Sometimes, it's only when you stop looking for something that you find it. The same, it seems, is true when looking for the perfect property in an overseas market. Andrew and Mandy Rogers from Stanford in Lincolnshire had been looking for property on the Costa Blanca, Spain, but says Andrew, "the properties we viewed didn't live up to what was portrayed in the brochure". They therefore postponed their property plans and, instead, took a holiday in Croatia, on the southern Dalmatian island of Brac. "It turned out to be everything and more than what was portrayed in the brochure", says Andrew. It also turned out to be something more than just a holiday. "We saw a property and thought that we could afford it at the time but perhaps we'd be priced out if we waited. We bought with this thought in mind and based on how pleasant and unspoilt the area is."

Andrew and Mandy now own a modern, one-bedroom apartment in Bol, built in the shell of a much older property about 100 metres back from the shore, on the southern coast of Brac. Inclusive of fees and taxes, the property cost 56,000 euros. "Affordability was a big factor", says Andrew. Now they have it, how often do they plan to use it? "Three to six weeks a year – and we would consider retiring there in a few years time. I'm a keen sailor, so the Dalmatian coast is perfect for me."

Croatia seems to make a habit of having this affect on people. Indeed, the agents the Rogers' bought from were once in this self same boat of sailing off in a direction they hadn't anticipated. Says Martin Hill of Croatia Coast Properties, "Since 2002, my wife Angie and I had been seriously considering moving abroad. We wanted a better climate, a better lifestyle and opportunities, but not to leave Europe. We took a close look at all the Mediterranean countries, and the more we learned about Croatia the more it appealed." Having bought land on the island of Brac, the Hill's new home was completed last year, and they have since set up an estate agency on the island. Hill explains, "We had no intention of starting this type of business when we arrived, but there was a real need for it. Up until we started our agency, people wanting to purchase property here on the island found it very difficult to find an agent at all as many Croatian agents worked on a part-time basis from their homes." Now, the Hills are mixing work and home life on Brac.

The coast with the most
Despite its attractive mountains, rolling, wooded hillsides, and deep-blue lakes, it is the 2,000 kilometres of Adriatic coastline that hooks visitors on the idea of buying a second home in Croatia. Sweeping white beaches fringed with turquoise shallows, secluded inlets, thin strips of land knifing out of a cobalt sea, and over 1,000 islands strung like seaweed along the mainland. Croatia's coastline is undeniably dramatic. And, what's more, it's almost totally unspoilt – and looks set to stay that way. Says Richard Edds of Leisure and Land Croatia, "New planning restrictions aimed at avoiding mass tourism development and based on government principles to realise 'sustained quality tourism' should ensure that the Croatian coastline remains unspoilt." Indeed, it's not just the coastline that's pristine, as Peter Ellis of Croatia Property Services points out. "Visitors comment on how clean Croatia is. The streets are far cleaner than in the UK – so it's no surprise the beaches are lapped by crystal-clear water."

Although pebble beaches predominate, the islands of Krk and Rab, in the Kvarner Gulf, and Korcula, in Dalmatia, have their seductively sandy moments. Luckily, Croatia also enjoys plenty of what makes the beaches of the Algarve and the Costa del Sol so irresistible to Brits: sunshine. Not quite matching the 3,000-plus hours of sunshine that the Algarve receives on average every year, the Dalmatian coastline between Split and Dubrovnik bears comparison with Malaga, Alicante and Palma Nova in terms of the light stuff. What's more, the average summer temperature is an inviting 25°C. All of this is only a two-hour flight from London – which means Istria and Dalmatia, Croatia's two most popular areas with foreign property buyers, are closer to Britain than the Balearics are.

Little Italy 
Tucked into the northern end of the Adriatic, the Istrian peninsula is only a few miles from Trieste in Italy. Consequently, says Ellis, "It has a very Italian feel to it, both in terms of landscape and cuisine." Moreover, having been ruled by the Venetians for 400 years, Istria boasts towns such as Rovinj, which mixes proud, Venetian-style houses and spacious piazzas in its attractive old town, and fishing boats and sleek yachts in its harbour. Rovinj, is one of the jumping off points for the Kvarner Gulf Islands, of which Rab is generally considered to be the most attractive for its cove-indented coastline and late-medieval architecture. Less popular with British buyers than Dalmatia, and shorter on availability than its southern cousin, go to Istria with 100,000 euros to spend you should be able pick up an old stone house in need of a little TLC (Croatia Property Services).

