Dubrovnik Property Market: Increased Buying Interest
April 10, 2022 – An overview of the current state of the Dubrovnik real estate market by the vice-president of the professional group of real estate agents of the Dubrovnik county chamber of commerce, Nada Burum.
As the pandemic subsides, Nada Burum, vice president of the professional group of real estate agents at the Dubrovnik County Chamber of Commerce, comments on the impact of past and current crises on the real estate market in the Dubrovnik region, reports Dubrovacki Vjesnik.
During the pandemic, prices increased further to slow trade, which is currently happening due to the war in Ukraine. Partially disabled businesses increase the cost of food, energy, building materials, freight transportation and real estate prices. The pandemic period was marked by rising prices in construction, which affected the growth of residential places, especially new construction.
Inflation is on the rise. At the same time, foreigners are heavily investing in real estate in the Dubrovnik region. Asking prices may be outside the actual range, but ultimately the market is affected by the law of supply and demand. Dubrovnik is a small city, a pearl, and it is not uncommon for some luxury properties to have a high and unrealistic price. Dubrovnik is one of the most popular cities in Croatia, and for the past twenty years it has therefore been one of the most expensive cities.
Will the weakening of the purchasing power of citizens harm the real estate market? Is there a drop in traffic or vice versa?
As a rule, clients with excess funds benefit from market developments. Negative interest rates in the banking sector have recently contributed to this, among other factors. Real estate is a desirable form of investment and preservation of the value of money. Therefore, interest in buying real estate in Dubrovnik and Zagreb has increased. Indicators of increased citizen demand for real estate purchases may be the need to solve the housing problem due to uncertainty about future prices and interest rates when obtaining a loan.
What about prices for residential square meters? The Covid crisis has not had a significant impact on prices; they even grew up. Have they been recently fixed for more since we are seeing price increases for almost everything?
The rise in the price of building materials caused the price of residential square meters in new construction to jump in a short time. We recorded in the Dubrovnik office at the end of 2021 and the beginning of 2022, i.e., in a very short time, an increase in the prices of apartments under new construction between ten and fifteen percent. This reflects market instability.
What are the prices in Gruž, Grad and Lapad?
Gruz ranges from around 3,000 to 3,800 euros per square meter, and the price can be higher for better apartments. Lapad ranges from around 3,500 to now 5,000 euros per m², and exceptionally in Lapad there are properties around 7,000 euros per m² due to some higher parameters. The city and Ploče are between 5,000 and 8,000 euros per m², but much more if it is a luxury property. Suburban pitches are cheaper. Despite the prices displayed, apartments with a sea view, especially if there are few of them on the market, sell quickly.
In the Dubrovnik region, buying a property is more often considered a good investment for tourism purposes that will pay off over time. But, since tourism has been suffering for two years, have real estate purchases linked to tourism fallen?
A slight caution was felt at the start of the pandemic, with properties used exclusively for tourism purposes. But it was at this time that some investors reacted and then bought real estate in the city center. With the return of optimism in the tourism sector, interest in investing in real estate of this type has increased.
What about supply, is there growth? The economic crisis may have forced some to sell apartments, vacation homes, apartments…
I am very happy to say that our fellow citizens have not been forced to sell their property during the pandemic. I get a little emotional here when it comes to Dubrovnik, and usually it’s not easy to hear that someone is in crisis, so they’ll sell their property below value. Even though I do real estate, I always go for a realistic market price.
What is the interest of foreign buyers and investors in real estate on the coast, which realistically has always been attractive to foreigners, especially in the Dubrovnik area? Is the Croatian coast still at the center of their concerns?
Foreigners are particularly interested in our sea, the coast, in luxury real estate, the realization of such sales is becoming more and more. They appear as larger investors who would develop projects and buyers who would recognize Dubrovnik as a “second home”. Investments in the market are necessary; it’s good that Croatia is a desirable country and foreign citizens often find a new home in Croatia. At the same time, it would be desirable to do everything possible so that our young people do not leave Croatia because of the lack of prospects in their country or the high price of apartments that they cannot afford to work in Croatia. Let’s hope for a change for the benefit of our young people.
Thanks to UTD Ragusa, the city of Dubrovnik has become the owner of thousands of square meters of attractive space in Gruž, the former TUP factory, but also in Komolac. How do you comment on this movement?.
The city of Dubrovnik made an excellent move by buying this property, that is, acquiring the property of 9,800 m2 of land at the strategic location of the former TUP in Gruž, including 14,000 m2 in Komolac . This is a move that represents an excellent prospect for the City by bringing added value and for the benefit of citizens. The heritage is estimated at 18.6 million euros. Through a legal and in-depth analysis, the City excluded the risks from the object of the purchase and concluded that the purchase of the joint-stock company was justified. The price of around 10 million euros is realistic. This is a good job for the city of Dubrovnik. The position of the former TUP in Gruž has great potential for the development of various content, commercial, public, and above all returns through multiple forms of lease, depending on the strategic projection that the buyer will choose to make profitable and to improve investment.
Several parameters determine the value of the land. One of the most important is the calculation or projection of the return that the property will bring once the project is completed.
Real estate prices are rising despite changing economic trends. With this project, the city will make a significant contribution to the future development of Gruž. Dubrovnik deserves to be enriched with harmonious buildings and to preserve the identity of the city.
The TUP area is unique, with excellent connections to the port of Gruž. It is therefore a position that offers many opportunities. In the real estate sector, we have monitored the value of special properties in Gruž in recent years, especially in the lower part of Gruž, a beautiful pedestrian zone. Their value will continue to grow because there is less supply than demand.
Buying a large building plot is a long-term investment. Some serious investors were interested in buying a TUP property and saw a profitable investment in such a desirable location at the western entrance to Dubrovnik.
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