Croatia: Non-appraised land bill may bring tourism up to EUR 5bn in investments

Clearing up the situation with construction land that has not been appraised, the bulk of which is in the tourism sector, may lead to potential investments in tourism of EUR 3-5bn, the state assets ministry said on Thursday during a presentation of a bill on that land. The bill was drawn up by the tourism and state assets ministries and put up for public consultation today. It covers tourism land, campsites and other construction land that has not been appraised.

Note that during the ownership transformation of tourism companies, only hotels and other tourism facilities were appraised whereas the land on which they are located was not. After the ownership transformation, the facilities became the ownership of the companies, while the land became state-owned. Campsites, of which there are 80 in Croatia, spreading over 14.5mn square metres, are a particular problem. They either became totally state-owned, or the facilities in them became owned by companies and the land state-owned. As a result, tourism companies have been using state-owned real estate without paying for it, and no investments have been made because potential investors could not get the necessary construction papers due to unsolved property rights relations. It is estimated that the state budget has been defrauded of HRK 2-3bn.

Tourism minister Gari Cappelli said he was pleased order was being introduced after 20 years as it was expected to result in EUR 3-5bn being invested in tourism. According to his estimates, every year Croatia has about EUR 1bn in tourism investments, there are additional funds for the tourism fund, which will mean better investments in the tourism infrastructure and, eventually, more employees. State assets minister Goran Maric said ownership transformation and privatisation had never been as devastating as in the tourism sector. He said that for 20 years after gaining independence, Croatia collected nothing on 25mn square metres of land that was not entered into stock capital. He said a law on tourism and other construction land that had not been appraised in the ownership transformation and privatisation process was passed in 2010 but that it was unenforceable. According to Maric, the new law will enable every company to develop a business strategy, while providing local government, the Tourism Fund and the state budget with bigger revenues.

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