Has you made a profit?

[Ribaric]

It certainly seems that way. What intrigues me is that, in all other ways....selling cars, market produce, scrap metal etc... there appears to be a "normal" take on value and pricing. Why is property viewed in this cock-eyed way? I get the feeling from my limited contacts that there is a fear of selling below value and when the bloke next door tells you your property is worth zillions (probably because he wants his similar property to be valued similarly) then it feels bad to sell yours for less. I'm sure it has something to do with losing face. Still, the end result is 99.9% the same: No sale.

[mark2]

You must bear in mind that selling property is a relatively new concept to many Croatians, as it used to be "a house for life and family" passed down from father to son. As they realise that some Johnny Foreigner has bought a house in their town, they begin to wonder, as the rumours spread about how much the house sold for so do the aspirations. We have had one chap who upped the price when interest was shown on his property, we immediately deleted it from our books and website, he was very angry but noone else has done it since. The properties which you mention which are for sale for 18 months and the price keeps going up, are obviously owned by people who don't need to sell and are playing a valuation game.

[mambo]

Not really if you ask me.

Here in Porec (and I think it is the real estate agent that Ribaric was talking about) are photos of the houses in the windows, complete with description and on all the houses (perhaps 30) the original 'printed' price was crossed out with a pen and the new price was written in with a red marker.

Perhaps the idea is to give the tourists the impression that if they wait longer then the price will go even higher.
Obviously this agent has no clue about the demand and supply rules, wonder how long he will stay in business like this.

[onetoten]

Interesting to read all these replies. I have been owning here in Sibenik, by the sea, right by the sea, for 2 years, and the market confuses me totally. My house, up and running, and I'd take a 10p profit on it, or even a loss. As`I see no real market, for Croats or for outsiders. And after all this time my understanding of Croatia is...I really don't understand the place, and don't have time, or want to understand the place. What I have seen and learned is not for me. Croatia, allegedly about to join the EU. They will kick and scream to get there. Their entire culture, which they cling to like grim nationalist death, about to be thrown out, totally.
I wonder. Anyone wanna buy a place. Contact me.

[mark2]

If you are right by the sea in Sibenik and cannot sell your house, the only reason I can see is that you paid to much for it or the papers are not properly sorted out, or possibly both. As for your statement "I see no real market, for Croats or for outsiders". We are currently flooded with enquiries and requests from both Ex-pat Croats, Americans and Western Europeans, true! certain people have certain budgets, many which are unattainable now.....a 3 storey beachfront house with land for 80,000 Euros. NO WAY! Which country can you can you buy that? and I will up sticks and buy the front row!
But a small word of comfort from myself is that interest is growing month by month.

[mambo]

In that case you should go to Curacao and buy half the city !

You think that 80,000 euro is peanuts for the front row, because you compare it to what you would pay in another country and that my friend is the basic mistake almost every foreigner makes.

The question is not 'what would it cost in my home country' ?

The question should be 'what is the economic value of this property' ? and then you will find a completely different answer.


As an example.

Why do you think the market in Romania is so hot ?

Is that because all of a sudden there is a huge amount of economic activity ?
Is it because all of a sudden they found gold or oil ?

No, nothing of that.

It is only because rich Westerners are now competing against each other to buy what they think is 'cheap'.
Cheap being cheaper than what they would pay at home.

The value of the houses has not changed, the economic activity has not changed, the houses have not become more beautiful, it is just a question of greedy foreigners who hope that one day the price of those houses will explode and then they can cash in.

And the locals ?

Indeed, when they hear a foreigner wants to buy their house they simply ask more money.

Why ?

Because they think that every foreigner is a millionair and can afford it. It is not based on anything, they are simply trying.

And of course there are enough idiots who will say out loud "wow, a house like this for xxxx euro, that is nothing, in London you would pay 5 times that price, what a good deal" !

And the moment an owner hears that he will................indeed, increase the price.