Discovering Dalmatia
From the exuberant streets of Split to the medieval majesty of Dubrovnik and the ragged ribbon of islands in between, the region of Dalmatia has a scene suitable for every homebuyer. Split, which is – ahem – split between an old town dominated by a Roman palace, a thriving outdoor café culture wrapped around a modern harbour, and hastily constructed modern suburbs, is the point of departure for two of Dalmatia's most celebrated islands: Brac and Hvar. Just a few minutes by boat from Split, Brac is a byword for beautiful beaches and quaint fishing villages. Here, on the island's north coast, Supetar is the largest town, while nearby Sutivan is a pretty town made partly of marble, while on the south coast Bol has some of the most memorable sweeps and spearheads of pebbles in the country.

Says Hill, "New apartments being built in various locations around Bol will range from 55,000 to 180,000 euros." Those looking instead for houses in this market, take note that 160,000 euros would buy you a traditional Dalmatian-style house with a terrace and balcony 200 metres from the sea (Croatia Coast Property). Outside of Bol, 90,000 euros is enough to buy you a new, 49m2 apartment near Sutivan, 168,000 euros two old stone houses comprising 240m2 of living space, or 220,000 euros a two-bedroom stone-built house with a 600m2 garden near Supetar and only 100 metres from the beach (Leisure and Land Croatia). South of Brac is the island of Hvar, famous for the scent of lavender wafting from its profuse main crop. A green slice of land 50 kilometres long but just a few kilometres wide, Hvar mixes jagged inlets with beaches, old stone houses with fishing villages and well-preserved architecture with sensitive development.

Here, 70,000 euros is enough to buy you a villa in need of renovation in the wooded, mazy village of Jelsa, while 175,000 euros would afford you a renovated and furnished stone house with 120m2 living area in the village of Vrboska, which overlooks a deep bay (Avatar). Further south, and closer to Dubrovnik than Split, is the island of Korcula. Green and wooded and boasting a cluster of stunning beaches - including the 200-metre sandy stretch of Prizna Bay, Korcula's main settlement is the town bearing its name. Protected by medieval walls, the town has a distinctively Venetian influence, fitting for the birthplace of Marco Polo.

For those wishing to buy into Korcula's history, an old stone house with renaissance detail and a sea view is, at the time of writing, available for 170,000 euros (Avatar), or for those wanting a challenge, how about a 300-year-old castle listed by the Croatian Ministry of Culture? If so, complete and historically sensitive renovation is required - as is the 100,000-euro asking price (Leisure and Land Croatia). A stone's-throw east of Korcula Town and a little further off the beaten homebuyer track is the Peljesac Peninsula, a slim, mountainous, gnarled finger of land harbouring tiny villages, hidden coves, the walled town of Ston and long shingle beaches near Orebic. Here, a four-floor semi-detached house with sea views and a living area of 160m2 is available for 183,750 euros, while 29,618m2 of land on the north-west side of the peninsula is available for a cool 1,332,810 euros (Leisure and Land Croatia).

Forty kilometres south is Dubrovnik, for many the jewel in Croatia's string of coastal pearls. Founded 1,300 years ago, the historic core of Dubrovnik is a treasure-trove of medieval and baroque architecture, where grand architectural statements such as ornate churches and ostentatious public buildings stand wall-to-wall with green-shuttered stone houses. Outside the ancient city walls, which are more than two kilometres long and 25 metres high, the city is a little younger but no less pleasant. However, such beauty comes at a price that very few property buyers can scale. As Edds comments, "The Dubrovnik property market has seen incredible price increases in the past three years and is now equal to Paris in price!" On the ground floor of opportunity is a three-bedroom apartment built five years ago and costing 220,000 euros; the next level up is a restored stone house with a living area of 110m2, costing 500,000 euros; and riding the elevator to the top of the Dubrovnik property market, a luxury apartment would leave you little spare from one million euros (Avatar).

Unproper properties
Steep asking prices aside, the picture has been almost exclusively positive, thus far. However, there could be one or two rocks lurking beneath the surface to threaten your pursuit of a perfect property on the Adriatic. One such obstacle is a lack of suitable supply, either of the ancient or modern variety. Says Amar Sodhi of Avatar International, "There is not nearly enough quality property available in Croatia to match demand", while Edds points out, somewhat disappointingly, that "the typical Croatian property offered for sale often lacks character and facilities".

The cavalry is on its way, though. "A number of foreign developers have been purchasing large sites with a view to developing them for the foreign second-home market. These will generally be built to a standard and design that will be more acceptable to foreign buyers", says Sodhi. For example, Leisure and Land Croatia is building 16 villas with pools overlooking the sea on the island of Brac, to be finished in the autumn of this year; prices will start from 300,000 euros.

Finding a suitable property in a suitable location can also be challenging. "Many clients ask initially for property that is on the seafront, but these are very hard to come by", Hill explains. "A good alternative is to go for something that is within a few hundred metres from the sea with room enough for a garden, large terraces and perhaps a swimming pool." Even then, there's a down side. "Unfortunately, most of these types of buildings are in need of renovation work." Due to this shortage, Hill predicts that "more individual places set back from the sea but finished to a high standard are going to become more popular. Investors should also take a look at the many incomplete small apartment buildings. These usually provide a reasonably quick turnover because building permits etcetera are already in place to continue work to completion. Buying land and building is also popular, but time, measured in months not weeks, must be allowed to receive the necessary permits."

