Slovenia: Real Estate
Over the course of recent years, the prices in the real estate market in Slovenia have risen somewhat due to the general improvement of the economic situation in Slovenia and the increase of demand. Slovenia, especially the area of Ljubljana and the Slovenian coast, has in recent years become more attractive as tourist destinations, which has also affected the increased demand for real estate, including by foreign investors. Due to some financial restructuring operations concerning real estate conglomerates, there has also been an increase in the quantity and scope of investments, especially in the field of warehousing and residential developments, while the market has also seen an increase in public investments.
For the same reasons as above, rental prices for real estate in Slovenia have also risen, with Ljubljana and the Slovenian coast standing out, as rental prices in these areas are significantly higher than in other areas of Slovenia. Rental prices have also been influenced by the steadily increasing supply of apartments through Airbnb and similar platforms, which is especially evident in tourist attractions, such as central Ljubljana, Piran, Portorož and Bled.
High prices in the real estate market also affect areas related thereto - the business of real estate agencies, as well as real estate lawyers, is booming.
The law related to real estate and the real estate market remains stable in Slovenia and has not changed significantly in recent years. There is currently no legislative proposal that would significantly impact real estate investment, ownership or development in Slovenia.
The years 2020 and 2021 are and will be marked mainly by the epidemic of coronavirus and the related COVID-19 disease. The still ongoing epidemic has not yet had a major impact on investments, sales and development in the real estate market; however, some economists believe that the consequences of the epidemic in the real estate market could come with a delay, which will be closely monitored by all participants in the real estate market, including real estate lawyers. Because of measures implemented due to the coronavirus pandemic, the provision of real estate brokerage services was banned for a certain period in 2020. A large portion of the real estate business has thus moved to the internet and other means of distance communication.
The epidemic has had some, but not significant, effect on the housing rental market, as due to the absence of tourists, property owners renting out real estate through Airbnb or other similar platforms were forced to rent out their properties, which would otherwise be provided as short-term leases at a higher price, for a longer fixed period and for a lower price. As a result, the supply of real estate for long-term lease increased slightly in 2020 and in the beginning of 2021, but the change did not significantly affect the average rental price of the available real estate. Also, due to the epidemic, lease contracts concluded in the future could more often contain a force majeure provision regulating the possibility of terminating the lease, deferring the payment of rent or extending the contractual term.
Furthermore, in the context of the coronavirus epidemic, the Government of the Republic of Slovenia in 2020 and 2021 intervened in the generally stable legislation regarding commercial leases by stipulating that tenants of commercial premises who are prevented from or significantly hindered in carrying out commercial activities due to the COVID-19 epidemic and are therefore unable to use the commercial premises in full or in part for the agreed purpose may terminate the lease agreement with a written declaration and observing a notice period of eight days, request a deferral of payment under the lease agreement or request an extension of the lease agreement concluded for a fixed period. In the event of a deferral, the tenant must pay the deferred rents to the landlord no later than six months after the expiry of the measure, while the landlord is not entitled to default interest for deferred rents, but may request appropriate security. The landlord may not terminate or withdraw from the lease agreement due to the tenant requesting a deferral of rent or an extension of the lease agreement. The said Act entered into force on 31 December 2020, but it explicitly stipulates that the tenant may request a deferral of payment or renewal of the contract also for the period prior to the entry into force of said Act. Under the current legislation, the above described measures shall expire on 30 June 2021.
As part of the measures implemented to mitigate the epidemic, another measure adopted by the Government of the Republic of Slovenia must be highlighted, namely the obligation of the investor to notify the competent ministry of any foreign direct investment within 15 days of concluding the contract.
Taking into account the above, it can be concluded that the real estate market in Slovenia should, despite the pandemic, not only remain stable in the coming years, but continue to grow at the current steady pace and therefore represent an excellent opportunity for any potential investor.