SLOVENIA: An Introduction to Real Estate

Background

Over the past few years, the real estate market in Slovenia has experienced a notable increase in prices, with this trend continuing in 2024. This can be attributed to several factors, including the overall improvement in Slovenia’s economic situation and a rising demand for properties. Such rising demand, consequently affecting prices, can be attributed not only to Slovenian citizens keen to invest their capital in the real estate market but also to foreign citizens for whom Slovenia is becoming an ever more attractive destination. Areas such as Ljubljana and the Slovenian coast – now prominent tourist hotspots – have significantly boosted real estate demand. This has led to a ripple effect, as those unable to afford properties in these high-demand areas are broadening their search to include nearby regions. Consequently, real estate prices in these surrounding areas have also risen substantially.

In addition, financial restructuring activities within real estate conglomerates have spurred a surge in investments, particularly in warehousing and residential developments. Moreover, public investments in the real estate market have also seen an upswing.

These developments have not only impacted on property prices but have also led to a noticeable increase in rental rates, with Ljubljana and the Slovenian coast standing out due to significantly higher rental costs compared to other regions in Slovenia. Furthermore, the proliferation of apartments available through platforms such as Airbnb has played a role in driving up rental prices, especially in tourist hotspots such as Ljubljana’s centre, Piran, Portorož and Bled.

However, after several years of robust growth in residential property prices and transactions on residential building land, the market is now indicating a moderation in house price increases. Several key factors influence property prices, including:

• inflation;
• interest rate fluctuations; and
• alterations in tax legislation and administrative procedures related to property acquisition.

Key Trends

In parallel with international trends, Slovenia’s real estate market is beginning to follow the trajectory seen in the United States in early 2022. Ongoing inflation and economic price hikes have prompted US banks to raise interest rates, thereby cooling demand in the real estate market and leading to a decrease in property prices and sales. Although in 2024 the European Central Bank decreased the interest rate slightly, the impact from previous years’ high interest rates can still be seen in housing loan costs; therefore, a subsequent decline in real estate investments was still expected in 2024. While the property market has not yet experienced a significant drop in prices, a stagnation in price levels is becoming evident, particularly in major cities such as Ljubljana and Maribor.

In terms of price trends, Slovenia’s property market has not witnessed substantial price drops. In the first half of 2024, apartment prices in Slovenia reached an all-time high for the fifth consecutive year, while developable land prices peaked in the first half of 2019 and have since remained relatively stable. The highest property prices for apartments are still observed in Ljubljana, with second-hand apartments nearing EUR4,370 per square metre in 2024. Although 2024 saw a decrease in property sales compared to previous years, property prices have not yet declined – on the contrary, they continue to rise, albeit at a slower pace.

The legal landscape regarding real estate in Slovenia has remained stable, with no significant changes in recent years. However, three significant laws related to real estate came into effect in 2022:

• the Real Estate Cadastre Act;
• the Housing Act; and
• the Construction Act.

While the Construction Act may not have a profound impact on the real estate market, it introduces simplifications, such as streamlined building permit procedures and the option to commence construction before a decision becomes final, reducing bureaucratic hurdles. These changes may attract more foreign investment, potentially making the Slovenian real estate market more appealing to foreign investors and increasing the workload for law firms. As of 2024, there have been no major changes to real estate legislation; although changes to tax legislation were announced for that year – in particular regarding the taxation of rental properties – no concrete changes have occurred. However, an amendment to the Hospitality Industry Act has been proposed, which, if adopted, will have a significant impact on short-term rental properties (among other things).

Conclusion

In summary, the Slovenian real estate market has not yet experienced the dramatic shifts seen in the US and European markets. There are no significant indications of plummeting property prices or a sharp drop in property purchase demand in Slovenia. Nevertheless, despite the anticipated moderation in Slovenia’s property market, it is expected to remain stable, offering excellent opportunities for potential investors.