Why invest in Croatia?

1. Tourism

With its stunning coast, pleasant Mediterranean climate and excellent connections to many European cities Croatia is an extremely popular tourist destination.  Istria is arguably Croatia’s most popular holiday destination.  Pula airport has seen a 132% increase in passenger numbers between 200 and 2010.  Tourism demand in Croatia is expected to increase by 7% per annum over the next 10 years with the country expected to become one of the world’s top 5 most popular travel and tourist destination by 2015.

2. Accessibility

Istria is easily accessed from the UK and Ireland in a little more than 2 ½ hours flying time.  Ryanair now flies directly from Stansted to Pula and from Dublin to Zadar. Easyjet from London to Split or Rijeka, Easyjet to Ljubljana (Slovenia) Ryanair to Trieste in Italy (from where it is only 1 ½ hour drive to Istria).  Low cost Eastern European airline Wizz Air also operates flights from London to Zagreb along with Easyjet.

3. Affordability

Croatia offers an affordable entry point for investors seeking a relatively stable emerging market with room for growth as well as those looking for an affordable holiday home overseas. 

4. Potential for capital growth

More people are demanding property in Croatia at a time when development is not yet up to speed in any of the main centres of interest to meet the growing demand.  This represents the perfect situation for capital growth.  So far in the most popular parts of Croatia prices have been rising by up to 20% a year.  With EU accession expected in the next 2 years it is forecast that property prices will continue to rise at anything between 15-20% per annum. Leading UK Estate Agent Knight Frank rates Croatia as one of the top 5 places to invest in European property in 2011.

5. Planning Regulations

Legislative activity and new planning laws introduced in the last year protecting Croatia’s coastline from over-development mean that land which is approved and is immediately available for developments is in short supply.  With the knowledge that the picturesque coastline of the country will be unchanged, more and more property investors are attracted to the area and the limited supply of land where construction is permitted will serve to further increase residential prices.  Any construction that is taking place is of a very high standard reflecting the increased interest of foreign property investors and an ever more discerning local market.

6. Infrastructure

A new motorway has been constructed in Istria linking Pula in the South to Buje in the North and the border with Slovenia and Rijeka in the East which links to the Coast and Islands and the Croatian South .  New direct flights have commenced to Pula airport from Stansted with Ryanair.

7. EU Membership

Croatia is widely expected to achieve entry to the EU by 2013.  The country is already aligned and doing all it can to harmonise with EU policies, strategies and standards.  With regards to property specifically, at the moment potential buyers can only own property in Croatia if they meet certain criteria such as being of a certain nationality and from a nation where Croatian citizens are granted at least the right to own property.  (Citizens of the UK and Ireland currently meet these criteria.) Furthermore non-Croatians have to gain permission to purchase from the Ministry of Foreign Affairs of the Republic of Croatia who seek an opinion as to whether the individual can own property from the Ministry of Justice as well as local Government in the location in which the proposed property is situated.  This is not acceptable to the European Union which demands that all EU citizens have the right to purchase real estate in any other member state and are also afforded the same rights as domiciled Croatian citizens when it comes to ongoing property ownership rights.  Croatia understands and accepts this ruling and therefore as it is determined to gain EU entry as early as 2013 it is highly likely that over the next year or so changes will be made to the property ownership rules which will lead more buyers to the market which will push up prices.  Investors should therefore position themselves in Croatia before that surge in interest happens.