So please, don't give me that crap that a house, a ruin or a collection of stones on the waterfront is worth zillions because it is on the waterfront.
When the war was there what was the value then ? It was still the same house, same waterfront, same sun, same sea, but apparently nobody was buying...........there was a war.
And now, nothing changed and now this same house is worth 1 million euro because it is on the waterfront ?

My a*s*s*

It is greed from the owners, greed from the real estate agents (especially the foreigners amongst them) and the buyers who hope to make a quick buck as well).

But, it has nothing to do with economic value or real value.

[mark2]

With all due respect, you spee in selling ice, we spee in selling properties. We deal with real people, their budgets and aspirations.

I admit it will very in different areas, but our real experience is that the "greedy Westerners" are present but in a the minority, 85% of our enquiries and dealings are from ex-pat Croatians who have moved and worked in richer countries and now wish to buy a second home back in Croatia.

My point about the 3 storey beach house with land is that we still have requests for these (preferably ready to move into and sometimes furnished) and they then explain that their budget is 80,000 maximum. It's absolutely unrealistic, in my opinion these are the greedy ones.

Quote"The value of the houses has not changed, the economic activity has not changed, the houses have not become more beautiful, it is just a question of greedy foreigners who hope that one day the price of those houses will explode and then they can cash in. "


The value of houses has most definitely changed in certain areas, the houses have been restored or finished off, refurbished often to extremely high standards. The economic activity in many areas has increased with tourism, foreign investment and of course the huge upgrading of infratructure.

Does it not make sense to purchase a house which would cost 10 times the price in your home country, is it not "value for money" is it not a wise investment if handled correctly.

QUOTE: "So please, don't give me that crap that a house, a ruin or a collection of stones on the waterfront is worth zillions because it is on the waterfront.
When the war was there what was the value then ? It was still the same house, same waterfront, same sun, same sea, but apparently nobody was buying...........there was a war.
And now, nothing changed and now this same house is worth 1 million euro because it is on the waterfront ? "

Of course noone was buying during the war and mores to the point, who was selling? The property market is in it's development stage and a house is only worth what someone will pay for it.

[mark2]

QUOTE......"In that case you should go to Curacao and buy half the city !"

Just as an aside I have researched the price of coastal property on Curacao, unbelievably expensive, maybe not for Richard Branson or Donald Trump and very expensive to fly to. But I see the Netherlands link. If someone can find me a 3 storey property with land and legal papers on the beach anywhere in the world for 80,000 euros, I'll buy it! if I like it

[mambo]

Mark,

Better start packing and move to Curacao, there are a lot of houses waiting for you.

The ones that you saw are probably the ones on the Spanish Water or near the Marriott Resort. And in that case you are really talking something special.
The Spanish Water consists of villa's written with a capital V, minimum 1000 m2, swimming pools, boat docks and ramps, secured area, 24 hr security and don't forget.....all material is imported from Europe (mostly) by container, which costs a fortune.

But if you move to Punda and Otrabanda (the centre) you will find lots of houses for sale for half your price, in fact nobody wants to have them. At the moment we have over 5000 houses empty in Curacao, everybody moved to Holland and left their house unattended.

You can even by a complete ruïn, usually a sixteenth century mansion for the price of 0,50 euro. You only have the obligation to restore the house and for that restoration you can even get a subsidy. For roughly 200,000 to 300,000 euro you will be living in a house which will be worth well over 1 million (actual building cost) and it will be identical to the original (they even use the original drawings).

If you would like to have some land there, view of the sea, I am more than happy to sell you my land, 1000 m2 with building permission for a nice price. I am not going to be in Curacao for quite some time and it is dead money at the moment.

And the cost of flying to Curacao ? For 399 euro you can fly Amsterdam to Curacao, is not that bad.


