House Hunter: 'I've got £120,000 to invest and Croatia appeals. What sort of property can I buy?'

Karen Burgess writes: "I'm seriously considering some sort of property-buying venture as an investment. I already own property in the UK, including one investment property, but given the current situation here at the moment I don't want to buy anything else in the UK since there is no potential for capital growth and rental returns.

THE PROBLEM

Karen Burgess writes: "I'm seriously considering some sort of property-buying venture as an investment. I already own property in the UK, including one investment property, but given the current situation here at the moment I don't want to buy anything else in the UK since there is no potential for capital growth and rental returns.

"I've got about £120,000 to invest and the place that really appeals to me is Croatia. I haven't been there yet, although I do plan on going there very shortly, but from everything I have heard about it I think it will suit me. I have thought about other countries like Spain, France and southern Italy but, having considered all of these options, Croatia definitely comes out on top.

"I've read about the place and seen it on television so I know that it's very beautiful and that it used to be a popular tourist destination which I believe will be again soon. I believe somewhere like this will give me both strong capital growth and a good rental return.

"I'm not sure what type of property I'm going to buy. I'm interested in buying a plot of land and getting something built or buying into a brand-new development. I would also consider buying off-plan. I've researched this a little bit and it looks good, but I don't think I want to take on an older building as I don't want to get into renovating. I went to a property exhibition recently at Olympia and got some advice on buying and the Croatian stand was the busiest stand in the show by far so they must be doing something right! It was a very encouraging sign."

THE ADVICE

"We are currently seeing a lot of investment-driven buyers like Karen. Dubrovnik is a good place for rental return as it has opportunities in high and low season. All hotels in Dubrovnik are now fully booked for June, July and August, and from September to May the American college is always looking for student accommodation.

"We offer inspection visits and manage places for buyers so we always make sure to place people in our buyers' properties first as this is part of our full-service approach.

"For Karen, buying off-plan will give the maximum return on her investment and we have several opportunities she might want to consider. In Dubrovnik, the fourth building in a development was recently released and we have six apartments left out of 30. They won't be complete until next year but she can make staged payments over the next 18 months. The apartments are right in the heart of the tourist area near bars, restaurants and a short walk from the yacht club. They start at around £80,000 and go up to £100,000 so they fit into her budget.

"In Croatia, capital is still appreciating well. Prices have risen in the past two years between 20 to 30 per cent but the market is still young. The Croatian government is determined to market their country as a high-end destination and it's always being compared with St Tropez. BA have started a scheduled service to Dubrovnik three times a week, which continues during the winter. Aer Lingus have also started up here as well as 20 new holiday companies so there will be many more charter flights.

"The island of Brac is popular and we have a new development in its harbour in Milna. Apartments are priced from £50,000 to £80,000 but while rental returns are good in summer they are not out of season.

"As for plots, we currently have one on the island of Korcula, ideal for a three-bedroom villa, on the second line back from the sea. It's £22,000 and we can handle all the building work as we have architects, surveyors and builders.

"Karen is right not to go for an older property. If a place is to be rented you don't want to spend time and money on it. Karen should get 8 per cent return in Dubrovnik and around 6.5 per cent in Brac."

Paul Keppler is the MD for Croatian Sun: 00 385 2031 2228; www.croatiansun.com

THE SOLUTION

Property one: Solitudo apartments, Dubrovnik.

Price: Three-bedroom apartments from £118,000.

Agent's details: This development in Lapad, the green area of the city with its own beaches, hotels and restaurants, is due for completion later this year. It has studios and one, two, and three-bedroom apartments, with wooden and ceramic-tiled floors, a 26m2 living room, separate dining room, air conditioning and, at a price, parking spaces.

Property two: Milna Apartments, Brac.

Price: One-bedroom apartment from about £58,500.

Agent's details: The island of Brac is the largest of the Dalmatian islands and is only a short ferry ride from Split. This development is set on a hill above the main beach. The apartments are on an 80,000sq ft plot close to the beach and marina, and a short drive from the old town. These 18 apartments are insulated and come with private parking spaces and gardens for those on the ground floor. Bedrooms have parquet floors, tiled bathrooms and each apartment has its own ISDN telephone wiring and satellite receiver with connections.

Property three: Marina development, Milna, Brac.

Price: About £86,000.

Agent's details: This development features luxurious one-bedroom beachfront apartments next to the tree-fringed marina, which has a full range of water sports and recreational opportunities. The apartments have a balcony or terrace, kitchen and bathroom with shower and full bath, room service and satellite television.

THE VERDICT

"I'll have to work it out exactly but it looks like the holiday-let market will generate a very reasonable income. I'd like to try this and would also like the opportunity to use it myself for holidays since the climate sounds good and the Dalmatian coast looks beautiful.

"I'm particularly interested in Dubrovnik but will probably also visit Split when I'm over there. I've been doing some research on the internet and Croatian Sun seems to have a good choice of properties, but it also seems able to offer advice about the whole buying process and the Croatian rentals market, which appeals to me. I would like to buy a whole package and will work out exactly what growth I'm likely to get when I see the figures."

If you would like House Hunter's help, write to House Hunter, The Independent, 191 Marsh Wall, London E14 9RS, or e-mail with full details: househunter@independent.co.uk