Price of land

[Dee]

Does anyone know what price land is per sq.m. that DOES NOT have planning permission? We are almost certain that a small plot next door to our house will never get planning permission, yet the next door farmer who owns the land, and wants to sell it to us, is asking a ridiculous sum of money.

The Croats are learning to be very canny about what their houses and land are worth to foreigners, and will do their best to drive you up in price all the time. We had a very bad experience, and ended up paying nearly 100% more than the original asking price. Hopefully, what seems like an awful lot now, won't seem so bad in a few years time!

[Mark]

The price of land with no planning permission should be very cheap. But then again, I guess if someone asks a high price and doesn't budge...there's not too much you do.

[Kaskader]

Price of land depends on its location. And the difference can be 5-20 Euros per square foot. What is the location of your interest? I might be able to tell you more precisely if I knew the location.

There are many popular location around Zagreb where the price of land is super high, and this is not because of people asking ridicolous sums of money from foreigners, but because people are willing to pay the sums. 95% of this land is not sold to foreigners but to locals. It is the suply and demand law.

I am curious...you say you do not know what the price per sq. m is, but you know that the owner is asking ridicculous sum of money!? I do not get it. If I did not know what the price of a 5 bed semi in Kensington is, it would definitely sound ridiculous to me that the owner is asking £3.0 mil.

Secondly, if the plot of land is next to your house, which was hopefully built with planning permission, it is almost certain that this plot of land has got the planing permision too. I could be wrong, of course.

The Croats are learning to be very canny about what their houses and land are worth to foreigners, and will do their best to drive you up in price all the time.

Is this typical to Croats, or elsewhere people do their best to sell something their forefathers owned as cheep as possible? Or they are just as smart as British, particulary in West London where half of the population are foreigners and a price of three bed purpose build flat in Notting Hill 4 years ago was £200K and two years ago was £400K. More and more foreigners ocupy West London and owners are driving the price up. Why is this phenomenom strange in Croatia? Should people elswhere in the world (except Britain) welcome foreigners with: "Here, have a piece of land for a tenner!"

I guess, my point is...it has nothing to do with Croats, British, Greeks, Spaniards...it is simple economics and simple trade. British thought the trade to the whole world and I guess everyone else learned from the best.

I bought a couple of properties in UK and guess what..both of the owners were driving the price up, none of them sold me a house cheaper than I was willing to pay.

Was this because I was a foreigner? I do not think so.

We had a very bad experience, and ended up paying nearly 100% more than the original asking price.

Now, who is to blame? The owner?

[Anja]

I would agree with Kaskader here.
It happened to few people I know, there were not foreigners at all, and the position of the plot was not on an attractive place either.

[Kaskader]

If for instance I want to buy a piece of land next to my property that is owned by a farmer...and market price is around £10K. Just because the market price (which is arbitrary) is £10K that does not mean that the farmer has to sell it to me for that price. Because to him it might be worth more than that. He might not be willing to sell it to me for £100K. He does not have to sell it. But he might be willing to sell it for £150K...and I might be willing to pay that price.

The farmer is not to blame, he does not have to sell it at the market price or even ten times above market price. But if I offered 15 times the market value he might sell it. And I bet, this is the case all around the world...it is not typical to Croatian land owners nor did they invent this practice. However, Adam Smith (British philosopher often reffered to as the father of modern economics) said:

"Every individual necessarily labors to render the annual revenue of the society as great as he can. He generally indeed neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."(The Wealth of Nations).

[nik]

The difference between the asking price in the UK and Croatia is this:

In the UK there is a genuine housing shortage and getting permission to build houses in the south east where all the jobs are is very difficult, therefore the prices represent the market conditions.

The prices in Croatia on the other hand are driven by the speculation that the market is and will continue to rise. There is no shortage of housing and there is no problem with a shortage of land. It's just people being greedy.

What goes around comes around though: people living in the south-east aren't any better off because of the high cost of housing, you still need to live in a house. So eventually the Croatians will price themselves out of the market and the locals will complain that they can't afford any property. As is happening here in the UK.

[Mirko]

Nothing wrong in being greedy, and if you are a buyer nothing wron trying to buy as cheap as possible. This is capitalism.

IIMO, the property market will still rise in prices and probably double in the next 2 years.

[Kaskader]

Nick,

Another argument which in my opinion is totally wrong. The market price is not set by a seller, but by a buyer. Market price has nothing to do with the sellers being greedy, but with the buyers being willing to pay any price. The seller can be greedy as much as he wants and he can set a price per sq. f 1 mil...but this greed would have never had any meaning unless the buyer comes along and is willing to pay this milion.

I trade stocks and am also involved in properties, and it has always been clear to me that unles there are people willing to pay, the price set by seller is meaningless.

There are uncontrolable forces in most of the markets, so it is the case with the property market. Any investment is started with the view of prospective rise in value...and as long as there is contining demand for any property I just cannot accept "greed" theory, particulary on the part of seller. Why is the seller greedy and not the buyer who buys this property and probably already has got another five properties? There is certainly possibility that the prices will downfall, but the reason will never be the fact that sellers were increasing the price during increased demand. The reason will be decreased demand.

