A Reddit user abandoned the idea of buying an apartment in Zagreb's neighborhoods after realizing it would take three decades of perfect renting to recoup the investment.
Buying an apartment in Zagreb with the intention of renting it out seems to many like a safe long-term investment. However, a detailed calculation by an anonymous Reddit user paints a very different picture. After putting everything down on paper, he realized that to recoup his investment in an apartment in locations like Prečko, Rudeš, Jarun, or Knežija, he would need to rent out the property for a full three decades at a monthly rent of 1,200 euros.
The user is in his early thirties and has managed to save a significant amount, but not enough to buy an entire apartment without a loan. His initial idea was to invest 50,000 euros of his own money and finance the rest with a mortgage. However, facing the real market prices quickly dampened his enthusiasm.
"When you see that a square meter in new construction is 4,000-5,000 euros in those locations, plus you need to furnish that 60-square-meter apartment. You're already at 280-300 thousand euros, and where are one or two parking spots, the loan, and the rest of the s***," the user wrote on Reddit.
His calculation showed that even under ideal conditions with no vacancy and no major unexpected costs, it would take 30 years to break even. Because of this, he decided to abandon the real estate idea and instead invest his money long-term in the S&P 500, planning to let it grow for the next 20 years.
His post sparked a lively discussion about the state of Zagreb's real estate market. Commenters offered their own explanations for why prices have reached such levels. "The market's problem is that money is currently cheap, inflation is high, so everyone is trying to park their money in real estate, which drives prices up," was one of the comments shared from Reddit.
Others recalled how the situation looked just a few years ago. "They were always unrealistically expensive, but I think that until a few years ago, you could get one for more normal money, and then being a landlord could even cover the loan more or less. And today they've driven prices up so much that it probably only pays off for people who are laundering money and then pay cash so it just sits there and keeps appreciating because prices only go up, and I don't think they'll stop rising," wrote one commenter.
Particularly interesting is the experience of a Redditor who moved to Western Europe, to the metropolitan area of a world-famous city with millions of inhabitants. He highlighted the absurd situation where the price per square meter in his Zagreb neighborhood has reached as much as 70% of the price per square meter in his new place of residence, while the quality of life is incomparable.
"The value of the apartment went up by almost 40% in a year and a half. Meanwhile, I moved to Western Europe... Now the square meter in the neighborhood is ~70% of the price per square meter where I live now, and here everything is incomparably better: more types of public transport, infrastructure for pedestrians/cyclists/cars, greenery, cleaner air, public amenities, etc. As for salaries, it's all individual, but the minimum wage is twice that in Croatia," he wrote.
He added that he concludes that prices in Zagreb are "inflated" and in no way keep pace with wage growth, suggesting that a buyer gets relatively little for an extremely high amount compared to what they would get in more developed European cities.
