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Croatia lifts restrictions on foreign property investment next week

It is one move that could make investing in property in Croatia more attractive but there are still issues to be taken into account such as land disputes, experts are warning.

A different strategy is needed for investors depending on what area potential investors are looking at, according to the Croatia Property Market Profile from Property Secrets.

The report points out that the way to take advantage of coastal development, for example, is to own prime lots of land that developers will consider to be Grade A. 'This way an investor can buy into a coastal boom by employing the earliest exit strategy available selling for development,' it says.

The capital city, Zagreb, is small with 783,000 inhabitants, but as the political, administrative and cultural centre of the country it offers good potential for the property investor as the market is driven by locals, not by foreigners which means strong demand for housing, especially new builds, coming from the emerging middle classes.

The report looks at GDP Growth, GDP per capita, the labour market, wage levels, property price growth and rental position.

It also points out that clear property rights in Croatia are a big issue. 'Restitution claims are potential issues for buyers on the secondary market and shouldn't be ignored. Before the war 10% of Croatia's population was Serbs. Some of them have returned, but many still live outside Croatia. Legally they are still owners of the property they left and can return and claim that property back,' it warns.

However, it concludes that overall the next 12 to 18 months are a period of opportunity for the property investors but advises against off-plan developments as these tend to work best in rapidly rising markets.

'We would recommend looking at after-plan buys from severely distressed developers only where the product has great long-term stored or intrinsic value. In other words, cheap isn't the overriding criterion for any investment but long-term value and potential for growth is,' it concludes.