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Post by Carol on Mar 12, 2006 22:37:01 GMT 1
Can anyone give me some colour as to what rents can be expected from tourists in the summer? We are estate agents and when we take on a property for sale, we ask the owner, if relevant. The replies we get are so varied, most of them must just be saying the first (big) number which comes into their heads! Also how long is the season?? 6 weeks, 10 weeks, 20 weeks or 6 months?! My own observation would put it at 10 weeks, but again I hear such diverse replies from the people who actually let out their homes.
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Post by Graham - Bosmere on Mar 12, 2006 22:48:40 GMT 1
It depends on the area of the country, but we have had clients in Croatia and Montenegro throughout the winter and this trend appears to be getting stronger each year. However the numbers are still small but with the Wizz and Easyjet flights to Split I would imagine that the demand in the Kastela area would increase greatly from what has been a very short season in the past. In other words don't base things on past years, look to what the future could offer and if the property is suitable for out of season lets. Heating would be a good idea!
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Post by Carol on Mar 13, 2006 0:48:02 GMT 1
I'm hoping the season will extend too, last year the best months weather-wise were May & June, but the tourists missed it because most of them came in July & August.
We don't just cover kastela. we cover Vodice to peljesac. Kastela just happens to be a middlish point on the coast, and next to Split airport and my question was for all areas in Dalmatia - apart from Dubrovnik which we do not cover.
When people tell us their prices, some say €50 per room per night, others €100, others €70 per bed, irrespective of how many . The thing is, it doesn't seem to be based on desirability of location, facilities or quality of accommodation.
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Post by mambo on Mar 13, 2006 1:26:17 GMT 1
I can only speak about the North, but in fact............I think the figures are here better than in the South, with the exception of Dubrovnik perhaps.
The official season starts at the end of April and ends in October.............but good luck finding any tourist in April, May and mid-September - October. Most of the tourists are then staying in hotels or on the campgrounds (the seasonal tourists). The real season is between 15 July and 20 August. Before that time and after that time it is relatively quiet. In August you will find the Italians and in July you will see the Germans, Austrians and the upcoming Czechs (last year almost 900,000).
Here in Istria, Porec (which is the city in Croatia with the most tourists according to the bureau of statistics), the season has become extremely short. Many people told me that they rented their appartments all summer long, 3 months continuously and so I became curious.
What I found out is that all these claims are just ...............empty claims. Each time they had another excuse why the tourists did not come or why the appartments were empty. If never occurred to them that their rediculous prices could be the reason. A friend of mine has 6 appartments and not even in August was he fully booked, June he only had a couple from Germany for one week (so 5 empty appartments), July was a bit better with a couple of appartments rented for 2 weeks. My neighbors are very open to me, they have 3 appartments and last year she had a total (after deduction of all the cost) of 3000 euro (Nett) The owner of the place where I am has one other appartment besides the one I am using and last year this appartment was rented for the full ONE week ! My neighbors behind me have 12 appartments and they are about to go bankrupt, they rented only 4 appartments for 2 weeks in August, rest of the time it was empty. Neighbors on the other side of the road did a bit better, 6 appartments, all rented in August, 3 or 4 rented in July for about 2 weeks and they even had one appartment rented in September !
On average I thinkg we can safely conclude that, if they are lucky, they will rent the appartment for a total of 30 to 45 days MAXIMUM. Of course there will be some who will have better occupancies, but they are also the ones who actively market themselves on the net, in the papers etc.
The ones that don't do any special marketing will come to the figures mentioned above and it will get worse, because the building spree is continuing while the number of tourists is going down. We already have overcapacity, but it will only become worse.
The prices they ask are also getting rediculous. Two years ago an appartment was 50 - 55 euro per night, this year they will ask 75 euro per night. How do they get to these prices ?
Each year the local govement will publish a list with the prices they can ask for an appartment, but there are many who simply stick their thumb in the air and say: 'well, I think this year I will ask this much'.
