Zagreb, Croatia - the secret of holiday investments?
Zagreb - the capital of Croatia, is a beautiful and fun city!
It claims to be the place where Central Europe and the mediterranean met and mix.
And, the city does represent both these sides of Europe.
It is expensive - average salaries in Croatia are 600 Euros per month vs 181 Euros per month in Bulgaria (obviously, Zagreb pays more and the white collar service jobs which concentrate in the capital pay much much more than the average).
And therefore Zagreb is more prosperous and what British and Irish investors might describe as more 'obviously european' - which really means that the city is more like a British city (with coffee shops and bars and pedestrianised disticts) than Sofia or Bucharest (for instance) which are developing very, very fast but from a different urban history.
And, during this period, many middle class people living in Yugoslavia (and Zagreb in particular) saw that cash was no longer an effective investment.
Back in those 'Berlin Wall' days, Yugoslavia had a relatively free trading economy (ie it was not stuck behing the iron curtain and the Croatian and Slovenia parts of the country were allowed to trade with Western Europe).
But, local people had very few investment options. Pensions were non-existant, investment funds didn't really exisit and buying shares meant sending money abroad (ie all local firms were mainly privately held or state owned).
So, your middle class person typically had three options for their money
- savings (in the form of cash, usually stuffed under a matress) - gold (which needed to be bought in hard currency and therefore not easy) or - property (mainly holiday properties and land on the coast)
Therefore, in the 70's, a large number of Zagreb citizens bought land and property on the Croatian coast for next to nothing.
Over the next 5 to 10 years, this area will be developed and the riches will flow back to the citizens of Zagreb.
And, therefore, when the cash comes back to Zagreb it will be spent on nice new homes, smart cars and all the normal middle class desires and habits (including resturants and coffee bars).
All this adds up to Zagreb becoming a propety hotspot - and the best place for a Croatian investment.
It is also worth knowing that buying in cities makes surity of property title much easier. Although the local view is that with a good property lawyer, you should be able to establish the previous ownership and therefore title of any piece of land (including that on the coast). Any Croatian lawyers out there want to confirm this?
ps. A side point - the fragmented nature of Croatian coastal land ownership is the most likely explanation of the lack of over-development (sorry, environmentalists, it is the economics which determines the landscape not the lobbyists).
Therefore, Croatian coastal property could reach sky high prices - due to lack of supply! Does this mean you should buy a Croatian holiday property? For holiday - yes. But for investment, no! Instead buy your investments in the city - Zagreb is the obvious candidate!
NEIL LEWIS ON SAT 11TH AUGUST AT 08:33 GMT