Can you guys tell me one market where price decreases at the times of increased demand? In the last five years there has been huge increase in demand of Croatian coastal land and properties. I guess, your
theory is that owners should be lucky someone wants to buy their land and they should in no case increase the price, but preferably decrease?

Ok, you have a land to sell, and the arbitrary market price is £100K....I come along and I am willing to pay £200K...just because I might not be well informed or I think that the price will in two years be £400K.....and I call you greedy? I do not think so.

It is not seller gready, in most of the cases it is buyer who thinks he will in few years get a great return. I found it funny, when first time buyer comes along..he/she starts winging about high prices, but when the same person in a year or two turns into seller, he/she does not mind high prices suddenly. No winging then..."uh how bad that the prices are so high, I am going to have to make a profit of 50%...too bad".

I tell you what I think is the case here. One of the first rules of property investment is that you should not think you will make money when you sell, but when you buy. The most money is made when property is bought below market value. It just might be the case that the owners in Croatia are not so stupid and uneducated as maybe some more sophisticated investors thought..and somehow Croatians know this rule too.

Anyway... you guys who are buying properties in Croatia now and are not happy with the prices, when in a few years you turn into sellers, please give me a call because surely you would be willing to sell me your property for much less than some other block will be willing to pay.

[nik]

Like I said before, first time buyers are no better off when property goes up unless they move to a different country or die. The house I live in has gone up a lot in value but so has everyone else's. How does that make me better off? I still have to live in a house, in fact I am worse off due to government taxes being larger on a more expensive property.

[Mala]

Foreigners buying in Croatia are not first time buyers: most likely they are taking advantage that their houses went up in value many taime over the intial price.

[architect]

From my own experience vendors are often just having a punt with their sale prices because they don't have to sell or indeed don't even want to, except at a price that exceeds what the local market can stand.

It is a wrongly formed opinion in my view that non croatian buyers are willing or miss informed enough to pay any amount of cash for property (except russian buyers or so i am told), and nor should they, when the market settles and sale prices regulate themselves you may of course find yourself in the position of having paid too much, but then again you may not.

I was told by a croatian agent that no one he knew was selling any thing if they thought they was further growth in it?

What you almost never find won't find in the UK is for example; a vendor doubling the asking price of their property pre contract in the hope the buyer they negotiating with will swallow it - as has happened to me.

Poor old Dee how ever may even find he is being offered argricultural land (from a farmer!) which is totally worthless to him.

[Dee]

Thank you 'junior member and architect' for your comments - I'm sorry that you had a bad experience too.

Kaskader - just to set the record straight about our house purchase, I shall try to explain what happened.

We agreed a purchase price with our vendor which was in fact 10,000 euros more that the original asking price - fine, we were happy with that. Having got all our finances in order and money wired from the UK, we received a phone call via our solicitor, who by the way was acting for the vendor, saying that he had accepted an offer from a German for 25,000 euros more. A few days after that, he contacts our solicitor again and says that he no longer wants to sell to the German, but would rather deal with us. The problem being that the German had signed a pre-contract, and in order to break the deal he would have to refund the deposit of 25,000 euros, and pay him another 25,000 in compensation. Therefore it could be ours for an extra 50,000 euros!!!

Now, Kaskader, I can hear you saying 'he can do what he likes, so walk away'. That, of course, is what we should have done, but when you have had two previous experiences of trying to buy a house that the vendors did not actually own, despite the agents advertising them with clean papers, you do now want to go on wasting more time and expending more money. Therefore, when you finally find one that has 'clean papers', you don't want to lose it.

The fact that we proceeded was our decision because we loved the site, the view, the people and the country, but we did not like the way we were treated. This is just one example of how 'canny' some Croats can be!

Our house has a very small plot of land right next door to us which belongs to our neighbour. He is a farmer and only uses this strip to plant a few extra cabbages. He needs to go across our garden to get to it from the other side of us, where his (empty) house is. He admits that he has no use for it, but wants 20,000 euros for this piece of agricultural land. I suppose that we could forbid him to use our walkway, but I can't be that petty, I just think that he would be better not to be quite so greedy! We would happily purchase it for a fair price, but what is a fair price? 20m x 5m

Until house buying in Croatia is regulated, there are going to be many, many stories of disappointed and angry people trying to purchase property - particularly when agents and solicitors appear to act for both parties in the main, and take fees from both vendor and purchaser. We have heard so many stories of ruthless agents, and disillusioned buyers - it does not do the reputation of the lovely Croatian people any good.

The other point to make is that the country has the most wonderful inheritance of beautiful houses, sadly abandoned in many cases because of the war. It is far cheaper for the remaining families to buy a plot of land and build from scratch, than to renovate the old property. I know it is very sad for the residents of these houses to have to sell them as there is no alternative for them, but isn't it better to sell to 'foreigners' who appreciate the beauty of these older properties and don't want to see them falling into total neglect and disrepair.?

