With ongoing uncertainty in the world markets and in particular in Europe investors are looking for safe havens for cash. With banks deposits paying very low interest rates, inflation rising, banks over exposed to risky assets and gold at peak values, historical property assets in seaside locations popular with tourists are an interesting medium to long-term investment if one buys in the right locations and at the right price.
There are a number of reasons why they make a good investment choice. Firstly, prices are over the long-term supported due to low supply. It is simply not possible to build more in historical centers. Secondly, historical centers are often popular tourist destinations due to their location. Furthermore, it is common for local and in some cases central government to promote their heritage. Thirdly, historical objects located in historical centers are popular with visiting tourists who want to be and stay in the heart of it during their visit.
Some important considerations, the location should be close to an international airport from which tourists can easily access it especially during the shoulder months and off-season. The availability of activities and facilities for visiting tourists is key, guided tours, shopping, restaurants, Spa’s, day trips and things to see and do. If there is enough to keep visitors occupied for a few days then there will always be demand for short-term accommodation. Competition should also be considered but if your product is according to the standard you are charging, you have made an effort with promotion and marketing and you can add an element of personal touch / service you will likely stand out from the majority of the competition.
The Croatian properties in the historical centers of Split and Dubrovnik are good examples. They have excellent investment potential. This is especially true at the moment because prices have fallen to a point, whereby yields have become very attractive. In Split for example, owners that have established themselves are getting net yields of between 7% & 8%. The season now starts in March and runs until the end of October. One can expect near on 100% occupancy during June, July & August with around 75% in May, September and most of October.
It is important to note that buying, renovating and owning a historical asset can be quite demanding but once established they are relatively hassle free. Initially, the key is to establish value, doing due diligence with regard to price and yield is essential. Split & Dubrovnik by example have quite small historic centers so getting data is not difficult. If you can find a good agent they should be able to give you a decent amount of comparative data. The same goes for a good rental agent who specializes in real estate in Croatia and in these locations. Getting a handle on renovation costs is also very important as well as understanding the rules & regulations that apply to the property you are interested in buying.
In conclusion, Croatian properties in the historical centers of Split and Dubrovnik are good investments during this period of economic uncertainty.