Besides the Constitution of the Republic of Slovenia, which lays down basic principles of private ownership, the main law governing real estate is the Law of Property Code, which prescribes the main rules regarding property rights. The Law of Property Code is supplemented by the Land Register Act and the Real Estate Cadastre Act, which govern real estate records.
In addition to general sources of real estate law, certain specific laws govern particular types of real estate. Such laws include:
In a broader sense, rules relevant to real estate are also prescribed in the Spatial Management Act and the Building Act, which govern spatial planning and construction, as well as in general sources of civil law, such as the Obligations Code.
In 2024, Slovenia’s real estate market continued to perform in the context of global, regional and local macroeconomic indicators, EU-driven sustainability goals, and a – slowly but surely – growing need for legal and financial innovation. Despite broader uncertainties and the lingering effects of previous years’ inflation and interest rate volatility, Slovenia remains an attractive and comparatively stable destination for real estate investment within Central and Eastern Europe. The Slovenian legal framework is established, infrastructure well-developed, and the strategic location within the EU remains a strong suit. These factors offer a relatively low-risk environment and collectively support Slovenia’s appeal among both institutional and private investors.
Office and residential seem to have been the most active areas for transactions in 2024, especially in Ljubljana, with a new office (DCB Montana) being opened and two larger ones (Vilharia and Emonika) being constructed and several residential projects on their way or just opened.
Other significant real estate deals in Slovenia in the past year are the sale of office buildings Severni Stolp and Tivoli, sale of shopping centre Planet Tuš on the coast, purchase of three retail centres in the Koroška area by the Czech fund ZDR as well as purchase of a retail chain KEA by Croatian Studenac. It is also worth mentioning that Mercator’s purchase of retail chain Tuš did not close and missed the long-stop date (did not receive the merger clearance in time).
Due to past rising inflation, increases in interest rates and a lack of supply, the residential market was slow compared to the previous year, while prices still increased. However, with many projects on the way and with activities of the State Housing Fund gaining momentum, this is likely to change in 2025 and, specifically, in 2026. By that time, it is also expected that over 40% of new residential developments in Slovenia will feature smart home technology.
Although modern technologies in financial services, such as blockchain, decentralised finance and similar, are present in the Slovenian real estate industry, their impact cannot yet be considered as disruptive, nor is it expected to become disruptive to these services in the next year. Conversely, proptech has had a significant impact on the real estate industry, most significantly through online marketplaces for short-term housing leases (eg, Airbnb, Booking). The emergence of such online marketplaces resulted in increased interest from investors in the purchase of real estate in order to lease it short term, which resulted in increased housing property prices. Due to the increased tourist count each year and, consequently, the increase in demand for accommodation, it could be expected that online marketplaces will continue to impact the real estate industry in the year ahead. On the other hand, it is worth noting that the City of Ljubljana announced a plan aimed at addressing housing availability and affordability by restricting the short-term leasing of residential properties to the summer months, when students are not present in Ljubljana.
A new real estate tax is being proposed for implementation. The ruling political parties have announced the introduction of a wealth tax, which would encompass reform in the taxation of residential real estate. Reform in the taxation of real estate is a measure that has long been proposed by international organisations such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).
According to the current proposal, any real estate, including both land parcels and buildings (or parts of buildings), classified as residential would be subject to a flat tax rate of 1.45% of its estimated value per year. The estimate is provided by the Geodetic Administration of the Republic of Slovenia (GURS).
The taxpayer would be the owner of the real estate, both natural and legal persons. If there are multiple co-owners of a land parcel, each would pay tax proportional to their ownership share.
Some deductions have been proposed. The main exemption applies to real estate that is actually occupied by the owner. Simply having an address registered at the property is insufficient as, under the current proposal, occupation will be verified by utilities usage.
The second exemption is a tax reduction equal to 25% of the rental income from residential lease agreements reported in the income tax return. However, legal persons would not qualify for this reduction, as they are taxed under a different system than natural persons.
The reform in the taxation of real estate is intended to discourage speculative purchases and force owners of real estate, specifically vacant ones, to purposeful use thereof, by selling it or concluding residential lease agreements.
Real estate tax reform has consistently encountered strong public opposition, making it unlikely to be adopted in 2026 as scheduled. A similar proposal was struck down by the Slovenian Constitutional Court in 2013, with the current proposal failing to address all constitutional issues identified at the time.
After severe floods in Slovenia in August 2023, an Act on intervention measures to deal with the consequences of floods and landslides was adopted in 2023 (the “Intervention Act”), which, among others, amended certain provisions of the Spatial Management Act, Building Act, Agricultural Land Act, Act on Forests, Water Act, etc.
The amended Spatial Management Act allows for detailed municipal spatial plans to address natural and other disasters, modifying land-use designations and spatial conditions. Under the amended Building Act, reconstruction to mitigate flood and landslide effects can alter a building within minor permissible deviations, provided project documentation and water consent are provided with construction commencement by 31 July 2024. With the Intervention Act, the Republic of Slovenia also gained the right to purchase agricultural land, a forest or a farm to remedy flood and landslide consequences, overriding pre-emption rights and other procedural steps and provisions in existing legislation.
In accordance with the Law of Property Code, the following categories of property rights can be acquired:
A non-accessory land charge can no longer be established, as it was widely abused by the debtors and was omitted from the Law of Property Code. Land charges established before 5 November 2013 have remained in effect.
The principle of numerus clausus applies to categories of property rights. In addition to those defined by the law, no other property rights may be created at the will of the parties. The principle of numerus clausus is somewhat alleviated in the case of easements in rem, the subject matter of which is not precisely prescribed.
The transfer of title of real estate is primarily governed by the Law of Property Code, the Obligations Code and the Land Register Act.
