Croatia’s Property Market Benefits from Pre-EU Status

While many individual investors have been biting their nails and taking a wait and see approach as the arguments still rally – will it, won’t it, will Croatia make EU entry by 2009 or won’t it?  One brand new, pedigree staffed fund management company has leapt in ahead of the crowds because according to their in depth due diligence, Croatia’s property market is actually benefiting now from its pre-EU status.

The company is called Castle European Estates and one of its founders explained - “we will be looking at transition economies in emerging Europe, principally non-EU and non-Russia.  The economies in those regions are not benefiting from either Russian growth, Russian near abroad investment dynamics or Europeanisation” - and making up the core of their transition market investment approach and providing the basis upon which they are predicting real estate related returns in excess of 20% per annum is Croatia.

Despite the Organization for Security and Co-operation in Europe having recently strongly urged the government of Croatia to revisit and re-implement its earlier promises to do more on equal employment opportunity rights – and despite other top EU officials having warned Croatian institutions that they need to work far harder to reform the judiciary and fight against corruption if the country is ever going to meet all the necessary criteria for completing the entry talks and actually join the European Union, the underlying fundamentals upon which Croatia’s entry is based are proving robust.

It is this very fact of robust fundamental that’s driving dynamic fund managers and forward thinking real estate investors to commit to property in Croatia.  According to David Stewart Howitt from Castle European Estates “through the nature of change where regional economies, national economies and sub-regional economies move from one status to another, you get an uplift because of increased domestic demand.” And the main factor driving change in the likes of Croatia is domestic growth and the key driver to this is the transition of the nation to a full market economy which experts believe it is well on track to achieve.

Other positive fundamental supporting the pre-EU status investment commitment argument include the fact the EU opened 6 new policy areas in membership negotiations with Croatia earlier in the summer and Zagreb authorities believe twenty chapters will be open by the end of the year as they still have their sights firmly set and trained on process conclusion by 2009. 

In the build up to the November elections in Croatia, all leading political parties are currently going to great lengths to promote the benefits of EU entry (although not at any cost) and highlighting to the nation that reforms and efforts so far undertaken by the nation towards EU acceptance have resulted in positives such as unemployment levels dropping to ten year lows in June and the industrial sector in Croatia having increased productivity capacities in parallel with employment.

On top of all this, travel and tourism in Croatia is an almost unparalleled success story, already in 2007 the number of visitor arrivals is up more than 10 % on 2006 and there is nothing holding this industry back at all – in fact, quite the opposite is true.

It seems quite clear that there is substantial opportunity for sustainable growth in the Croatian economy, in domestic and international demand in Croatia, in affordability and therefore, the investment climate is ripe for property investors to commit today and reap financial reward following Croatia’s impending EU entry. 

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