Slovenia is a country within Central Europe. It is a small country but boasts of dense forests, Alpine mountains, historic cities, and an Adriatic coastline. It is the first member of the Yugoslav republic to join the European Union in 2004. Unlike Croatia, Slovenia transitioned from a state economy to a free market with ease. It was one of the best-performing countries in the European Union before the recession severely hit it in 2012.
Slovenia Economic Status
The current economic status of Slovenia is slowing down. In the past four years, the economy only grew minimally due to a decline in the contribution of net exports. In the second quarter, the import industry grew as local demand gained momentum, outpacing the export growth. Tight labour market and expansion in household spending continue to drive domestic demand. It is of note that the country’s Q3 indicators how a slight pick up in economic activity, with industrial production showing signs of improvement. Still, the economy would experience a slowdown, mainly due to weaker trade dynamics.
Investors are still feeling cold investing in Slovenia, primarily because of reduced judicial effectiveness and monetary freedom. In the 2019 Economic Freedom Index, Slovenia ranked as the 58th freest economy. The country’s economic index increased by 0.7 points, notable in fiscal health and government spending scores. In the European region, the country ranked 29th out of 44 countries, with an overall score below the average in the region. One major drawback that scares investors is the widespread corruption in the country.
In the Transparency International 2018 Corruptions Index, Slovenia ranked as the 36th least corrupt out of 180 nations. It received an overall score of 60 over 100 (with 100 as the perfect score or most clean).
Slovenia’s economy is expected to increase by 3.5% this year, and at least 3% by 2020. While there is a slowdown, private consumption remains robust as it receives considerable support from income gains brought about by real wage and employment growth, according to the latest report by the OECD.
Liveability in Slovenia
When it comes to liveability, Ljubljana is the most liveable city in Slovenia. It has high ratings in terms of housing, affordability, and business freedom. It also scores high in environmental quality. The European Commission awarded it with European Mobility Week Award. The city’s commitment to promoting events that place high importance on sustainability. Some of the city’s programs include cycling, walking, and the use of public transport systems. The city also partnered with schools, research centres, and citizen associations to come up with better transportation programs that can benefit all.
The cost of living in Ljubljana is quite affordable. The median rent in city centres is currently at $530, which is 42% more affordable than San Francisco, California. The country is also a safe country, with a relatively low crime rate. Many regard it as the safest in Eastern Europe. Violent crimes rarely happen.
Property Investments in Slovenia
Many foreign investors are unlikely to consider Slovenia as a profitable real estate market since it is not as popular as London or Germany. However, savvy property investors know that this quaint country has significant potential. They know that Slovenia is one of the top property investment markets today. With property prices starting at $50,000 and capital growth of more than 30% annually, plus robust rental income, property investments in Slovenia are definitely worthwhile.
Tourism is the primary driver of the economic growth of Slovenia. As the country gained international recognition, more and more people consider visiting the country. The country’s majestic scenery, cheap airfare, and improved infrastructure is attracting tourists from all over the world. As a result, the demand for rental property continues to increase.
- Foreigners can buy properties in Slovenia depending on their nationality.
- Foreigners from an EU member country can buy properties under the same conditions as the locals of Slovenia.
- Buyers from Liechtenstein, Iceland, and Norway can buy properties without restrictions as a result of the European Economic Areas Agreement.
- US citizens can also buy without restrictions as a result of the Treaty on Trade and Navigation.
- Buyers from EU candidate countries would have to request permission from the Ministry of Justice.
- Property investors from Switzerland can buy property if they can present a valid Permit C or permanent settlement permit.
- Investors from other countries may purchase a Slovenian property if they inherit property, get Slovenian citizenship through marriage or a registered business in the country.
Property Market Trends in Slovenia
The housing market of Slovenia posted the fastest annual growth in the European Union from the year to Q3 of 2018, marking the third year of continued growth. The persistent growth seems to be stretching the buyer’s capacity. In the last quarter, there is a notable price falls in house prices of Ljubljana.
The country’s regional house price index appreciated by 15.1% during the year to Q3 of 2018, as reported by the Statistical Office of the Republic of Slovenia. Looking at the quarterly figures, house prices in the country increased by 1.9% during the same period. In the capital city of Ljubljana, existing flats have price index increases of 8.9%. For the rest of Slovenia, prices increased by 10.6% year-on-year.
Ljubljana has moderate gross rental yields of 4.7% to 5.1%, according to Global Property Guide research.
CHG Recommendation: Invest in New Buy-to-Let Properties in Slovenia
Those who want to make property investments in Slovenia would enjoy high returns if they invest in rental properties in Slovenia. New properties have slightly higher gross rental yields than existing ones. If you can buy a property near the city centre, it would be better since prices are affordable, but demand is comparable to the city centre. Investors can bank on the country’s improved transport system that the city centre is easily accessible from other regions. It is also okay to invest in the capital city of Ljubljana since the house prices are still relatively affordable. Plus, they can also benefit from the continuous stream of tourists and employees moving into the city.