In addition to the above-mentioned laws, which apply to the transfer of title of real estate in general regardless of the type of real estate being transferred, additional specific laws apply to the transfer of title of particular types of real estate, which prescribe certain restrictions in the transfer of specific types of real estate, as follows:
The proper transfer of title to real estate requires the following:
The decision on the transfer of title is made by the land register court based on the above documentation. Based on the court’s decision, the land register records each transfer of title in real estate. Entry in the land register is a constitutive element in the process transfer of title.
Each piece of real estate in Slovenia is registered in the land register, which shows the exact owner of the property as well as any encumbrances registered over the property. The land register is kept electronically and is publicly accessible. Both actual and historic data are available. The Land Register Act prescribes the principle of reliance on the land register data, which means that anyone who acts honestly in legal transactions and relies on the information entered in the land register should not suffer adverse consequences as a result. Considering the above, title insurance is not commonly used in daily transactions. In large transactions, however, buyers may elect to use title insurance to cover transaction-specific risks identified during the due diligence (for example, part of the building being built on foreign land, etc).
The aim of real estate due diligence is to thoroughly inspect the real estate in order to reduce the risks involved with the purchase and to mitigate uncertainties. Besides legal due diligence, acquisition of real estate frequently also requires performance of technical or environmental due diligence.
The manner and scope by which buyers carry out real estate due diligence depends heavily on the objectives of the transaction. On the one hand, the acquisition of an income-producing property like a shopping centre requires the buyer to examine existing lease agreements and each tenant’s rental payment history. On the other hand, the acquisition of a greenfield property intended for real estate development requires the buyer to closely examine the zoning regulations. Regardless, due diligence always involves a review of public records (land register, land cadastre, etc).
A due diligence activity specific to the acquisition of real estate in Slovenia is the examination of potential ongoing restitution proceedings, which is a legacy of the former collective ownership system.
The scope of representations and warranties in commercial real estate transactions depends on the characteristics of each individual transaction. Nevertheless, representations and warranties may include the following:
Certain seller’s warranties, however, are also provided under statute, in particular in the Obligations Code and in the Protection of Buyers of Apartments and Single Occupancy Buildings Act that applies to the purchase of new constructions with the buyer being a consumer and the seller an investor or intermediate buyer. The seller may be held liable for the following:
Under the Protection of Buyers of Apartments and Single Occupancy Buildings Act, an additional liability of the seller is established, namely for defects in the common parts of the building where the owners of the flats have co-ownership.
In the event of the seller’s misrepresentation constituting a breach of the agreement, the buyer is entitled to demand that:
At the same time, the buyer may claim reimbursement of damages. By way of contractual regulation, the parties often set a cap on the maximum amount of compensation for certain breaches (25–50% of the deal value or more for title defects, third party rights, etc) and agree on de minimis, granting damages only if the claim exceeds a certain amount. As security for these remedies, payment of a certain proportion of the purchase price is sometimes held back or is held in escrow. Although representation and warranty insurance is available, it is not commonly used.
The general statutory expiry period for representations and warranties is six months as of handover. Considering that this period is relatively short, it is occasionally contractually prolonged.
In addition to property law, construction law, spatial planning law and environmental law, the main sources of which were specified in 1.1 Main Sources of Law, investors also ought to consider finance and tax law. Investors seeking to purchase or develop an office building should also monitor whether new legislation on business leases shall be adopted.
Under the polluter pays principle, prescribed by the Environmental Protection Act, the person who is responsible for (soil) pollution or contamination is responsible for undertaking the measures necessary for the rehabilitation of the environment. Therefore, the buyer who did not cause the pollution or contamination is generally not liable for incidents that occurred while the relevant assets were held by the previous owner.
Nonetheless, if environmental damage occurs and, after its occurrence but before its remediation, the polluter disposes of the real estate on which it carried out certain types of environmentally burdensome activities, the agreement by which it disposes of the real estate must include a provision to the effect that the person acquiring such real estate will also assume the remediation; otherwise, the contract is null and void.
The permitted use of real estate is determined by the state and local authorities under the spatial planning regulations. Permitted use of a specific land plot can be most reliably ascertained by obtaining so-called location information from the competent local authority. This is specific zoning information, issued by a local authority, which specifies permitted uses, restrictions, pre-emption rights, special protection regimes, applicable zoning regulations and other spatial implementation conditions, all linked to a specific piece of property. Permitted use can also be ascertained through online public spatial data information systems. Conclusion of specific development agreements with relevant public authorities is possible to a limited extent (see 4.6 Agreements With Local or Governmental Authorities).
In accordance with the Spatial Management Act, owners may be expropriated on the condition that expropriation is essential to attain public benefit, and that the public benefit pursued is in proportion with the interference with private property. Owners need to be awarded damages or compensated in kind with a real estate of same type and quality.
Before the expropriation procedure commences, the expropriation beneficiary must make an offer to the owner to purchase the real estate. If the sale and purchase cannot be agreed, the expropriation beneficiary may submit a request for expropriation to commence the expropriation procedure. The expropriation procedure is conducted by the administrative unit that decides on the expropriation and the compensation.
Besides the above-mentioned generally applicable provisions of the Spatial Management Act on expropriation, the provisions of specific legislation concerning expropriation, such as the Investment Promotion Act and the Water Act, may be applicable in particular cases.
Asset deal transactions are subject to (i) the real estate transaction tax (RETT) or (ii) VAT. If the transaction is not subject to VAT, RETT amounting to 2% of the value of the real estate is to be paid by the seller. Payment of RETT may contractually be shifted to the buyer. Differently, for sale of real estate owned by a taxable person identified for VAT purposes, VAT amounting to either 22% or 9.5% is applied instead of RETT in cases enumerated by the law or by choice of the parties (see 8.1 VAT and Sales Tax).
