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Croatia Real Estate

ZAGREB, Croatia, Nov 22 (IPS) - The approaching winter brings with it the high season for the fairly new business of property sale on the picturesque Adriatic coast. Tempting for foreigners, troubling for local people.
Sale of property on the 1,000km coast and about 1,180 islands has risen rapidly over the past five years, the Croatian Chamber of Commerce says. The buyers are exclusively foreigners.
The sale is helping rebuild the economy of this nation of 4.5 million after the devastating war for independence in the 90s.
The prices of villas, and even devastated homes have risen an average 10 percent a year. The going price at present is between 2,500and 7,000 dollars per square metre of living space.
"The most wanted location remains Dubrovnik," Dubravko Ranilovic, head of the real estate department of the Croatian Chamber of Commerce told IPS on phone. "There are wealthy people who do not ask the price, and pay whatever they are asked to. However, this is a limited market, and trends are hard to foresee, as there's little new construction in the region."
Dubrovnik, the mediaeval town on the far southeastern tip of the coast, is known as the 'pearl of the Adriatic'. It has been the most popular target for tourists for decades.
The old town, with cobbled streets and ancient little houses, is bordered by a fortress protruding into the sea. The price of property within the town reaches 7,000 dollars a square metre. Outside the walls, it is about 4,000 dollars.
"Buying property here is a fantastic investment, as the prices in Dubrovnik have doubled in just two years," Goran Pikunic from the local property agency Aedio told IPS. Almost 2,000 houses and flats were sold in Dubrovnik in 2004. Most buyers were British, Irish and Russians.
The central town Split on the Dalmatian part of the coast has also become popular with buyers. It is the point for ferry transport to faraway outlets.
Foreign real estate companies have now been allowed to open offices in Split. One of their first successful sales was an ancient villa on the tiny island of Ciovo for 800,000 dollars.
"The targets are the islands, particularly Hvar and its archipelago," says Medenka Vidovic from the estate agency Cvjetni Dom (Flower Home).
Hvar, which also has a medieval fortress and cobbled streets, remains the second most popular vacation spot after Dubrovnik. Its group of seven Hell Islands so named after shipwrecks in the ancient past are now a treasure of the Dalmatian coast.
One of its islands, Pelegrin, was proposed to be leased to an Italian consortium on condition it invests 350 million dollars for six new hotels.
But although tourism is the strongest part of the Croatian economy, bringing up to seven billion dollars a year, the Pelegrin sale proposal brought public outrage. It is on hold for the time being.
"It seems we are now turning beauty into the beast with such sales," Hvar resident Niko Miksic told IPS. "Who will remember we had wild, untamed nature here after giant hotels overrun the coast. Besides, it looks like we are selling to foreigners the last thing we have - our coast."
The Croatian transition into a market economy was marked by the emergence of war profiteers under the late president Franjo Tudjman, who died in 1999.
Since then, Croatia has been slowly recovering from the shock of the 'one kuna (local currency) privatisation' under which people close to the regime bought profitable factories and firms for a symbolic sum of one kuna. Most of them are now business tycoons.
The growing sales on the coast, and the fantastic prices often quoted by the local media have brought property issues into focus. A survey by the Vecernji List newspaper and the real estate agency Infonekretnine showed that 74 percent of interviewees opposed further sale of coastal homes to foreigners.
Economists say the skyrocketing prices of real estate influence the price of new homes in inland Croatia as well, particularly affecting first home buyers.
"Young couples are becoming losers, because in some continental areas prices are now almost double of what they were a couple of years ago. This followed the coastal trend," Vecernji List wrote.
Despite the public outcry and the effect on local property, real estate agents seem happy. Among their customers they name former French culture minister Jacques Lang, former top international official in Bosnia Wolfgang Petritsch, and United Nations representative in the region Carl Bildt.
They expect prices to double once Croatia joins the European Union by the end of the decade. (END/2005)


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