Detailed guide to buying a luxury villa in Croatia

Luxury villas are a type of real estate that offers a sense of prestige, privacy, an escape from everyday life with an enchanting view and superb interior and exterior design.

The term itself comes from the Latin word villa, which denoted residences that patricians used to escape from urban everyday life. Villas were usually located in the countryside or in an attractive remote location and were often enriched with fountains, pools and lavish gardens, thus emphasizing the feeling of prestige. 

Remains of numerous ancient villas have been found all over Croatia, both on the coast and in the interior, which allows us to say that we are continuing the tradition of a luxurious escape in the manner of the ancient Romans.

Exclusive destinations on the Adriatic: Dubrovnik, Split, Hvar, Istria

At the first mention of Croatia, everyone will first think of the beautiful Adriatic coast. That’s why it’s not surprising that the majority of luxury villas in Croatia are located in this area, specifically in the area of Dalmatia and Istria which, thanks to their configurations, still offer a different experience.

Dubrovnik and Split are certainly among the most recognizable pearls of the Adriatic. Dubrovnik has become recognizable as a tourist mecca in the last decade, especially among fans of television series, due to its impressive scenery. However, this city, inscribed on the UNESCO World Heritage List, offers much more than that. Its rich historical heritage and exceptional geographical location make it unique, and every visitor is left with an unforgettable impression of a stone-shaped town that is gently lapped by the waves.

Split, the largest city on the Croatian coast, was created from the residence of the Roman emperor Diocletian, and since then we have followed the uninterrupted continuity of urban life. Known for a long time as a transit center, Split eventually became a destination that attracts visitors with a combination of dynamic nightlife and enjoyment of the rich historical heritage.

The island Hvar, in recent decades, has been recognized as an exclusive destination thanks to its crystal clear sea, beautiful beaches and a rich gastronomic offer. Hvar offers peace to those who aspire to rest in seclusion, but also a vibrant nightlife to those who want to have a good time. With ferry lines, it is excellently connected to the mainland.

Istria is often called the “”Tuscany of Croatia”” because of its preserved natural beauty and charming, picturesque towns in the interior. In addition, Istria is characterized by a beautiful coast. Thanks to the enchanting natural beauty and quiet corners that provide complete silence, Istria is the perfect destination for luxury villas.

Advantages of the interior of Croatia for luxury villas

The COVID pandemic has redirected many buyers with high paying power to closer, tamer and less exotic locations, therefore, for wealthy Europeans, Croatia was an ideal choice.

Although Croatia is much more famous for its coast, the pearl with a thousand faces, which is discovered anew every time, is its interior. In addition to the interior of Istria, which, as we mentioned, they like to call “Croatian Tuscany”, there is also an oasis of peace that is ideal for luxury villas and for a peaceful life.

Dalmatian Zagora was a hidden secret for a long time. Thanks to the influx of tourism from the coast to the interiorš, Zagora started to spring up luxury properties that combine modernity and tradition. Lika and Gorski kotar are also ideal regions for luxury villas, as they provide the perfect getaway, beautiful views and comfort in luxurious wooden houses with saunas and fireplaces.

Slavonia and Zagorje offer ideal conditions for owning a property in quiet, secluded areas, where privacy and the silence of nature enable the creation of a perfect refuge and access to an excellent gastronomic offer, top wines with a great geographical location that ensures proximity to relevant centers and distance from the city bustle.

Legal framework for buying real estate in Croatia

When buying luxury real estate, it is crucial to check the ownership in the country’s books, that is, to check whether the property is burdened with mortgages and similar burdens.

Purchase contracts are concluded in writing and often require notarization. When we buy a property with the intention of converting it into a luxury residence, we must be prepared for upgrades and/or renovations. For such interventions, it is necessary to obtain construction and urban planning permits from the competent office. 

Can foreigners buy a luxury villa in Croatia?

Croatians and citizens of the European Union can equally buy luxury real estate in Croatia, while citizens of third countries must meet additional conditions (for example, they must have registered residence).

