House Hunting in … Croatia

This traditional stone house is in Sveti Lovrec, a fortified medieval village on the Istrian Peninsula in Croatia, about 10 miles from the Adriatic Sea.

Built in the early 1900s, the 2,433-square-foot home has been used as a school and a residence, although it had been vacant for many years when the owners bought it. A renovation completed in 2016 added a swimming pool and modern amenities like air-conditioning and central floor heating.

The three-bedroom home, on a quarter-acre lot, has its original stone walls, staircase and wood entrance doors. Its elongated elevation, asymmetrically punctuated by doors and windows, is typical of older Istrian homes, said Marko Pazanin, a partner and executive director of Croatia Sotheby’s International Realty, which has the listing.

“The hallmarks of a traditional Istrian villa are the materials, its floor plan and small windows,” he said. “The inside of the villa is characterized by the thick stone walls and warm ambience of wood.”

The main entrance opens to a foyer that leads to a staircase and a dining area. To the left are a guest bathroom and the kitchen. An opening in an original stone wall leads to the living room, which has wooden ceiling beams, a wood-burning fireplace and views of the countryside. The furniture is included in the asking price, Mr. Pazanin said. The kitchen has a farmhouse sink, Bosch appliances and access to the pool area.

Three bedrooms are on the second floor, including the master suite, which has a 118-square-foot terrace laid with Italian terra-cotta tiles and adorned in vines. The other two bedrooms share a bathroom.

The 23-by-11-foot swimming pool anchors a patio with a grill and a dining area under a vine-draped pergola. The grounds include a vegetable garden and a grove with olive, almond and walnut trees, as well as roses, mandevilla, lavender, oleander and jasmine plants. The house’s railings, two pergolas and a gazebo were handmade by a local artisan. There is an electric entrance gate and parking for four cars.

Sveti Lovrec has about 1,500 residents and a picturesque old town that was first noted in historical annals in 1030, Mr. Pazanin said. Named for the eighth-century St. Lawrence church and replete with architectural relics from its medieval history, the village has several pubs and a restaurant, along with a bank, post office and other public amenities.

The Istrian Peninsula, about 60 miles east of Venice across the Adriatic Sea, is known for its pebble beaches, national parks and historic sites. Other attractions include a thermal spa, a tennis stadium in Umag and Michelin-rated restaurants, Mr. Pazanin said. The resort city of Porec, about 10 miles west on the Adriatic coast, is a popular summer destination that is home to the sixth-century Euphrasian Basilica, Istria’s only Unesco World Heritage site.

The nearest international airport is in the seaside city of Pula, about 25 miles south. The Croatian capital of Zagreb is 150 miles east.

Home prices in Croatia fell by as much as 50 percent after the global financial crisis of 2008, but the markets in the coastal cities of Dubrovnik and Split have fully recovered, and Istria is poised to follow suit, said Vedrana Kelleher, the director and owner of the real estate brokerage Dream Estates Croatia.

Prices in Istria rose approximately 6 percent from 2017 to 2018, but are still as much as 20 percent below their pre-recession peak, she said.

Istria “has tremendous value currently, compared to neighboring countries and farther down the Croatian coast,” Ms. Kelleher said. “Increased demand and reduced stock will create the catalyst to propel the market back to the highest point by the end of 2020.”

Asking prices across Croatia tend to be erratic, said Peter Ellis, the owner of Croatia Property Services, in Istria. “In other countries, asking prices are typically within a small band around what property is actually being bought at,” he said. “Here, it varies a lot.”

Ms. Kelleher agreed that while typical Istrian houses just off the coast may sell for about 150 to 220 euros a square meter ($15.60 to $20.75 a square foot), prices are influenced by the location and quality of the property. (This home, in a historic village near the coast, is priced at $220 a square foot.)

“Higher-end houses, close to the sea and with great sea or panoramic views, will have higher prices and can be more than double the inland prices,” she said.

Mr. Ellis said that he has recently been selling houses and apartments at pre-recession prices. In Istria, that means an attractive three- to four-bedroom house can be had for 275,000 to 400,000 euros ($308,000 to $448,000), depending on where it is, he said.

Mr. Pazanin said that newly renovated three- or four-bedroom houses can sell for as much as 800,000 euros ($896,000), while newly built villas can go as high as 1.5 million euros ($1.68 million).

In recent years, the housing market has shifted, with fewer Russian buyers and less prime property being built to serve them, Mr. Ellis said.

“That market was always a bit tenuous, as upper-end infrastructure with restaurants to be seen in and high-end discotheques, again to be seen in, are not here,” he said. “We have very good restaurants, even Michelin ones, but they are for people who enjoy food, rather than places for the nouveau riche to show off.”

Many of the area’s new homes were built by locals on land they already owned, as rentals for tourists, rather than to sell to foreigners, Mr. Ellis said.

As for foreign buyers, “we have mostly German, Italian and Austrian buyers of houses, and Slovenians, who are buying apartments,” Ms. Kelleher said.

Russians are still buying seaside villas, she said. And Scandinavian buyers have become very active in the last few years, with the introduction of more affordable flights, Mr. Pazanin and Mr. Ellis said.

Croatia, a member of the European Union since 2013, has a reciprocity law that enables foreigners to buy property without restrictions as long as Croatian citizens have the right to acquire property in the buyer’s home country or state. (The official Croatian currency is the kuna, but most properties are listed in euros, Ms. Kelleher said.)

For American citizens, the reciprocity is dependent on their state of residence. More than half of the states have reciprocity agreements with Croatia, including New York, New Jersey and Connecticut, Mr. Ellis said. Canada has a similar arrangement, with six of its 13 provinces and territories offering reciprocity.

Buyers from countries without reciprocity can set up a Croatian ownership company that generates income, he said.

Hiring a local lawyer is recommended, and typically costs about 1 percent of the home’s sale price, Mr. Ellis said. Buyers should “ask them all the questions they can think of,” he said, as “Croatian lawyers don’t always volunteer information, but will respond to specific questions.”

Buyers will pay roughly 7 percent in taxes and fees on a home sale, which includes the real estate agency commission, the lawyer and notary fees, and the transfer tax, Mr. Pazanin said.

Croatian; Croatian kuna (1 kuna = $0.15) and euro (1 euro = $1.12)

There is no property tax in Croatia on primary residences, Mr. Pazanin said.

Marko Pazanin, Croatia Sotheby’s International Realty, 011-385-98-904-8370;

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