The French diving legend Jacques Cousteau once described Croatia’s waters as “the cleanest and clearest” in the world. When you come here, you simply must take a boat and go out into the Adriatic—you’ll be astounded at how far down into the depths you can see.

What else? Oh, yes—Adriatic property prices are what you could find on the Mediterranean a generation or so ago. Although prices have been increasing at a rate of between 20% and 30% per annum in recent years, (30% in the last six months in the splendid medieval city of Dubrovnik, the hottest spot on the country’s real estate map), it’s not too late to find great values.

It’s hardly surprising, then, that this little gem of a country is experiencing something of an investor feeding frenzy. Where else along Europe’s sunshine coasts can you find a two-bedroom seaside apartment for under $80,000? Now could be an ideal time to snap one up since it seems most unlikely that prices will fall. Croatia is seeking accession to the European Union by 2008, though this could actually come as early as 2007.

Dispelling common misconceptions

Although Croatia was once part of Yugoslavia, the vast majority of Croatians actually resent their country being portrayed as part of the Balkans. Both historically and culturally, they regard themselves as firmly a part of central Europe.

Croatia is not a battle zone. The war here ended in 1995. It is neither Kosovo, nor Bosnia. In fact, Croatia is nothing like either.

What you need to know is that Croatia is a wonderful retirement destination, a dream holiday spot, and an interesting investment opportunity.

A tourism rediscovery

The tourists are coming back! Actually, they’re increasingly returning in droves from all over Europe. Croatia and its islands have become one of the hottest new destinations for holidaymakers weary of the crowded resorts and overdeveloped coasts of Italy, France, Spain, and Portugal.

Nautical tourism...agro-tourism...health tourism...adventure tourism...conference tourism. The growth potential is massive. The World Travel and Tourism Council projects that Croatia’s tourism figures will grow by at least 6.9% annually for the next few years.

Before Yugoslavia’s breakup and the ensuing Balkans conflicts, Croatia received some 10 million annual visitors. Just about all of them came only with beaches and suntans on their minds. And if the country could get those kind of numbers during the communist era (the peak was in the mid-1980s), just think what it can do now!

Split and the Dalmation Coast - International Living can’t claim to be the first to recommend the Dalmatian Coast as a retirement destination. That distinction goes to the Roman Emperor Diocletian (AD 245-316), the only Roman emperor ever to retire. He chose to spend his golden years in his palace in Split—built between 295 and 305—where he remained until his death in 316.

You can walk from the Riva, the palm-lined promenade overlooking the harbor, into the palace complex itself, which sprawls over 7 acres.

Diocletian took quality of life and retirement seriously. He spared no expense, building his palace using the white stone from the nearby island of Brac (which was also used to build the White House in Washington), and importing marble from Italy and Greece for the squares and columns. He even imported a sphinx from Egypt.

If you’d like to live overlooking Split’s 1,700-year-old monuments, at the time of print, Croatian Sun is offering a 970-square-foot apartment for $258,000. It’s at one of the four entrances to Diocletian’s Palace—the Golden Gate.

In the modern part of Split, you’ll find plenty of apartments (generally with clean title) for low prices––but we doubt they’d appeal to you. This is one of the few parts of the country that would probably make you think of communism.

Dubrovnic—Europe’s walled wonder

Swifts fly screeching around crenellated towers, past secret courtyards of lemon trees and roses, and waves of russet-tiled rooftops.

On the cobalt-blue sea beyond the old port, a lone paraglider drifts toward the island of Lokrum on the sea breezes. These are the glorious views you get from the rampart walls girdling Dubrovnik, Croatia’s medieval showpiece city. You won’t find better views of the silken Adriatic, the densely wooded Dalmatian coastline, and the distant smudge of islands, than in this city.

Once a city-state that rivaled Venice, Dubrovnik’s history stretches back over 1,300 years. Up until the Napoleonic wars, this was the principal city of the independent state of Ragusa. Even at street level, it’s obvious why Dubrovnik calls itself the “Pearl of the Adriatic.” The drawbridge over Pile Gate leads into a marble-paved street called Stradun. Laid out before you is a treasurehouse of bell towers, fountains, and palaces. You’ll find a Franciscan monastery with one of Europe’s most ancient pharmacies; honeycolored houses with deep green shutters, and steep alleyways hiding cozy restaurants, bars, and hole-in-the wall boutiques.

Vehicles are banned from the medieval core—mopeds and scooters included. There’s none of that annoying “putt-putt-putt” noise to compete with the pealing of the bells or the strains of classical concertos spilling out from behind the churches’ wooden doors. Most visitors love this car-free environment—it’s so refreshing to sit at outdoor cafés without breathing gas fumes or worrying about risking life and limb whenever you step off a curb.

As you might imagine, space in Old Dubrovnik is limited—planners cannot add more buildings to those already within the medieval fortifications.

Plus, it has become a hot destination—luxury cruise ships dock every day, and tourists are returning to its nearby holiday resorts in force. The Croatian government is intent on marketing this southern region of the country as a top destination.

Paul Keppler, managing director of the agency Croatian Sun, says Dubrovnik has seen increases of 20% to 30% in the past six months. Yet even though prices have taken off, property here could still prove a worthwhile investment.

One old town property on Croatian Sun’s books is a one-bedroom apartment of 355 square feet, for an equivalent $120,000. That’s reasonable—the average price here is around $392 per square foot. You’ll generally pay more for houses—usually $500 to $560 per square foot. Croatian Sun has a few properties within Dubrovnik’s walls—the cheapest is a bijou house of 650 square feet for $308,000.

We believe Croatia’s re-emerging market should be at the top of your list, be you an investor, a wandering expat, a would-be retiree, or an adventurer…and that this may be your last chance to position yourself at a super discount.