The best reasoning however is what I call Croatian logic. They have a mortgage and let's say they have to pay 5000 euro. They will simply look at the total number of days they rented the appartment last year and they will divide the 5000 by that number, that will be the rent. It doesn't matter what the apparment looks like, doesn't matter where it is located, this is the way they go at it.
You don't have to be a rocket scientist to predict that more tourists will simply pass by, looking for cheaper accomodation. For a family of 4 Istria is becoming an extremely expensive affair.
So what is your return on investment per appartment on average. I think if you can make anywhere between 2000 and 2500 euro (gross) a year on an appartment you should start applauding yourself. And on an investment of 70,000 euro (minimum) I don't call that a real good return. That 2000 to 2500 euro will leave you 1800 to 2200 euro nett, if you are lucky, after the cost of renting are deducted, but it is before taxes. Be aware, if you are owner as well as user of the appartment you can safely reduce the amount to 1000 euro max.
But for sure, if you go to visit the local real estate agents, everyone will tell you that they always rent the appartments 6 to 7 monts a year continuously. Perhaps I would also say that when I want to sell the place.
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Post by Ribaric on Mar 13, 2006 2:14:26 GMT 1
For what it's worth, I've stayed at the Hotel Hostin in Poreè for a week in late May and another in early October for the past two years (seminars). it's been basically empty on each occasion, much like the rest of Poreè.
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Post by lojalnost on Mar 13, 2006 2:51:17 GMT 1
So what is your return on investment per appartment on average. I think if you can make anywhere between 2000 and 2500 euro (gross) a year on an appartment you should start applauding yourself. And on an investment of 70,000 euro (minimum) I don't call that a real good return. That 2000 to 2500 euro will leave you 1800 to 2200 euro nett, if you are lucky, after the cost of renting are deducted, but it is before taxes. Be aware, if you are owner as well as user of the appartment you can safely reduce the amount to 1000 euro max. But as a longer term investment, say over 10 years or more? A lot of wealth is held in property, don't forget that.
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Post by mambo on Mar 13, 2006 10:38:58 GMT 1
As a long term investment ?
Meaning you want to make a profit on the sale of the appartment ?
Is possible, but don't forget you also have the maintenance costs and taxes of the apparment during that time. And only if you bought the appartment already a few years ago you may see some profit on the sale. I don't think that, if you are now buying for 2000 euro/m2, you will see a lot of profit due to value growth.
For me the whole idea of having an appartment in Croatia should not be 'to make a profit', but more 'that you have your own place under the sun'.
The only way to really make a profit is to buy land and build yourself. That way the 1500 euro/m2 profit that is now calculated in the price goes into your pocket instead of that of the owner or real estate agent.
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Post by Carol on Mar 13, 2006 21:54:15 GMT 1
Hi Mambo thanks for your answer regarding the summer rental market. Its basic economics to know that setting your price for any goods or service to high will reduce the amount of people willing to buy it. The trick is always to optimise your revenue. Its hard to believe that people who have depended so much on tourism for decades, would not work that one out, almost instinctively.
Could you explain more about your views that the market is "toppy"? What factors do you think drive a property market? Can structural changes have an influence? Or a change in the risk factors? or sentiment?
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Post by mambo on Mar 13, 2006 23:21:22 GMT 1
Quinne,
I agree with you, you would expect that these people are able to figure out the correlation between price and demand, but unfortunately they don't understand that part at all.
Too many times I have seen that they raise prices when the tourists come and then start complaining when the tourists refuse to pay i.o.w. don't spend any money. It is not only with the appartments, it is also in the restaurants, the bars etc. There is a discotheque in Porec, Interantional Club, which raises it's prices at the beginning of August with 100 % ! The result last year was that most of the time the place was empty, while only the week before the place was packed. Simple common sense would tell you that lowering your prices would attract customers, increase sales and thereby increase your profit and competitiveness.
