Front Elevation: Europe’s Hidden Hotspots
Where the jewels are still ripe for the picking.
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Two years ago, Aaron Hicklin, a magazine editor who spends most of the year in Brooklyn, bought a two-bedroom, 19th-century stone house on the Croatian island of Hvar for €65,000. Since then, the value of the property has almost doubled. To hear Hicklin wax poetic about this unspoiled corner of the Balkans—across the Adriatic from Italy—you would swear he was describing the south of France or Tuscany…in the 1960s.From the Istrian Peninsula in the north—with its medieval
hilltop towns, vineyards and Venetian-style waterfront palazzos—to the ancient
walled city of Dubrovnik in the south, the 1,100-mile coast has caught the
attention of moguls and movies stars such as Bill Gates and Gwyneth Paltrow, who
have been lured by the action along Croatia’s coast, a place some are now
calling "the next Riviera."
Lower prices and fewer tourists have led buyers to
discover new European locations. Three listings in Bodrum,
Turkey, from Mona Candaner range from approximately $290,000 to $1.2
million. Top photograph by Mona Candaner. Middle photograph by Birtur Insaat. Bottom photograph by Jochen Hertzke. (Click images to enlarge); function voidFunc() { } voidFunc();)
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But Hicklin did not come for the glamour. Originally, he was
looking for a place where he could eventually retire, specifically a house in
England, where he is from. "When I looked at ads for places on the Internet, I
realized the U.K. was too expensive," he recalls. "Croatia was still
under-recognized and its infrastructure was in its early stages. I thought it
had potential."
The shortage of acquisition opportunities in prime European vacation home markets, such as the French Riviera or Tuscany, has forced investors to enlarge their scope. And they have discovered destinations on the Adriatic and Aegean with all the charm and beauty of the Mediterranean sans the astronomical prices and busloads of tourists.
Like most people who consider buying vacation homes outside the U.S., Hicklin is well traveled, and any qualms he had about investing in a country that probably will not even get into the E.U. until 2009 were allayed by his real estate agent, Paul Bradbury of Hvar Property Services, whom he found on the Internet. Hicklin flew to London, then on to Trieste in Italy, rented a car and drove into Croatia.
Dealing with principals who are unaccustomed to doing business with foreigners can present a challenge. Although most people in the European real estate business speak some English—thanks to the British buyers who, as they did in Spain and Tuscany, are leading the way—there is still the language barrier. Since most banks in the U.S. consider it too risky to give mortgages on properties in Eastern Europe and local banks will not lend to foreigners who would be too difficult to pursue in default, buyers need to pony up the cash. Patience is a necessity, as it can take months for lawyers to unravel legal complications, such as getting clear title on a property handed down from generation to generation with little or no paperwork.
Perhaps most frustrating is the nascent infrastructure in
places like Croatia, Slovenia and Montenegro; amenities Americans take for
granted—from good highways to golf courses—are scarce. The upside is a minimum
20 to 40 percent annual increase in real estate prices in these destinations
(numbers are expected to skyrocket as these nations edge closer toward E.U.
membership). On the Croatian coast, where over 30,000 foreigners have bought
properties, some have doubled in value every year since 2000.
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