[Kaskader]

Dee...I can only say that I understand you. My house in Croatia would do well if I could buy aproximately the similar strip of land that is owed by a farmer who does not use it for absolutely nothing. But his price was too quite funny and I walked away. After a few months, I hear that he is willing to reduce it. Until I hear what I want to hear, I will not be bothering to negotiate.

In your situation it may be that the farmer will come to senses as he sees that you are not "buying".

In any case he does not have to sell it for any price...this sort of things I beleive happens in Spain, Greece, Florida or Devon.

I am sorry about your awfull experience with property purchase in Croatia, particulary your last dealings with agents. That was quite bad on their part.

Now, Kaskader, I can hear you saying 'he can do what he likes, so walk away'. That, of course, is what we should have done, but when you have had two previous experiences of trying to buy a house that the vendors did not actually own, despite the agents advertising them with clean papers, you do now want to go on wasting more time and expending more money. Therefore, when you finally find one that has 'clean papers', you don't want to lose it.

In my opinion two previous experiences should be enough education to unemotionaly walk away from the third.

But, I understand the difeence. You guys are not simply investors, who do not bring emotions into deal, you wanted to buy something for yourself, something you like or fall in love with.

I had a girlfriend once I was in love with. But... boy was she taking me for a ride. Beacuse I loved her and did not want to wast time with other girlfriends (deals)..I was paying the price.

That thought me it is not always the best idea to open up totaly at the very begining.

Investors in properties never fall in love with the property but with the deal, and are always prepared to walk away.

If you "pretended" to be an investor and if you showed clearly that you are at any time prepared to walk away if something dogy starts developing, maybe the situation would be different.

There are so many fantastic properties and deals of the century in Croatia which appear at least once a week...particulary when people sell themselves, advertising in the papers which are equivalent of "free adds".

I am even inclined to think that agent was using imaginary German who was biding for the same property, it is possible that there was no German at all.

Until house buying in Croatia is regulated, there are going to be many, many stories of disappointed and angry people trying to purchase property -

Agree...but until than it is much more possible to find the deal of the Century and buy BML.

In Spain, there are more regulations and this business is well established, but you still watch on tv horror stories.

[Anja]

Kaskader said:

Dee...I had a girlfriend once I was in love with. But... boy was she taking me for a ride. Beacuse I loved her and did not want to wast time with other girlfriends (deals)..I was paying the price.

;D ;D ;D

[Anja]

Dee said:

Thank you 'junior member and architect' for your comments - I'm sorry that you had a bad experience too.

Kaskader - just to set the record straight about our house purchase, I shall try to explain what happened.

We agreed a purchase price with our vendor which was in fact 10,000 euros more that the original asking price - fine, we were happy with that. Having got all our finances in order and money wired from the UK, we received a phone call via our solicitor, who by the way was acting for the vendor, saying that he had accepted an offer from a German for 25,000 euros more. A few days after that, he contacts our solicitor again and says that he no longer wants to sell to the German, but would rather deal with us. The problem being that the German had signed a pre-contract, and in order to break the deal he would have to refund the deposit of 25,000 euros, and pay him another 25,000 in compensation. Therefore it could be ours for an extra 50,000 euros!!!

Now, Kaskader, I can hear you saying 'he can do what he likes, so walk away'. That, of course, is what we should have done, but when you have had two previous experiences of trying to buy a house that the vendors did not actually own, despite the agents advertising them with clean papers, you do now want to go on wasting more time and expending more money. Therefore, when you finally find one that has 'clean papers', you don't want to lose it.

The fact that we proceeded was our decision because we loved the site, the view, the people and the country, but we did not like the way we were treated. This is just one example of how 'canny' some Croats can be!

Our house has a very small plot of land right next door to us which belongs to our neighbour. He is a farmer and only uses this strip to plant a few extra cabbages. He needs to go across our garden to get to it from the other side of us, where his (empty) house is. He admits that he has no use for it, but wants 20,000 euros for this piece of agricultural land. I suppose that we could forbid him to use our walkway, but I can't be that petty, I just think that he would be better not to be quite so greedy! We would happily purchase it for a fair price, but what is a fair price? 20m x 5m

Until house buying in Croatia is regulated, there are going to be many, many stories of disappointed and angry people trying to purchase property - particularly when agents and solicitors appear to act for both parties in the main, and take fees from both vendor and purchaser. We have heard so many stories of ruthless agents, and disillusioned buyers - it does not do the reputation of the lovely Croatian people any good.

The other point to make is that the country has the most wonderful inheritance of beautiful houses, sadly abandoned in many cases because of the war. It is far cheaper for the remaining families to buy a plot of land and build from scratch, than to renovate the old property. I know it is very sad for the residents of these houses to have to sell them as there is no alternative for them, but isn't it better to sell to 'foreigners' who appreciate the beauty of these older properties and don't want to see them falling into total neglect and disrepair.?

Sorry to hear about your experience.
I believe there was no German at all!
I would be great if you post the name of the agent so
others would't fell into the same trap.
I think that there should be a list with "bad" agents names on this board.
Same time, I believe there is a Croatian body which deals with these types of cases, maybe you should write to them.