For buyers who are not citizens of the European Union, also the rule of reciprocity applies š this means that there should be a reciprocal right to purchase real estate for citizens of Croatia in the country in question and vice versa. If the rule of reciprocity does not exist, citizens of countries outside the European Union cannot buy real estate in Croatia. Ownership of the real estate, in that case, can be obtained by establishing a trading company that must be registered in Croatia and through it purchase the desired real estate.

Key legal documents and purchase process

Investing in luxury real estate can be very rewarding whether it is property for family life, vacation or rental. According to some data, the daily rent of a luxury property can reach as much as 8,000 €. The most frequent guests of luxury real estate in Croatia are Arabs, Americans and Russians.

The very process of buying a luxury property is best started by hiring a real estate agent who is most thoroughly familiar with the market conditions of the requested area.

Before the actual purchase, a pre-contract is concluded, which enables securing the basic conditions and with which the legal framework is set. After that, the customer pays a down payment in the amount of 1 to 10% of the total price. The deposit is included in the total price, and if one of the parties withdraws from the purchase, the deposit is returned.

The sale contract, finalizes the purchase of real estate and confirms all details. It defines the price and method of payment, the date of transfer of ownership and other conditions. The sales contract must be signed by both parties.

The next important document is the title deed issued by the Cadastre. It is an official document that proves the ownership of real estate. The extract from the land register determines the right of ownership, possible mortgages and encumbrances, and other possible restrictions related to the property in question.

When buying and selling a luxury villa, you should get an energy certificate, which determines the energy efficiency of the property. It is also important to confirm that the building is legal with the help of a valid building and use permit and a certificate of compliance with the spatial plan.

Taxes and expenses related to the purchase of a villa

Costs associated with the purchase of luxury real estate include taxes, registration and other administrative costs. If the buyer uses agency mediation services, he/she is obliged to pay the agency commission, which in Croatia usually amounts to 3% of the total price of the property. Also, the buyer is obliged to pay real estate transaction tax, which amounts to 3% of the real estate’s market value.

The real estate tax is not paid by those who bought the property as their first home or for whom that address will be their place of permanent residence. Real estate tax in Croatia varies depending on the location and type of real estate.

Value added tax (VAT) at a level of 25% is applied to the purchase of new or reconstructed buildings, which practically replaces the real estate transaction tax in these cases.

Legal fees that facilitate the transfer of ownership amount to 1 to 3 percent, however sometimes legal services are included in the agency commission. We need to count on translation fees if necessary, although this service can also be included in the agency commission.

There are also administrative fees for real estate registration and sometimes fees for geodetic services.

Luxury villas, as we have already mentioned, represent a type of exclusive real estate intended for a luxurious stay, often as a second home. In addition, such villas represent an extremely profitable investment, especially if you plan to engage in renting.

Many luxury villas in Croatia are already being used for rent, and the demand for them is stillš always surpasses the offer.

As an investor in a luxury villa, you have three options: buy building land with a project, buy a villa for adaptation or buy a fully equipped villa. Each of these options has its advantages and disadvantages. For example, buying construction land with a project is the most demanding in terms of time and technology, but it can prove to be the most profitable option in the long term, because you have complete control over the project and the ability to build according to your own wishes. Likewise, the ratio of invested and returned in the case of potential sales is the highest in this scenario in favor of the return. 

Conclusion

Buying a luxury villa in Croatia is a prestigious investment with numerous options, from popular locations on the Adriatic such as Dubrovnik and Split to quiet inland regions such as Istria and Dalmatian Zagora. The buying process can be complex due to legal requirements, taxes and administrative fees, but with the help of experts it can be made easier. 

Foreigners can buy real estate under certain conditions, while different options such as buying land, renovating a villa or buying a fully equipped villa offer different advantages. Croatia offers excellent opportunities for luxury villas, either for personal use or as a lucrative rental investment.