The charm of Tuscany on a Croatian peninsula

VISNJAN, Croatia: For vacation home buyers who want the feel of Tuscany but at lower prices, the arrowhead-shaped peninsula of Istria in northern Croatia is proving to be a popular choice.

For years most of the foreign interest in Croatia's real estate centered on its southern coast. But over the last five years, as prices along that 5,000-kilometer, or more than 3,100-mile, strip climbed steadily and the supply of vacation homes dwindled, Istria emerged as a region where prices were still relatively affordable and foreign buyers were welcomed.

Martin Westby, the author of a book on buying property in Croatia, said the sales success was partly because Istria was the first area to be served by Western European budget airlines and it is relatively easy to complete a sale here in comparison to some other parts of the country.

By 2005, the region led the country in foreign ownership, with 34 percent of its properties in the hands of non-Croatian owners; the rate in the popular tourist city of Dubrovnik was less than 10 percent, according to the Croatia Chamber of Economy.

Upper-end homes in Istria are priced for sale at about €1,500 per square meter, or almost $192 per square foot. For comparison, property near the beach in Split, a city of 200,000 residents in the middle of the country's Adriatic coast, sells for €3,000 per square meter and equivalent properties inland are €2,250 per square meter.

And in Dubrovnik, it is very hard to find anything for less than €3,000 per square meter, agents said.

While most of the peninsula, which covers almost 285,000 hectares, or 1,100 square miles, is within Croatia, there are small slices along the northern edges that belong to Italy and Slovenia.

The divisions - and the fact that town names appear in Croatian and Italian on the signs along the winding country roads - are just a few of the reminders of the area's tumultuous history.

During the 19th-century Austria ruled Istria, primarily using it as a base for naval operations and wine growing. Italy controlled the region from the end of World War I until 1947, when it became part of Yugoslavia until that country split apart in the early 1990s.

Today, the region's past and proximity to European centers is reflected in its real estate market. Germans are frequent buyers - Munich is only a five-hour drive away - as are Hungarians and Austrians. "It's like an Austrian empire" in parts of Istria, said Brian Gallagher, the editor of the online Croatia Business Report newsletter.

American buyers, however, are rare, partly because there are no direct flights from the United States to anywhere in Croatia.

There are some hurdles to buying real estate in Croatia, primarily the complexity of land titles. For instance, it is not unusual for a father to bequeath a few acres of the family land to one child and the olive trees growing on that land to another.

Peter Ellis, director of Croatia Property Services in Istria, recommends that potential buyers hire a Croatian lawyer who understands the market and can ensure that titles are in good order. He also stresses that it is important to visit a potential purchase. "I've been amazed by the people who buy property without visiting," he said.

Right now, agents say, many foreigners are buying here with the expectation that Croatia will join the European Union in 2009 and property values will skyrocket, much like the excitement that surrounded Bulgaria's entry this year and the Czech Republic's in 2004.

The expected accession was one reason Winfried van der Bom, a semiretired managerial consultant from the Netherlands, bought a 184-square-meter villa in Visnjan last year for about €300,000.

The climate - Istria's temperature is an average of 10 degrees Fahrenheit, or almost 6 degrees Celsius, warmer than in the Netherlands - played a large role in the decision. But the occasional rain also was welcome, van der Bom said, because, as a Dutchman, "after a while you are looking for rain."

The four-bedroom, three-bath residence has a swimming pool and is about eight kilometers from the beach. "The beaches are nice," van der Bom said. "But it's stone and so it's nice to have a pool because the fridge is close and the pool is clean."

Traditionally, Istrian houses are built of stone, with small windows and thick walls. While some new homes fit that description, many others imitate the white stucco and sprawling style of Mediterranean villas. Also, the work of Robert Dallas, the self-taught British architect who uses reclaimed materials to construct homes in Provence, is having an influence on the area's style, real estate agents said.

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