Both asset deal transactions and share deal transactions may be subject to corporate income tax (CIT) if the seller is a legal entity, or income tax on capital gains if the seller is a natural person. As regards CIT, any profit (or loss) from the deal counts towards the total profit of the legal entity. The general corporate income tax rate is set at 19%, but notwithstanding this – in accordance with the specific Law on Reconstruction, Development and Provision of Financial Resources, adopted to tackle the 2023 floods – the CIT is payable at a rate of 22% for the years 2024, 2025, 2026, 2027 and 2028. As regards income tax on capital gains, natural persons are taxed based on capital gains and the capital holding period. The tax rate, which first amounts to 25% of the difference between the value of the capital at the time of disposal and the value of the capital at the time of acquisition, decreases over the years of ownership – ie, it amounts to 20% after five years of ownership and 15% after ten years of ownership. After 15 years of ownership, the transaction is exempt from tax on capital gains.
The above-mentioned taxes are also triggered by partial ownership transfer.
Foreign investors are classified into the following groups as regards the possibility of acquiring real estate in Slovenia.
The restrictions described above are somewhat alleviated, as it is possible for foreign investors to obtain real estate through legal entities established in countries with no legal restrictions applicable to them.
Acquisitions of commercial real estate are in most cases financed by both debt and equity, whereby the ratio between the two (LTV) depends on the characteristics of each individual acquisition. In order to acquire debt financing from lenders, investors are required to ensure sufficient equity also in property development transactions.
Large real estate portfolios or companies holding real estate are often financed by syndicated loans of different lenders. Such deals may be financed by a club of Slovenian banks, though often it may not be only Slovenian lending institutions, but also foreign. In such cases, LMA standard financing documents are used and, most commonly, English law applies.
Mezzanine financing is not a common occurrence on the Slovenian market.
Not surprisingly, the most typical security created by commercial real estate investors borrowing funds to acquire or develop real estate is a mortgage. Term loans are commonly secured with a so-called directly enforceable mortgage, which enables the mortgagee to initiate the enforcement process more swiftly upon maturity of the secured obligations. In theory, out-of-court sale of property with assistance of a notary is possible if a loan is secured with such a directly enforceable mortgage, but this is extremely rare in practice.
A special type of mortgage, which is also very common, is a maximum mortgage, where all existing and future claims arising from specific business relationships are secured by the same mortgage on real estate up to a specific amount. In syndicated loan transactions under English law, security is typically established in favour of the security agent, but not a security trustee as the concept of trust is not acknowledged under Slovenian law.
In addition to mortgages, security is often also given in the form of pledges on movable property, securities, company’s business shares, receivables and bank deposits, guarantees, etc.
Generally, there are no restrictions on granting security over real estate to foreign lenders, nor are there restrictions on repayments being made to foreign lenders under a security document or a loan agreement. However, EU restrictive measures against Russia have caused standstills in the possibility of making repayments to Russian banks and financial institutions.
Under the Law of Property Code, loan agreements, the claim of which is secured by security over real estate (ie, mortgage), need to be either notarised or, in the case of directly enforceable mortgages, concluded in the form of a notarial deed. In this respect, notarial fees are payable according to official notary tariffs. Furthermore, mortgages need to be registered in the land register, whereby a registration fee is payable but the applicable amounts are immaterial. Enforcement of security over real estate is done by way of court proceedings or, in certain cases, with a notary’s assistance, in which court or notary fees are payable. In addition to the aforementioned fees, no taxes or stamp duties are payable on the granting and enforcement of security over real estate.
The applicability of legal requirements that must be complied with before an entity can give valid security over its real estate assets, such as “financial assistance” rules and “corporate benefit” rules, depends on the entity granting security.
As regards public limited companies (d.d.), financial assistance (ie, legal transactions by which a public limited company procures an advance payment or loan or another legal transaction with a similar effect for the benefit of a future shareholder) is in general prohibited under the Companies Act. Transactions entered into in breach of these rules are null and void. It is also prohibited that a public limited company returns (or pays interest on) a contribution to a shareholder.
As regards limited liability companies (d.o.o.), such companies may generally provide financial assistance in relation to the acquisition of their share(s) or shares in any holding company of that company, provided that capital maintenance rules and solvency rules are duly considered.
In respect of capital maintenance limitations, under the Companies Act, a limited liability company is prohibited from making payments to its shareholders or making a legal transaction with a similar legal effect (eg, guarantee with its assets for the loan of the shareholder or any other group company except its own subsidiaries) to the extent that this would prevent the preservation of its minimal lawfully allowed share capital, actually registered share capital and tied-up reserves.
In relation to provision of upstream security, certain risks may arise within the borrower’s group in relation to potential personal liability of management of the group companies. Namely, the Companies Act provides for relatively strict rules regarding the obligations of the management of group companies in case of so-called harmful instructions. Such concerns are typically addressed by inserting a standard limitation language into the facility agreement or into security documents.
In the event of borrower default, the lender may achieve enforcement of its security over real estate against the defaulting borrower through court proceedings. Since loan agreements are usually concluded in the form of directly enforceable notarial deeds, the borrower in such case does not need to first initiate litigation proceedings, but rather can directly initiate enforcement proceedings. The law prescribes no additional steps that must be taken to give priority to the lender’s security interest over real estate over the interest of other creditors. In certain limited cases, real estate can also be sold in an out-of-court sale with a notary’s assistance.
If only enforcement proceedings are necessary, official statistics show that the average time needed to successfully enforce and realise on property security is 2.9 months. Differently, if litigation proceedings also need to be initiated, the average time needed to successfully enforce and realise on property security significantly increases and is likely to exceed 12 months.
In the current market, lenders have been rather lenient with debtors and tend to forbear before foreclosing. When institutional lenders foreclose, they might purchase larger real estate themselves or through their real estate vehicles, and then manage it or sell it themselves on the market; however, smaller tickets can be bundled into portfolios and sold on the market to specialised companies.
