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News: Croatian obstacles 'cause for concern'

Current Croatian property laws pose significant barriers to foreign investors interested in buying property in the country, an issue which is creating problems for Croatia's bid to join the EU, reports Natasa Radic for Southeast European Times...

EU experts have concluded that Croatian property law does not comply with European standards and must be amended before the country can join the EU.

"A large number of legislative restrictions still exist," the European Commission reported. "Citizens of EU countries do not enjoy the necessary rights that would enable them to obtain property in Croatia."

Already a very popular tourist destination, Croatia has a strong appeal with foreigners looking to buy holiday homes along the country's beautiful coastline.  But Eurosceptics in the country are not keen to open the property market to foreigners, fearing that such holiday properties will be snapped up immediately.

For the time being therefore, Croatia is not taking part in the EU's negotiations on the free movement of goods and capital.

The current legal situation

Under current Croatian law, foreign individuals and businesses wishing to buy property in the country must first obtain consent from the foreign ministry and the justice ministry, a process which can take years.

On deciding whether to grant a foreign request to purchase property, the foreign ministry examines whether there is reciprocity between Croatia and the applicant's state in real estate matters.  In other words, the foreign ministry looks at how Croatian citizens are treated by the property law of the applicant country.  Italian, German and Austrian nationals have the easiest ride, since vast numbers of Croatian citizens have already purchased property in these countries.

Foreign individuals and businesses are not currently allowed to buy agricultural or forest land in Croatia. If the object of acquisition is a protected cultural monument, it is first offered to the authorities -- federal, regional, and municipal.  Only if such authorities decline to exercise their pre-emptive right to purchase can the property be bought by foreign individuals and businesses.

Another country with a significant tourist market which ran into similar issues to Croatia during the accession process is Malta.  The Maltese real estate market took seven years to liberalise.

The Croatian property market is scheduled to be liberalised by 2009, according to previous agreements signed with the EU.

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