A few weeks back the European Parliament passed a bill stating the Croatia would be able to finish its EU accession negotiations this year, provided that it continues to reform and cooperate, especially with the war crimes investigators. The question on many people's lips is this: with the EU heavily in the spotlight for all the wrong reasons as it limps out of recession, will the Croatian property market see the same boost EU accession has become famous for?
EU accession has proven to be a massive boost to a country's property market, as we have seen many times in Estonia, Bulgaria, Poland and more. But in Croatia there are some caveats to address.
Firstly, Croatia still might not actually join the EU. The government has always promised that a referendum will be held if and when the accession negotiations are completed. With the EU crumbling at the hands of a sovereign debt crisis the prospect of joining is less appealing than ever before, perhaps too much so for the dissolutioned Croatian public.
However the EU still offers a very powerful package. Apart from the boost to property values, the economy gets a boost. Visa free travel boosts tourism and the competitiveness of Croatian companies trading in the EU is improved by reduced import/export tariffs. Thus, the consensus of opinion is that the referendum will pass with a Yes vote.
But even if the public do vote yes, this still doesn't guarantee that the Croatian property market will be boosted by accession, because Croatia has already had its day under that sun.
Croatia was meant to achieve EU accession in 2008, but Slovenia blocked its negotiations. At the time the possibility of Croatia joining the EU made it one of the most popular property markets in the world. Investors had seen the money made on property investments in Estonia, Latvia and Poland et al, along with others that joined the bloc in 2004, and then Bulgaria in 2007, and they wanted a piece of that action in Croatia.
Needless to say many people saw these dreams broken when accession was blocked. This of course compounded by this being followed by the economic crisis. The question is, will investors be so quick to invest in Croatia, and if not will their hesitancy limit the boost to the Croatian property market?
The answer is of course maybe, but I doubt it. Yes, many people will be hesitant. However, real investors know that the early bird catches the worm, and that with Slovenia's block now well out of the way they time to be early is now. The fact that Croatian property prices are now much lower on a like-for-like basis than before the crisis increases the chances that people will buy now, because if they employ due diligence and choose carefully, they will be able to buy properties that will be good investments irrespective of EU accession.
We will likely see two waves; one of buyers who decide to take the chance on investing before EU accession goes ahead, and another, possibly larger wave of those who buy if or when Croatia accedes to the EU. Either way, in answer to the initial question, yes, Croatian property will most likely see a boost because of EU accession.