece, Turkey, Romania and Poland.

But it’s also important to note that buying in Croatia can be a difficult process, because there are restrictions on where and what foreigners can buy. This means getting professional advice on any sale is essential. For foreign buyers, the only way to finance a purchase – apart from paying full cash – is either as an individual through a leasing agreement, or by setting up a Croatianregistered company and borrowing through a mortgage. But again, a well-versed, Englishspeaking property lawyer is crucial to getting everything done by the book, and in your interests. As usual, don’t hand over any money until you are 100% certain.

Facts & Figures

AREA:56,542 km²
POPULATION:4.5 million
CURRENCY:the Kuna
COST OF LIVING:74% of the price of living in London. GDP per capita is €9,781.
QUALITY OF LIFE:Croatian capital Zagreb is the 107th best city in the world to live, according to Mercer’s Worldwide Quality of Living Survey 2007.
HOUSE PRICES:across the country, prices grew by 10% in 2007.
RENTAL YIELDS:average annual gross rental yields are estimated to be 6.5%.
AGENTS:reliable agents can be sourced through the Association of International Property Professionals (www.aipp.org.uk), Federation of Overseas Property Developers Agents and Consultants (www.fopdac.com), or sites such as BuyAssociation.co.uk or Overseascafe.com
BUYING TIPS:you can only rent your property in Croatia if you set up a company, which means you will then be subject to 22% tax. If you are denied ownership rights, you can’t resubmit for five years, so take your time deciding.
TAXES:tax in rental profits is 15%, while Capital Gains tax is 25% (if you sell it after after three years it is exempt). There are also local surcharges to be paid.
AVERAGE PRICES:average prices are €2,555 per m2. In Dubrovnik, prices are approximately €215,000 for a 55 m2 apartment, but Istria and Dalmatia are considered less expensive.

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