To adjust the prices based on the economy in other countries is definitely too much for the people here. That would be higher economics, which is too far fetched. We have a lot of Germans and Italians here, countries where the economy is terrible, high unemployment rates i.o.w. there is not a lot of money to be spend. You can then do two things. First thing is to say 'sorry we don't want you here, you don't have money to spend so sod off' or you could do the second thing and that is to make it affordable for them to come on holiday here. They still have to spend there money here, but they may also tell others and........if the economy improves again they are more likely to return and that way you profit again.
If you look at the way tourism is organized and handled in Croatia you cannot help but conclude that there is no real long term goal. Sometimes I get the idea that the only goal they have is to attract the better situated tourist who will spend more money in less time and that is about it.
There is no real plan of how to reach that goal, what needs to be done by the government (better roads, better infrastructure, better service, less bureaucracy etc) and what needs to be done by the private companies, the owners of the appartments, campgrounds, bars etc.
How strange is it to hear campground owners complain that the bars and restaurants which rent space on the campground don't make any investment, but to hear at the same time that these bars and restaurants will only receive a contract for one year ! Nobody is going to invest a lot of money when he does not have a long term contract, in fact there is no bank which would supply a loan.
The season is starting at the end of April, yet most of the bars/restaurants, campgrounds, hotels etc have not even begun with preparing for the next season. Last year tourists had to wait until mid June before all the rubble of the year before was cleaned up and before all restaurants were open. What kind of message does that send to your guests who arrive in April, May and June ? Sorry, but you are not important to us, hope you won't bother us too much, please piss off ?
This situation could be easily solved by local goverment by simply instating fines for short term building activities after the end of April. In addition all rubble of the year before should be cleaned and if you have a license for a seasonal spot it is mandatory to open in the first week of that license period.
Why is it that we still don't have any other entertainment for tourists in Istria. We have the sun, we have the sea, we have a few villages, but just wait until it starts raining. There is absolutely nothing to do here in Istria on rainy days and many people already asked the question why there are no plans for a themepark or an entertainment park like e.g Gardaland.
Tourism is a very delicate industry. It costs much more money to get a tourist to come to your country than it is to have him stay (i.o.w. come back next year). The way Istria is going at the moment is to push the tourists out. Well, with the disastrous August 2005 result (3 weeks of solid rain), the upcoming world championship soccer, the bad economies in Italy and Germany, Istria could be in for a very rude awakening.
The biggest risk of a tourist market economy is of course that the tourists stay away. This may sound rediculous, but it has already happened many times in Europe.
And when the tourists stay away I think you will see the real estate market drop like a rock and to be honest, prices are already levelling out. Houses remain for sale for a few years, but still the building spree continues. Demand is not rising, so overcapacity exists, local governments are now trying to limit building permissions in the areas, because it has gotten out of hand.
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Post by lojalnost on Mar 13, 2006 23:34:20 GMT 1
...did you know it in the 1990's, it was like a ghostland
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Post by mambo on Mar 14, 2006 0:50:58 GMT 1
I know, I was here during that time, spent a few years being busy with this little war.
But, we live in 2006 and not in 1995 or 1992. We have to face the reality of today and not what was 10 years ago.
Croatia did well in recovering from the war, we are back up to 10 million tourists, but in tourism there is no place for complacency. No industry is so volatile as tourism, tourism is no right........tourists can do without Croatia, but Croatia cannot do without its tourists and that is something many people often forget.
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Post by lojalnost on Mar 14, 2006 0:53:26 GMT 1
fair enough!
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doris
Full Member
Posts: 61
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Post by doris on Mar 14, 2006 14:05:31 GMT 1
This year the higher end rental ie,villas with pools seems to be steaming ahead.Of a 30 week season,we have 18 weeks booked all ready,and the gaps are mostly in april and october
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Post by Embridge on Apr 6, 2006 17:55:17 GMT 1
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