Croatian real estate market liberalised

09/02/2009

Croatia's real estate market opens up to EU citizens in an effort to fulfill another SAA requirement and as a potential boost to the national economy.

By Natasa Radic for Southeast European Times in Zagreb -- 09/02/09

The newly liberalised Croatian real estate market should attract more foreigners, especially EU buyers. [Getty Images]

Beginning this month, EU citizens have as much opportunity as Croatian nationals do to purchase real estate in Croatia. In the past, EU citizens had to deal with long bureaucratic procedures and fulfill numerous legal requirements, such as obtaining permission from the foreign and justice ministries to buy property, which took years.

With the passing of the Bill on Property, which was implemented this month, Croatia fulfilled a requirement of the Stabilisation and Association Agreement that grants EU citizens equal rights to purchase property in Croatia.

The new bill, however, excludes agricultural land and protected cultural and national property. Non-EU citizens still need approval from the foreign and justice ministries in order to purchase real estate.

Despite skyrocketing property prices over the last few years and the onset of the global economic crisis, observers expect brisk sales to foreigners to continue. Foreigners find Croatia appealing as both a tourist destination and a long-term home.

In the past, a foreigner buying a private residence had to obtain a permit from the two ministries mentioned above. At least 98% of applicants would obtain a permit, but the process was extremely slow, sometimes taking up to two years.

Another problem was establishing a clear title to the land, as the government updated the Land Registry only a few years ago. It is now available online.

According to the Croatian Chamber of Economy, more than 3,500 foreign citizens received a permit to buy property in the last decade. The Germans are in the lead (2,000 permits), followed by Austrians (700), Hungarians (120) and surging numbers of Russians and Britons. The foreign buyers flock to the coast, preferring Dalmatia and its islands and the Istrian peninsula.

Though official numbers are far from accurate, over 70,000 foreign nationals reportedly already own property in Croatia, either by purchasing it through a foreign company or by arranging a lifelong lease, which does not require a special permit.

Marusa Vizek of the Zagreb Institute of Economics told the financial magazine Banka that the foreign ministry receives up to 1,500 permit requests annually, adding that the price per square metre will not rise after liberalisation, since foreign nationals' interest in Croatian property is already "priced into" the market.