Under general principle of property law, earlier rights defeat later rights. Nevertheless, existing secured debt can be subordinated both by agreement and under the law. By way of agreement, creditors can allow subordination of their existing secured debts to later debts of other creditors. A note of subordination in favour of another mortgagee can be registered in the land register.
Moreover, under the Companies Act, a shareholder of a limited liability company who made a loan to the company at a time when the shareholder knew or should have known that the company was facing financial and/or economic difficulties may not enforce a claim for the repayment of the loan against the limited liability company in bankruptcy or compulsory settlement proceedings. A bankruptcy court will consider whether the shareholder, acting as a good manager, should have provided its own capital to the company instead of giving a loan. Under these circumstances, the loan is considered to be part of the company’s bankruptcy estate. Repayments of such loans made during the year prior to a company’s bankruptcy must also be returned to the bankruptcy estate. Similar rules apply to shareholder loans to public limited companies, where the shareholder holds more than 25% of the voting rights.
Under the Environmental Protection Act, lenders cannot be held liable for pollution of real estate by merely holding or enforcing security over such real estate. Theoretically, however, a lender could be held liable for any pollution of real estate caused by it, or if lenders take control of a contaminated property through foreclosure or if they become actively involved in the management of the property.
Under the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act, security interests created by a borrower in favour of a lender may be set aside or annulled, if they were established in the look-back period and if, at that time, the debtor was already insolvent and if further objective and subjective conditions were satisfied. The objective condition is met if the debtor’s actions resulted either in the decrease in the net value of its assets, resulting in reduced payments to creditors other than the (benefited) person, or if the other (benefited) person acquired more favourable payment conditions for its claim against the debtor. The subjective condition is met if, at the time of the debtor’s actions, the other (benefited) person knew (or should have known) of the debtor’s insolvency.
Security interests created by a borrower in favour of a lender, which may be set aside or annulled, are only those made in a look-back period starting from 12 months prior to the day of filing of the motion for bankruptcy and ending on the day on which the bankruptcy proceedings are initiated. The look-back period is extended to 36 months if the other (benefited) person received assets of the company without being obliged to provide consideration, or if it was only obliged to provide consideration of a small value.
The costs in connection with mortgage loans that need to be paid by lenders or borrowers are, according to the Land Registry Act, Notary Act and the Law of Property Code:
Registration in the Land Register requires a Land Registry Permission, which must be either notarised or issued in the form of a notarial deed. In the land registration procedure, the notary often serves as the proxy of the applicant for registration of the mortgage.
No specific stamp duties apply, and the costs and fees are generally rather low compared to neighbouring jurisdictions.
In Slovenia, spatial planning and zoning is governed by the Spatial Management Act, which envisages a system and hierarchy of spatial planning acts. Spatial planning acts either take the form of spatial strategy acts or spatial implementation acts, and are adopted at a state, regional or local/municipal level.
Accordingly, the state is responsible for the adoption of a spatial planning strategy for Slovenia and a thematic and regional actions programme, constituting strategy acts, as well as national spatial plans, and regulations on the most appropriate variant and national spatial development plans, which serve as implementation acts. Likewise, the state and local municipalities adopt regional spatial strategies, which are strategy acts. Lastly, municipalities adopt municipal spatial strategies as strategy acts, as well as municipal spatial plans and municipal detailed spatial plans as implementation acts. No regional spatial plans have been adopted yet, but several proposals and planning activities have recently emerged.
On a general level, the design, appearance and method of construction of new buildings or refurbishment of existing buildings is regulated by the Building Act and the Spatial Management Act. On an individual level, the design, appearance and method of construction is controlled in the process of issuing of the building permit. In this process, the competent administrative unit or the Ministry of Natural Resources and Spatial Planning in case of large-scale construction projects considers, inter alia, whether:
If the above conditions are fulfilled, the responsible authority will allow such construction.
Regulatory competences in spatial management are hierarchically divided between the state and municipalities. As regards the regulation of the development and designation of use of individual parcels of real estate, the competences generally lie with municipalities. Municipalities are, however, bound by hierarchically higher spatial planning acts.
In order to obtain entitlements to develop a new project or to complete a major refurbishment, an investor has to obtain a building permit. The building permit is issued by the territorially competent administrative unit or – in case of larger constructions with certain environmental impacts – by the Ministry of Natural Resources and Spatial Planning. In the administrative procedure for the issuance of a building permit, third parties have the right to participate and may potentially object to or comment on the intended construction. Such third parties are, inter alia, the owner of the land plot subject to construction or the holder of another property right over such land plot, the owner of the neighbouring land, as well as other persons, if they demonstrate that their rights and legal interests are likely to be affected by the proposed construction.
A building permit issued by an administrative unit is subject to an appeal. The right to appeal is granted to the investor as well as third parties which have the right to participate in the said procedure (see 4.4 Obtaining Entitlements to Develop a New Project). The right to appeal against the building permit issued by the Ministry of Natural Resources and Spatial Planning is limited to only an administrative dispute procedure.
A public utility charge is payable in respect of any planned development. The amount of the charge depends on the scope of available (ie already built) public utility infrastructure, whereas, generally, connection to the available public utility infrastructure is mandatory, which is why the investor will also need to obtain the consent of the utility provider and ultimately enter into a contract with such utility provider.
Instead of paying part of the public utility charge, an investor can – to a limited extent – agree with a local municipality that the investor will, instead of the municipality, construct the public utility infrastructure for the land on which the investor intends to build. After such infrastructure is constructed, it is transferred to the ownership of the municipality free of charge. Such agreements are common practice.
Restrictions on development and designated use are enforced by the inspection services, which supervise the implementation of the regulations in the field of spatial planning and construction. Inspections are aimed to prevent the illegal construction of buildings and their use without the required permits.
