Will Croatian Property Boom in 2011?

Written by Andrey Bibarsov

The question on everyone’s lips is will the Croatian property market boom in 2011. Earlier this year the European Parliament passed a bill stating that Croatian accession negotiations can be completed this year, if enough progress is made on Croatia’s part.

During the last round of EU expansions in 2004, almost all the countries that acceded into the Union saw massive growth in property investment, and those investments were indeed very rewarding as property prices grew massively following accession. Estonia, Lithuania and the Czech Republic saw particularly strong growth, as did several others. So, it would be nice to say that Croatia will see the same growth in 2011 or whenever it accedes but the evidence just doesn’t support this.

A: The Croatian property market has already seen a flurry of investment activity, when its accession was previously supposed to complete in 2008 and didn’t because Slovenia blocked it. So this will put many people off until accession is actually completed.

B: The investors who put it off could well be proven right, because selling accession to the Croatian people in the promised referendum could put the Kaibosh on accession.

C: The European recovery is still shaky and confidence is low, it is practically impossible that we would see a boom like we saw in EU accession hopefuls during a massive global property boom.

At any rate, we have all seen the damage done when boom turns to bust. We have also seen lately that the Croatian property market is one of the most stable in Europe. It is likely that this is what we will see in 2011, a return to stability. Not that investors will care, following the bust, investors are much more concerned with rental yields that capital appreciation anyway.