And you were looking for additional property on the beach anywhere in the world. How about Venezuela, Colombia, St Vincent, St Lucia, Belize, Puerto Rico, even Cuba, Haiti, jeez I can go on and on like this.
A friend of mine moved from Curacao to the Dominican Republic, bought himself a house on the beach, next to a hotel, has the time of his life and spend the total amount of 30,000 USD on that house (3 bedrooms, 2 bathrooms, living, kitchen, porch, big garden and........15 meter from the water edge.....not bad.

[mambo]

But coming back to Croatia.

I always have to laugh when people tell me that 80,000 euro is nothing. If we translate that into old DM or NLG we are talking about 160,000 DM or 175,000 NLG and that is quite a lot of money. Just the fact that in euro we cut the price in half does not mean that all of a sudden it is nothing.

The whole idea behind the prices in Croatia is speculation, pure speculation and nothing else. Here in Istria any idiot starts building a house or an apartment. Why ?
Because he can build (incl the land) for 700 - 800 m2 and he can sell it to stupid foreigners (who have no clue about the real value) for 2000 - 2500 euro m2.

Is this then all of a sudden the real value ?

Of course not, it is more what we call 'what a fool will pay' and if that fool does not show up today we will wait until he shows up tomorrow or the day after, but one day that fool will show up.

There is no economic reasoning behind the price, no price calculation, it is just 'stick your finger in the air and there is the price.

If I go to a real estate agent (a good one) in Holland he can tell me exactly how the value of a house is deducted, up until the last cent. They even calculate in the price the distance to schools, hospitals, roads, trainstations, the neighborhood etc. The technical state of the house is valuated, prices of refurbishing, necessary maintenance etc.

And that is something which does not exist in Croatia at all. You can tell me what you like, you can tell me I am not in the real estate business (which I am not), but the main difference is that in Holland I really would not be able to open up a real estate agency...............here I just register the company and dear tourists here I am.

Most of the real estate agents have no real clue about being a real estate agent. They look at houses as if they are selling ice cream. They hire an office, hang the pictures outside and they will show the people around, tell them stories that they have to hurry up, since other people also want to buy and that is basically it.
They can give you the address of a befriended lawyer and notary (for which they will get a spin off), they know a few guys who can use a hammer and a nail (for which they will also get a spin off) etc.

That is making money, but it is not being a real estate agent.


I understand that you are trying to protect your business, but sometimes it cannot hurt to be honest and admit that people are willing to pay crazy prices for property, on or not on the waterfront. And you profit very well from that since you get a commission of that crazy price. In that case I would also reason that those prices are 'reasonable' and 'normal'. Otherwise I would be saying that my fee is also too much and that would be the last thing I would say.

But then again, if you can find the idiots that will pay those prices then you won't hear me complain. Be my guest and I congretulate you with your sale.

[irac]

Mambo, it is near impossible for anyone dealing in real estate to be above suspicion, in any country, and in Croatia it's worse than most. For over a year my colleagues set about trying to form a union or federation, but when they set down the guidelines (like the partner company in Ireland) the local agents baulked and even a couple of foreign run/owned firms didn't like to get involved. Drive through the Kastels, around Vodice or Trogir and they're ten a penny, as you described, but apart from having a business licence they've little else. They're not in the local chamber of commerce (not that it's worth so much) and most properties on offer are with a half dozen other agencies, so it's like going to a souk, walk along enough and you get a better price for the same place!

I wouldn't call the buyers idiots, prices are crazy, but it's like investing in futures, right now rentals, infrastructure etc might not be the best, but it's investing in a perceived future. God forbid Dalmatia reaches the secession point!

[mark2]

Any property market in the world is governed by speculation as Irac says exactly like futures or shares. I can't see the argument you are waging, do you not want foreigners to invest here, do you not want house prices to increase, if so you are in a minority of ONE. If an agent makes alot of money from selling a house, it says one thing, the seller is happy with the price they got and the buyer is happy to pay that price. What is the problem. If I offer to buy a ton of frozen water from your company for half a million euros, will you refuse?