Generally, all entities, including foreign entities, that have legal capacity can hold real estate assets, although restrictions described in 2.11 Legal Restrictions on Foreign Investors need to be observed. In any case, the predominant type of entity used to acquire real estate is the limited liability company (d.o.o.), followed by the public limited company (d.d.).
Limited Liability Company
A limited liability company is a legal person whose shareholders may be one or more (up to 50) domestic or foreign legal and natural persons. The shareholders are not responsible for the company’s liabilities. A limited liability company is formed by a memorandum of association, which may be in the form of a notarial deed or on a special physical or electronic form. The procedure for establishing a limited liability company depends on whether it is a one-person limited liability company or a multi-person limited liability company and whether the share capital is paid in cash or in kind.
Public Limited Company
A public limited company is a company whose share capital (capital stock) is divided into shares. The shareholders of a public liability company are not personally liable; rather, liability is held by the company itself. A public limited company may be set up by one or more domestic or foreign natural or legal persons that adopt statutes (memorandum of association), which must be drawn up in the form of a notarial act. The company is established when the founders take over all the shares. The founders may pay up the shares in cash or by means of contributions in kind. The main advantage of public limited companies is that they are able to be listed on stock exchanges.
Tax
There are no material differences in tax benefits or costs for the two types of entities set up to invest in real estate. For details on the taxes, see 2.10 Taxes Applicable to a Transaction.
REITs are not directly present in Slovenia, but there are other investment entities present in the market. Real estate funds and real estate companies are on the rise, but most of them are privately owned and are not open-type funds available to the general public.
A limited liability company is required to have capital that amounts to at least EUR7,500, whereas a public limited company is required to have minimum share capital in the amount of EUR25,000.
No specific governance requirements apply to investment in real estate as such, save that each company must be registered for any activity it pursues. The general requirement to act with the diligence of a prudent businessperson must be complied with.
Annual entity maintenance and accounting compliance costs depend predominately on the type of entity as well as the real estate investments themselves, and therefore cannot be estimated at a general level.
The most common type of agreement that allows a person, company or other organisation to occupy real estate for a limited period of time without buying it outright is a lease agreement. A similar effect may be achieved by personal easements (ie, usufruct, use and apartment easement), as well as the building right, which is a right to own a built structure above or beneath the real estate of another person, and in effect comes close to ownership.
Slovenian law differentiates between different types of leases depending on the subject of the lease. The Obligations Code prescribes general rules applicable to all lease agreements. In addition to and/or instead of the general rules, mandatory provisions are prescribed by the Housing Act for leases of residential buildings and the Agricultural Land Act for leases of state- or municipality-owned agricultural land. In the past, leases of business buildings and business premises were also regulated by the Business Buildings and Business Premises Act; however, this Act was repealed and continues to apply to only lease agreements concluded before 19 June 2021.
In principle, rents and lease terms are freely negotiable. However, the Housing Act applicable to leases of residential buildings designates rent as usurious if it exceeds the average market rent in the municipality for the same or a similar category of housing by more than 50%. Furthermore, in accordance with the Agricultural Land Act, lease terms of state- or municipality-owned agricultural land cannot be less than ten years (or 15 or 25 years for specific types of agricultural land). Regulation of rents and lease terms was enacted as a result of the coronavirus pandemic; however, its validity has since expired.
Length
The length of lease term for business premises is typically agreed as a fixed period of between two and ten years (for offices) or between five and 20 (for facility, warehouses and retail). Extension options are also often agreed. In the past, fixed-term leases were far more common in comparison to indefinite lease terms because the latter had to be terminated through court proceedings in accordance with the Business Buildings and Business Premises Act. Although this Act was repealed and (new) indefinite period lease agreements for business premises are no longer required to be terminated through court proceedings, fixed-term lease agreements are still more common.
Maintenance and Repair of Real Estate
In accordance with the Obligations Code, the landlord must maintain the condition of the subject of the lease during the entire lease term and, if necessary, repair it. The landlord is obliged to reimburse the tenant for maintenance costs incurred by the tenant. However, the costs of minor repairs caused by the normal use of the subject of the lease and the costs of its use are borne by the tenant. Nevertheless, the parties are free to set different terms of lease on maintenance and repair, and the approach differs depending on the type and scope of lease. In small-scale cases the parties tend to refer to the statutory regulation, whereas, in larger commercial leases, the split of maintenance obligations is defined in detail. In triple net leases, which are also common in commercial (specifically sale and leaseback) transactions, the burden of maintenance and repair is shifted to the tenant.
Frequency of Rent Payments
Rent is mainly paid on a monthly basis and very seldom quarterly. Different frequencies of rent payments are uncommon.
In the case of fixed-term leases for a shorter period of time, the rent payable will normally remain the same for the entire duration of the lease term, with the rent being increased, if so agreed between the parties, alongside the prolongation of the lease term. Conversely, fixed-term leases concluded for longer periods of time commonly include rent variation systems, such as rent indexation, graduated rent or rent linked to turnover. The rise of inflation triggered by the Russia–Ukraine war caused even short- to mid-term leases to contain indexation clauses. Even if inflation is currently not high, this matter is now carefully negotiated across the market.
On the one hand, if the rent is to be changed or increased, the determination of new rent is usually regulated by the lease agreement itself. In the case of rent indexation, the rent will be adjusted according to the changes in the chosen index. For graduated rent, the rent will be raised gradually by a specified amount after a certain period of time. For rent linked to turnover, the rent will be adjusted according to the tenant’s turnover. On the other hand, if the determination of the new rent is not regulated, the new rent is usually negotiated in view of the average market rent applicable to the type of real estate.
Generally, VAT is not payable on rent. However, in accordance with the Value Added Tax Act, the parties to the lease agreement may under certain terms opt into the VAT system, thereby enabling the deduction of input VAT.
