Croatia

During the 1980s Croatia carved out a reputation as one of the most desirable holiday destinations in eastern Europe, attracting half a million visitors annually from the UK alone.

But the 1990s bought armed conflict to the Balkans and the former Yugoslavia was torn apart, crippling the country's reputation for a decade. However, peace and emerging stability have returned in the new millennium and the country has begun to rebuild its former reputation.

According to the Croatian National Tourist Board half a million Brits visited the country in 2006 – up 5.2 per cent from the year before. The areas along the hundreds of miles of Adriatic coast and the historic city of Zagreb remain central to the Croatian tourist industry, and are consequently also property hotspots.

Sun, sea and sand

On the south coast, Dubrovnik - a UNESCO world heritage site – is popular, but possesses some of the most expensive property prices in the country. While at the opposite end of the country, in terms of both price and culture, lays the peninsular of Istria, where the towns of Porec, Novigrad and Umag have some of the most affordable property.

Located in the middle of these two extremes are the cities of Split and the capital Zagreb. The former strikes a balance between the price and culture extremes in the north and south of the country, while Zagreb – home to almost a quarter of the countries 4 million strong population – bares more resemblance to Vienna than other Balkan capitals, such as Sofia, due to the strong Austrian influence over the region during the nineteenth century.

A rule of thumb would suggest sought after villas on the south coast, or apartment properties in the central cities are the best bet for long-term investors.

Numbers, however, remain small. Overseas specialists Selection Properties, estimate just over 1,000 Brits will make a purchase in Croatia in 2007. The country is perhaps best suited to more intrepid investors with a certain degree of acumen and experience, as conditions can be from ideal.

Bureaucratic headaches

The process of purchasing property can be slow in Croatia. All personal sales have to be approved by the government, and this process can take up to a year. Thus waits of twelve months are not uncommon before any actual investment can be made.

Concerns have also been raised over the possibility of absentee landowners, whom may have fled the country during the previous 50 years of upheaval. If the legitimate owner of a property cannot be located, this may hinder, or even prevent, a sale.

However, the country signed a Stabilisation and Association agreement with Europe in 2005, and prices have increased by approximately 15 per cent annually in some areas since then, thus investment potential is high.

There are also plans for Croatia to join the European Union proper within the next few years and this is sure to bolster property prices further, in a similar fashion to the other eastern European states which joined in 2004 and 2007.