As i mentioned in an earlier post, most of our interested buyers are ex-pat Croatians, they know the score and if they are clammering to re-invest in their homeland I feel that is a sure sign of this country's future.

[mambo]

First of all, I am not against foreigners investing here or buying here. I am a foreigner and we are also investing here, only in a different way. We add something to this economy, we don't just take it out.

And house prices can increase, no problem, but it has to stay normal. How is it possible that a ruïn in Istria costs as much as the house of my neighbors in Curacao (family house, 2 storey, 800 m2 of land) ? You can not call that real value anymore.

Like I said, if you can find idiots who are willing to pay these over inflated prices then I am happy for you and also happy for the seller and if the one who pays this amount is also happy then so be it.

The only thing that I am saying is that none of the above should make the claim that this is also the value of the house, that this property is also actually worth that money.
I like to compare this to the prices once were paid by the Japanes for golfcourses in the US. The Japanese were buying everything, all the major courses and the Americans were shouting murder when Pebble Beach was bought for 200 million USD. The Americans were afraid that in the end they would not be able to play on their own courses anymore.

The prices those Japanes companies paid were indeed outrageous, but they hoped that the prices would keep rising and then they would be able to offload the courses with an even higher profit.

However, the economy in Japan turned sour and the Japanese companies realized that the actual return on the investment was way below what they had to pay each year. They realized they had overpaid and had to sell with a huge loss.
The prices of golfcourses are now back to normal levels again, more in line with the real value.

And that is the whole thing that I am trying to tell. The current prices of houses are way out of line with the real value. That bubble will burst and then a lot of people will be extremely unhappy.
Who will benefit ?
The former owners, the real estate agent will all be happy. The person who bought it for too much money is the one who is not happy and in the end it will result in a very negative image of the country.

I like to see a more durable market, where it is not the wild wild west. The people that come for the quick buck are the ones who don't give a s * about the country, any place where they can make their money is fine and if they leave a pile of rubble behind them......so be it.

As for our product, we came here to stay, not to make a quick buck during a few years and leave. We know our product is proven all over the world, we keep our prices low, so the product is reachable for everybody and we value customer service. We will make that extra step for the customer if he asks for it, since his business is also our business. We don't always have to profit immediately, we value a long term relationship.

And will I refuse half a million euro for a ton of water/ice ?

The difference is that we don't ask that price (I mean knowingly overprice) and real estate agents do !

And I have already written about the dark side of driving up the prices: locals are unable to buy houses anymore, villages turn into ghost villages (nobody living there in the wintertime), economic activity goes down even further, more unemployment, in all not a situation we should aim for.

[bobsyouruncle]

What a load of nonsense! Property market (and I'm not talking about just Croatia; the principles apply anywhere in the world), is not a reflection of the "real value" of the house (what exactly does that mean - cost od bricks and mortar?), but the value of land on which the property stands, ie the location, which in effect is driven by the supply and demand ratio. How else do you explain a studio flat in London selling above £200000 (290000 euros by the latest exchange rate)?
In every country coastal properties are much more expensive than mainland (just look at French property market for example).

Your argument is irrelevant Mambo, and your liberal use of the word "idiot" does not help!

[ianl]

Exactly BYU. Something that often seems to be forgotten is that something is worth precisely what someone else is prepared to pay for it, that is the whole and fundamental basis of the money system. Is a Van Gogh painting 'worth' $25M? It is if someone is prepared to pay that. If Van Gogh went out of fashion so no one would look at it, it is just oil on canvas. The whole stock market/futures market is based on exactly the same premise.

The things Mambo says are true about a dark side, pricing out locals etc but in an unregulated capitalist system money and value are just concepts, there is no 'true' value, only what is sustainable and that the person who buys believes that they can sell it for more. Once that belief goes in the buying/selling chain then the bubble bursts.