Although not mandatory under the law, the parties to the lease agreement commonly agree that the tenant will pay a security deposit to the landlord, which is usually determined in the amount of a few monthly rents. For commercial leases, security deposits are sometimes replaced with the procurement of a bank guarantee by the tenant to the landlord as security for fulfilment of the tenant’s obligations under the lease agreement. In certain cases, the landlord and the tenant will agree to split the fit-out costs (sometimes against a rent-free period, and sometimes not).
In accordance with the Obligations Code, the costs of maintenance and repair (also) of common areas are the burden of the landlord. However, commercial lease agreements commonly shift the costs of maintenance of common areas used by several tenants, such as parking lots and gardens, to the tenants, and divide the costs proportionally between them.
The utilities and telecommunications costs arising solely from the business operations of the tenant are typically borne by the tenant, even if invoiced to the landlord. The utilities and telecommunications costs related to the common services and infrastructure are typically allocated proportionally to each tenant.
Currently, there is no direct property tax payable in Slovenia, but there is a communal levy called building land use fee, payable by the direct user of the constructed land or premises (a tenant in case of leased property). For office buildings or retail assets where there are several tenants using their own space or premises but co-using the common areas, the fee is paid by the landlord for the common areas but is most often then charged proportionally to the tenants. The lease agreement typically also provides that where any new taxes are introduced or the use fee is replaced by another tax, the tenant will bear the costs.
The person responsible for paying the costs of insuring real estate that is the subject of a lease can differ depending on the subject of the lease. For instance, for leases of residential buildings, it is most common that insurance is procured and paid for by the landlord. Similarly, for leases of commercial buildings, the landlord usually procures insurance for the subject of the lease, covering fire, storm, hail, water damage, etc. However, the costs are commonly shifted to the tenants as part of the operating costs. Also, the landlord’s insurance policies do not usually cover all risks, eg, tenant’s property or interruption of business, which are in turn insured by the tenants themselves. Nevertheless, in triple net leases, which are common in commercial sale and leaseback transactions, all costs of insuring the real estate that is the subject of a lease are borne by the tenant. Since most business insurance policies did not expressly cover the coronavirus pandemic, which resulted in the interruption of business, it has proven to be difficult for tenants to recover rent payments and other costs.
Generally, the parties to a lease agreement are free to agree on restrictions on the use of the subject of the lease. There are no specific regulations and/or laws regarding restrictions on how a tenant uses the real estate, whereas provisions of law operate with the term “ordinary use” in different contexts. For this reason, restrictions are commonly regulated contractually. Statutory provisions governing the prevention of restriction of competition must be complied with.
The Obligations Code prescribes that, if the tenant made any alterations to the subject of the lease, it is obliged to return the subject of the lease to the landlord after the lapse of the lease term in the same condition as it was before. The tenant may remove the improvements it has made to the subject of the lease, provided that it is possible to remove them without damage to the subject of the lease. Nevertheless, the landlord may retain the improvements if it compensates the tenant for their value. In commercial lease agreements, this matter is typically regulated in detail.
As described in 6.2 Types of Commercial Leases, specific provisions prescribed by the Housing Act apply for leases of residential buildings and specific provisions prescribed by the Agricultural Land Act apply for leases of state- or municipality-owned agricultural land. Previously, leases of business buildings and business premises were also regulated by the Business Buildings and Business Premises Act. The intervening coronavirus legislation also made distinctions between asset classes and, for instance, regulated measures applicable solely to leases of business buildings and business premises, though this is not applicable anymore.
Upon commencement of bankruptcy proceedings, the insolvent debtor acquires the right to terminate lease agreements concluded before the commencement of the insolvency proceedings by giving one month’s notice, notwithstanding the general rules laid down by law or contractually on the right to terminate the lease agreement. The exercise of the right of termination is without prejudice to the right of the other party to the lease agreement to claim from the insolvent debtor compensation for damage suffered as a result of the exercise of the right of termination.
As per a recent amendment of the insolvency regulations, termination of key contracts – ie, bilateral contracts, the performance of which is necessary for the smooth operation of the debtor’s business – solely due to initiation of insolvency (including court restructuring) proceedings of the debtor, is not possible. This applies even if specifically enabled in the lease agreement, and works both ways, for the landlord and for the tenant.
The tenant does not have a right to continue occupying the relevant real estate after the expiry or termination of a lease, per se. If the tenant continues to use the real estate after the expiry of the lease term and the landlord does not timely object to such use, a new lease is deemed to have been concluded for an indefinite period. Accordingly, upon expiry of the lease agreement, the landlord needs at least to object to the continuous use of the real estate, should such use occur.
Moreover, if the landlord wants the real estate to be vacated against the will of the tenant, it must generally obtain a judgment ordering the tenant to vacate the real estate and enforce the judgment in enforcement proceedings. The need to obtain such judgment may be avoided if the lease agreement is concluded in the form of a directly enforceable notarial deed, in which case the landlord may turn directly to enforcement proceedings, though not all events of default will be eligible for such application.
Unless otherwise agreed, the tenant may generally sublease the subject of the lease or otherwise grant its use to another person; however, only if such transfer of leasehold interest does not cause damage to the landlord. In practice, lease agreements commonly prohibit subleases or demand the landlord’s consent for the sublease.
Lease agreements concluded for an indefinite period of time can be terminated by way of notice, which either party may give to another, observing the notice period. However, since most lease agreements are concluded for a fixed term, the ordinary termination rights are excluded. A lease agreement concluded for a fixed term is terminated upon expiry of the lease term.
The Obligations Code also grants both the landlord and the tenant extraordinary termination/withdrawal rights. The landlord may, under the law, terminate the lease agreement:
Conversely, the tenant may withdraw from the lease agreement:
In addition, the tenant may terminate the lease agreement if the disposal of the subject of the lease results in the transfer of the lease to the new owner of the real estate. A range of additional termination options is usually contractually granted to both parties of the lease agreement.
