Unbeknownst to many living outside the region, Croatia's rich history, cultural vestiges, stunning landscape and varied cuisine are on par with the most desired destinations in the Mediterranean. Roman ruins, medieval walled cities, timeless fishing villages - not to mention a pristine lake district and immaculate coastline dotted with islands - have much to offer visitors and residents alike. Bordering Slovenia to the north, Bosnia Herzegovina to the east and the Adriatic Sea to the west, the small coastal country with a population of just over 4.5 million, enjoys 6,000 km of unspoiled coastline - more than any other European country.

Since achieving independence from the former federal independent communist state of Yugoslavia in 1991, the Croatian government has made various changes to its economy and infrastructure, including further privatization, designed to ensure the country is more competitive as an investment and commercial location, and foreign investment is steadily flowing in both business and tourism. In 2006 alone, the country received around 10 million tourists. With some 680 million people living within a three-hour flight of Croatia, these numbers are expected to increase.

As a result of increasing demand, holiday home properties in Croatia have been experiencing constant capital appreciation. According to Croatia Real Estate Exchange, average asking prices in 2006 increased by 13 percent compared to the previous year. Adding to this upward trend is the fact the market remains in its initial stages and supply lags behind demand. Unlike many other booming vacation spots, the country's regional planning and development restrictions, largely aimed at coastal preservation, have prevented overbuilding and sustained a continued shortage of supply in the market. Setbacks in planning have thus far delayed the arrival of new medium-and large-scale projects. In some cases, this has resulted in loss of developers' interest, but it has also allowed Croatia to maintain its appeal as a select destination. "Croatia is clearly more upmarket than any other emerging country in Eastern Europe," says Andreas Dussmann, managing director of Dussman Homes. "Istria, for example, was under Italian rule until WWII. It's basically Italy twenty years ago. Croatia is not aiming at mass tourism like Bulgaria or Turkey. Its strict planning laws are aiming for elite tourism and quality rather than quantity."