Slovenia's Real Estate and Foreigners
During EU negotiations in 1995, Slovenia agreed to open its real estate market to foreigners earlier than any other candidate country, in an agreement known as the "Spanish Compromise." Named after then EU president Spain, it settled a dispute over property rights between Slovenia and Italy. However, it caused concern among many Slovenes.
After agreeing to open the real estate market, people worried that Slovenia, a country with barely 20,000 square kilometres (about half the size of Switzerland), would be bought up by more prosperous western Europeans. The process of opening the property market was gradual. In 1999, real estate in Slovenia became open to EU citizens who had lived in Slovenia for at least three years. In 2003, the market opened to all EU citizens, although - again - with restrictions.
However, the flood of foreigners failed to come. In 2003, the Slovenian Justice Ministry received only 176 applications from foreigners interested in buying property. The majority were EU citizens, with 74 Germans forming the largest group, followed by 45 Austrians and 25 Italians.
Diana Evans, from England, was among the first-wave of foreigners to buy land in Slovenia last year. She explains what motivated her:
"You can come to a country like Slovenia and do as I did and buy a house with (I've got 15 hectares of land) which we think is lovely and people here think I'm absolutely crazy: "What do you want with all this land?!" And it is just because you can't get it in Britain - not at any sensible price. You need to be a millionaire to do that kind of thing."
When Slovenia joined the European Union on May 1, all previous restrictions were dropped and the real-estate market was fully opened. The government still has a safety clause that would allow it to protect the real estate market in case of problems.
But after one month of EU membership, the market is still quiet. As Sonja GraÄaniÄ, from the Slovenian real estate firm Dodoma, says:
"We didn't notice yet any increase in asking for buying real estate."
Sonja explains:
"There are some regions where prices for real estate are higher than in other countries which joined the European Union. Perhaps in some areas, or some specific real estate where local communities want to get some foreign investors... but it would not happen all over the Slovenian country the same way."
Indeed, it seems that quite a few potential investors were scared away by Slovenia's prices. Diana confirms:
"I've had a lot of e-mails from British people, or people who speak English anyway, for advice about how to go about buying a house in Slovenia. But, you know, when you explain to them the realities, when they look at the prices (which are not that cheap, you know) and mostly they're thinking about renting it out and get some money, and when they work out what they get in rent, it doesn't actually add up, so most of them have been put off when they look at the reality. And the people who are buying would probably have bought anyway. It's just that now is the right time for them to do it."
The future is always impossible to predict, but for now it appears that Slovenia's fear of having its property market overrun is, in fact, nothing to worry about just yet.
