Croatia before 1991, when it was part of the former Yugoslavia federation, was widely known for its Adriatic sea resorts and tourist attractions such as the Medieval city of Dubrovnic. After it gained independence from Belgrade in the summer of 1991, local Serb militia, backed by the Yugoslav army occupied more than 30 percent of its territory by the end of the year. After two successful and bloody military operations in May and August 1995 Croatia regained control over the most of the occupied territories and in January 1998 it took peacefully the last region - Eastern Slavonia (at the border with Serbia), that was previously under the Serb authority.

The recapture by Zagreb of the whole Croatian territory lead to massive migration of hundred of thousands of ethnic Serbs, which have lived for two centuries there. They left their homes and lands and moved into Serbia and into Serb-controlled part of Bosnia and Herzegovina. The international community has obliged Zagreb to allow Serbs to return in Croatia, but until now only a few thousands have chosen to regain their properties, putting on risk their lives within the hostile Croats environment.

The Croatian residence building construction, which varied around 20-25,000 flats and family houses before the war of 1991-1995, since then dropped to 7 000 units. During the war some 21,000 flats and family houses were destroyed or seriously damaged.

There are several reasons for not building a larger number of flats in spite of their obvious shortage. On the one hand, the entire Croatian economy lacks the financial means, which has resulted in a collapse of the whole production, therefore of residence and office construction as well. On the other hand, banks decide very rarely to finance the building construction, due to a high level of risk involved in this business and to a weak possibility of securing the return on investment.

The prices of the residential flats and houses in Zagreb reach $1000 /sq.meter (1 sq.meter=appr. 10 sq.feet). In the big cities on the Adriatic coast the prices range between 600 and $1000 /sq.meter. In the big cities of the northern parts of Croatia the prices go below the mark of $500 /sq.meter.

The prices of the building lots reflect the same trends as in the residential market. If in the capital Zagreb a sq.meter could easily reach $100 and even $350 for most attractive sites, in the regions, ravaged by the war, the lots are sold for $.50 (yes, 50 cents) per sq.meter.

Almost all banks in Croatia are offering to its clients the housing credits. Creditors require from the credit beneficiary to have an income, together with his guarantor, at least double than the monthly mortgage, to deposit between 10 and 30 percent of the credit value on his account with the bank. Credits are granted for the terms from 10 to 15 years with an annual interest rate between 9 and 12 percent (the annual inflation stands at 4-5 percent).

The foreign citizens in Croatia may purchase real estate in case they obtain formal approval from the Ministry of Foreign Affairs with a recommendation of the Ministry of Justice. The approval is granted only to the citizens of the states with which Croatia has signed the agreement of reciprocity, and even for them the procedures of obtaining approvals often last over a year. The agreement of reciprocity has been signed by Croatia with many western countries, the USA included. Those who cannot obtain approval or have no time for waiting over a year for purchasing real estate can establish a company in Croatia which, as a Croatian legal entity, could be able to purchase real estate without obstruction. All foreign citizens are allowed to establish a company within a period of approximately one month with a minimum initial capital of 5 000 German Marks ($2500).