Foreigners Waiting To See Croats Buckle

The Croatian real estate market has become a popular destination of European capital recently, especially along the Adriatic coast. Still, according to the New York Times, the real estate market is not blooming in Croatia.

- Despite government action this year to simplify house purchases for European Union citizens, real estate brokers report few new projects and flat demand - the Times writes.

Vedrana Likan of a Zagreb-based real estate agency confirmed that there were 13,000 unsold apartments in Croatia at the end of the first trimester. Furthermore, she said that “absolute stagnation and illiquidity” was present on the market for the foreign media.

Expectations were high in March when Croatia introduced a new law in the face of approaching the European Union. The law equalised EU citizens with Croatians upon purchasing real estate in Croatia. However, the law was poorly timed and adopted in the time when the world economic crisis started affecting the country and according to the Times, “specific phenomena” are in question. Apart from the zone closest to the coast being reserved for constructing villas and homes intended for rental, the issue of land ownership arises.

Real estate prices going down

The argument goes all the way back to former Yugoslavia, where property was usually nationalised. Feuds are possible regarding the actual ownership of a certain part of land.

However, not everything is so bleak for wealthy Europeans who want to own a piece of Croatia – real estate prices have went down by 20 to 25 percent in 2008, while a squared metre in Dubrovnik is worth 3,100 euros, which is must more realistic that before, the Times writes.

In addition, Europe hopes that real estate prices in Croatia will keep on going down, which hare now the same or higher that those in EU, so that Europeans can attain property in the Adriatic coast with ease.

This is also highly likely, because a survey conducted by 50 Croatian real estate agencies shows that 65 percent expect real estate prices to significantly be reduced within the upcoming months.