What's hot?
Doubts aside, find the right investment property and the sky's the limit. In 2004 Edds estimates that there was "an average increase in property prices of 35 per cent, with some areas achieving over 50 per cent". What's more, he expects to see "similar increases in the next two to five years". But where exactly should one consider buying? "The coast will remain the best investment market in the next two to three years, while inland properties offering more traditional surroundings may provide sustained capital growth in the long term".

Hill paints a similar picture of 2004. "Depending on location, we have seen property prices rise from 20 to 60 per cent. The most established places for investment are the more developed and accessible resorts, particularly on the islands." However, other possibilities exist for the prospective property speculator. "Areas that could see significant price increases may be those that are off the tourist track but could later become more developed for the tourist market", says Sodhi. He picks out the Peljesac Peninsula as representing good potential. "Anecdotal evidence suggests that prices have nearly doubled in the last year or two." What's right for capital appreciation, though, does not necessarily apply to those targeting rental income. "When looking for rental investment, pay a premium and buy in established, sought-after areas. For the right property, occupancy and rental price will be high. It can be a false economy to compromise location for a lower price", he advises.

Up in the air
Exactly how many areas of Croatia could be, in time, considered sought-after by overseas property buyers is currently limited by a lack of air access. Besides the flights of Croatia Airlines, only British Airways flies directly from the UK to Dalmatia – to Split and Dubrovnik. This effectively limits the Brit-rich markets to the following: Dubrovnik, south to Cavtat and north to the Peljesac Peninsula and Korcula; Split, south to Makarska, Brac and Hvar and north to Trogir, Sibernik and Vodice. Istria, however, is accessible from Trieste, which does have low-cost air access.

But why the quiet skies? Says Sodhi, "The government is not operating an 'open skies' policy at present. Instead, it is protecting its national airline and blocking the entry of foreign-owned, low-cost airlines. When routes are secured by such companies, I anticipate a significant increase in property values within striking distance of the relevant airports." Besides giving the Croatian property market a shove in the right direction, the long-awaited low-cost access to the country should also help its tourist market recover to levels last seen before the Balkan conflict. In 1990, before the war tore Yugoslavia apart, over 440,000 British tourists holidayed in Croatia; in 2003 there were 130,000 and, by last year, the number had reached 190,000. With the difficult days of the nineties now subsided, all Croatia needs is low-cost access to light the blue touch paper of its tourism industry – and, with it, the property rental market.

Another key variable is if and when Croatia joins the EU, predicted to be sometime in 2007 or 2008. Tourism will certainly benefit from the increased investment this will bring, but the property market will also receive a boost in terms of investment opportunities. Sodhi believes that EU accession will finally open up the property market of Zagreb, the capital, to foreign buyers, especially for buy-to-let investors. "This would be driven by employees of an increasing number of foreign companies establishing bases in the capital", he says.
 
But the floodgates could really open if two other matters are addressed: property finance and the buying process. Edds foresees "a huge increase in property buyers once UK banks open for business in Croatia and offer mortgages as in other Mediterranean countries. Today, our clients pay cash." As for the latter, property buyers used to secure purchasing procedures in more established markets will find Croatia anxiety-inducing by contrast.

A leap of faith
While Croatia awaits EU membership and the modernisation that will follow, in the meantime buying a property in the country is not for the faint-hearted. Says Rogers, "The process of buying was a leap of faith in the honesty of the people we were dealing with. We bought the property and then had to apply to the Ministry of Foreign Affairs (MFA) for permission to live in it. Nevertheless, everything went through exactly as I was told it would." Sodhi explains, "A foreigner technically requires approval by the Ministry of Foreign Affairs (MFA) to buy property. This can take in excess of six months, but it is common practice to 'buy' the property and take over the use of it while waiting for permission, which is a formality. Buyers also have the option of setting up a Croatian registered company, and then buying the property in the name of the company. As the company is a Croatian entity, there is no requirement for MFA approval and completion can take a matter of weeks." One thing to ensure, though, is that any property you plan to buy has good title. Due to emigration and the vagaries of inheritance, many properties in Croatia do have defective paperwork. In this case, trusting the agent becomes even more important.

Prospective buyers of Croatian property are therefore left with a Dalmatian dilemma. Wait until cheap air access is secured and the paperwork process is smoothed out, then buy with increased confidence but at a higher price, or take the plunge now and weather the uncertainties but, perhaps, crucially, buy more cheaply. Either way, play your Croatian cards right and a home on the fantastic Adriatic could be yours.

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Leisure and Land Croatia 

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Article first published in January 2006