A lease is not required to comply with registration requirements or particular execution formalities. Nevertheless, lease agreements may (but do not need to) be entered in the land register, which bears the effect of publicity. For the entry in the land register to be possible, the owner of the real estate needs to grant the tenant a land register permit that requires notarisation of the landlord’s signature, for which notarial fees are payable, and a registration fee needs to be paid.
The tenant may be forced to leave the leased premises in the event of default even prior to the date originally agreed if the landlord terminates the lease agreement.
If the tenant fails to comply with its obligation to vacate the leased premises, the landlord must generally obtain a judgment ordering the tenant to vacate the real estate and enforce the judgment in enforcement proceedings. The need to obtain such judgment may be avoided if the lease agreement is concluded in the form of a directly enforceable notarial deed, in which case the landlord may directly initiate the eviction in enforcement proceedings.
If only enforcement proceedings are necessary, official data states that the average time needed to successfully achieve enforcement is 2.7 months. However, if litigation proceedings are also necessary, the average time needed for successful enforcement significantly increases and may even exceed 12 months. No eviction moratoriums or related restrictions were enacted as a result of the coronavirus pandemic.
As described in 2.9 Condemnation, Expropriation or Compulsory Purchase, owners of real estate may be expropriated under certain conditions. The decision ordering expropriation may also order that lease agreements connected with the real estate being expropriated are to be terminated. In such case, the tenant needs to be either awarded damages or compensated in kind depending on the subject of the lease.
In the event of a tenant breach and termination of the lease, the landlord has a claim for delivery and vacating of the property (which means that the tenant must, in principle, return the property in the same condition as it was received) and a right to compensation for damages under the general damage liability regime; no specific rules for rent apply and it has not been widely adopted that the landlord would be entitled to receive the full amount of remaining rent. The Obligations Code adheres to the principle of full compensation, though it is limited by the principle of foreseeability of damage, while, simultaneously, the landlord has a duty to mitigate damages. In the case of rental agreements, the latter will require the landlord to make efforts to secure a new tenant promptly.
Landlords typically hold security deposits posted by tenants, usually in cash form, or the tenants provide other types of security, such as a bank guarantee or promissory note.
In construction agreements, the most common price clauses are: (i) unit prices, where the price of works is determined by the unit of measurement of the agreed works applied to the actually implemented quantities of work (most commonly used in road or rail construction); or (ii) fixed (lump-sum) prices, where the price is set as a total price for the entire scope of works. Construction agreements also commonly include a “turnkey” clause, in accordance with which the contractor independently undertakes to execute all the works necessary for the construction and use of the entire building. At the same time, the agreed price also includes the value of any unforeseen and excess works but excludes the price impact of any missing works. Fixed-price clauses are also common as they allow for a shift of the price-change risk (up to 10% increase in price of elements) to the contractor.
Responsibility for the design and construction of a project is split between the contractor and the project designer. The contractor and the project designer may be responsible for defects in the structure, which occur due to the building not being constructed in accordance with the design or the professional code of conduct, as well as the defects in the solidity of the structure, which is stricter, as the liability for defects in the solidity of the structure extends over a period of ten years after handover and acceptance.
If there is a defect in the project design, the project designer is liable. If the defect is due to the special nature of the site, the designer is liable, as it must take the relevant site conditions into account in the design process. However, the contractor may also be liable if it should have detected the defect due to the special nature of the site if it had acted diligently. In the case of a defect in the material, the designer is liable if it has included inappropriate materials in the building design. The contractor may also be liable for a defect in the material if the correct material was planned but the contractor used the wrong material. For defects in the manner of execution, liability lies with the contractor.
Construction risk is managed, to a certain extent, through the appointment of a construction supervisor. The construction supervisor is responsible for the supervision of construction works so as to ensure that the statutory requirements are complied with, that preventative action is taken and that defects are prevented in a timely manner.
Each contractor is also obliged to take out insurance against liability for damage in connection with its activity. The liability insurance must cover liability for damage caused to the investor or to a third party in connection with the performance of the contractor’s activities and must cover damage caused by negligence, fault or default of the contractor and its employees, up to an annual sum insured of at least EUR50,000. The investors commonly request that their contractors conclude insurance policies with higher insurance sums.
In addition to the foregoing, construction agreements commonly require that the contractor delivers bank guarantees for good performance, return of the advance payment or remediation of defects during the warranty period.
Construction contracts commonly foresee contractual penalties for delays in the execution of works. The contractual penalties are typically foreseen not only in case of delays in the completion time, but also penalise delays to (certain) interim milestones. In addition, timely completion of construction by the contractor is also commonly secured by a performance bond.
It is common for investors to seek additional forms of security to guarantee the contractor’s performance on a project. The most common forms of security are (different) bank guarantees, bills of exchange, enforcement notes, parent company guarantees or use of the retained amounts, etc.
Although possible, it is very uncommon for contractors and/or designers to hold an encumbrance over the real estate in the event of non-payment by the investor. Such encumbrance would be possible only upon explicit agreement between the contractor/designer and the investor as the owner of real estate and would need to be perfected in the land register. In such case, removal from the land register would be possible based on a deletion permit issued by the contractor/designer.
Individual contractors do not usually hold specific securities against non-payment by the investor. On the other hand, construction contracts are commonly paid based on progress, in monthly instalments. Both the contracts and the law allow a contractor to stop the works in case of non-payment by the investor.
Where a building permit had to be obtained before the commencement of the construction project, it is also necessary to obtain a use permit upon its completion. A use permit is a decision issued by the administrative unit authorising the use of the building. In certain more complicated constructions, a successful technical inspection is also one of the conditions for obtaining the use permit. In instances of certain specific commercial uses, additional permits may also be required.
