- Title: CROATIA: Croatian real estate blooms as country moves towards EU membership
- Date: 29th July 2006
- Summary: (L!1) SAVUDRIJA, CROATIA (RECENT) (REUTERS) VARIOUS OF WORKERS AT CONSTRUCTION SITE FOR HOLIDAY APARTMENTS BILLBOARD WITH DETAILS FOR SELLING PROPERTIES VARIOUS OF FINISHED HOLIDAY APARTMENT BUILDING
- Embargoed: 13th August 2006 13:00
- Keywords:
- Location: Croatia
- Country: Croatia
- Topics: Economic News,Lifestyle
- Reuters ID: LVAESH2SYFN76X5UXV2W7S2RNYJ8
- Story Text: Croatia's real estate market has exploded in the last few years, as the country overhauls its tourist industry and starts moving towards European Union membership.
House prices have sky-rocketed and the number of property agencies are growing to meet the new demand.
"It has been three of four years now that foreigners have started showing interest in Dubrovnik again, and many of them come to look at property, whether to buy holiday homes or to invest," Slavica Gavranic, a real estate agent from Dubrovnik told Reuters.
"And the interest has started growing recently as there is more talk about Croatia joining the European Union," she added.
Gavranic runs one of a number of the booming real estate agencies that are trying to cash in on the Adriatic city's status as Croatia's top destination among foreigners seeking to buy a place under the Mediterranean sun.
The price of a square metre in the very heart of Dubrovnik ranges from 4,000 euros to as much as 10,000 euros. Outside the old walls, it varies from 2,500 euros to 5,000 euros.
Due to its proximity to the rest of Europe and its milder climate, the northern Adriatic peninsula of Istria is attracting even more buyers and in the past five years the prices of property have doubled.
The potentially lucrative market has prompted a number of foreign-owned agents to open businesses there.
"I think the prices are good, I think it's a young market and it's definitely increasing, and I don't think it can keep going too far. Once Croatia joins the EU I imagine the prices to go 30 percent overnight and then it will start to turn down. But currently its a very, very young market, it's very good. There's a lot of good deals right now," said Jamie Tingle, owner of a real estate agency based in the coastal town of Savudrija said.
Tingle moved to Croatia from England four years ago after spending a holiday in Savudrija. He says his new business is performing strongly and plans to stay in Croatia. His clients come from all over Europe, and even further afield.
"We have clients from all over, the local surrounding countryside, people from Slovenia, Austria, Germany, Italy. But also from further afield such as Norway, South Africa, a lot of English, all sorts really," Tingle said.
Due to its laid back lifestyle, green hills and wineries, the Istrian inland - often called the Croatian Tuscany - is an especially attractive property buying location among foreigners.
Many look for old stone houses, some of which have been abandoned for years as younger generations of Croats moved to cities in the 50's and 60's looking for jobs.
"I bought this house about four and a half years ago. Nobody lived here for maybe 15 years," Alistair Stepehen, a house owner from Scotland said.
He redesigned the house on the inside and connected it with the farm house to make more space, but left the outside in its original form, a move which delighted his neighbours.
The growing real estate market has given local property owners a chance to become wealthy almost overnight, as they can sell even neglected old stone houses for a small fortune.
At the same time, it gave rise to fears that in the end wealthy foreigners would buy all attractive property and strip Croats of what they perceive should be in local hands.
The fears intensified as Croatia intends to fully open up the real estate market in 2009, in line with an associate membership accord with the EU.
Several conservative parties have urged the government to ask Brussels to delay full liberalisation, or devise a way to ban or block the sales. They also cited the need to preserve the pristine landscape and prevent urban devastation.
Currently, citizens from most EU states can freely buy property in Croatia, on the basis of reciprocity.
However, they face a complex and lengthy bureaucratic procedure which may take two years or more. On top of that, Croatia has only recently started to tackle muddled property rights, the legacy of 50-years of neglect under communist rule. The laws have meant that fewer than 4000 foreigners have legally bought property in the last decade, but some estimates suggest more than ten times that have actually purchased houses by circumventing the laws.
Despite a public outcry, locals are often quite keen to sell their property.
Croatia started EU membership talks last October, with a view to joining around 2010. The government is devising a strategy for talks with the EU on the real estate, which are due start this year. Observers say Croatia has a clear obligation to open up the market in February 2009, as laid out in the associate membership accord.
It might, however demand another deal, citing a huge discrepancy in purchasing power between EU citizens, eager to buy its property, and its own population.
Another possibility is to limit the sale of land along the coast or on the islands so that the restriction applies equally to Croats and foreigners. - Copyright Holder: REUTERS
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