VAT is payable in certain (but not all) sale and purchases of real estate. The sale and purchase of real estate is taxed with VAT only if the seller is a taxable person identified for VAT purposes. Moreover, VAT may be applied depending on the type of real estate being transferred and whether the parties opt into VAT treatment of the transaction.
As to types of real estate being transferred, the supply of land is exempt from VAT; however, the supply of (empty) building land is subject to VAT. Furthermore, the supply of buildings or parts of buildings and land on which the buildings are located is also exempt from VAT, unless the supply is made before the buildings or parts of the buildings are occupied or used for the first time, or if the supply is made before two years have elapsed from the beginning of the first use or first occupancy. Nevertheless, if the buyer is also a taxable person identified for VAT purposes with the right to deduct input VAT, the parties may opt into VAT treatment of the transaction, even though the supply would otherwise be exempt from VAT.
VAT must be paid by the buyer. However, the buyer may deduct the amount from input VAT and demand reimbursement from the state, making the transaction tax neutral. Conversely, if the parties opt into VAT treatment of the transaction, the reverse charge system applies.
The general VAT rate is 22%. A lower VAT rate of 9.5% is applied to supplies of apartments, housing and other buildings intended for permanent residence, and parts of buildings, if they are part of social policy.
If VAT is not payable on the sale and purchase of real estate, real estate transactions are subject to real estate transaction tax (see 2.10 Taxes Applicable to a Transaction).
There are no methods which could be used to mitigate tax liability on acquisitions of large real estate portfolios.
There is no annual tax specific to the holding of business premises. However, payment of an (annual) compensation for the use of building land is required. This compensation is generally payable in respect of the following areas:
The exact areas for which the compensation should be paid, the criteria for determining the amount of compensation and the applicable exemption are determined at the municipality level. The person liable for payment of this compensation is generally the direct user of the land or building or part of the building.
Foreign investors are subject to special rules on income taxation in Slovenia. Income tax may be withheld, but this is not automatic and depends on various factors such as tax treaties between countries, the type of income and the status of the investor.
Natural persons are obliged to pay tax on rental income, which is payable by the landlord. The rate is 25% from the income from renting out real estate, reduced by standard costs of 10% or actual costs. If a natural person rents out real estate as a business activity, these incomes can be considered as income from the activity, which go into the tax base for the annual assessment of income tax.
Natural persons also pay tax on capital gains in connection with the disposal of real estate. The law provides for several exemptions, the most important being disposal after 15 years of ownership. Even otherwise, the tax rate, which first amounts to 25% of the difference between the value of the capital at the time of disposal and the value of the capital at the time of acquisition, decreases over the years of ownership, ie, it amounts to 20% after five years of ownership and 15% after ten years of ownership.
Meanwhile, legal entities pay corporate income tax (CIT), which amounts to 19% of their profits.
A 15% CIT withholding is provided for rent income if paid to a non-resident stemming from real estate located in Slovenia, unless the lease is provided by the business unit of the non-resident in Slovenia, in which case it is paid to this business unit.
There are no tax benefits from owning real estate, per se. Still, depreciation of real estate is taken into account in the assessment of tax (see 8.4 Income Tax Withholding for Foreign Investors for decrease of the rate of the tax on capital gains as well as consideration of costs in the tax base for tax on rental income).
Komenskega ulica 36
1000 Ljubljana
Slovenia
+386 1 300 76 50
+386 1 433 70 98
info@selih.si https://selih.si/en/Introduction
In 2024, Slovenia’s real estate market continued to perform in the context of global, regional and local macroeconomic indicators, EU-driven sustainability goals, and a – slowly but surely – growing need for legal and financial innovation. Despite broader uncertainties and the lingering effects of previous years’ inflation and interest rate volatility, Slovenia remains an attractive and comparatively stable destination for real estate investment within Central and Eastern Europe. The Slovenian legal framework is established, infrastructure well-developed, and the strategic location within the EU remains a strong suit. These factors offer a relatively low-risk environment and collectively support Slovenia’s appeal among both institutional and private investors.
Residential
One of the key themes shaping the market in 2024 is the notable slowdown in the residential segment, both in terms of pricing and transaction volume. The number of residential transactions dropped significantly in 2024 compared to the previous year, though the prices did not quite follow that trend. This correction follows several years of significant growth and reflects both reduced affordability due to prior inflation and cautious buyer sentiment in the face of broader economic uncertainty.
That said, investor appetite for rental housing remains healthy, particularly in Ljubljana and other university cities, where supply continues to lag significantly behind demand over a longer period now, which has caused the rental prices to rise above affordability levels. Several governments have long promised an aggressive approach in tackling this situation but have not delivered. In March 2025, the Housing Fund of the Republic of Slovenia however announced a new (and largest until now) set of waves of investments into new rental units. Supported by legislative measures, both in the housing law and state financial support view, this should bring several thousands of units across Slovenia.
Contrary to the state fund, private investors are more focused on Ljubljana when developing new residential properties. The leading investor in this part is Slovak Corwin, but there are also other notable players, local and foreign, active in the market. Some private investors are also active in developing luxury residential quarters in tourism-based areas, such as the coast or Lake Bled.
Build-to-rent and co-living models are not fully developed but might be gaining traction as developers will need to seek to address the shifting demographics and preferences, including a growing number of single-person households and urban professionals. Public authorities should also step up when exploring new policy mechanisms, such as rent regulation pilots and support for co-operative housing models, which could improve long-term affordability and increase access to adequate housing.
Office Space
On the one hand, statistical indicators show that the office segment has demonstrated certain resilience in keeping low vacancy rates and was not bruised heavily due to hybrid work models and downsizing trends. On this part, Slovenia’s office market has remained relatively stable. Prime rents for Class A offices in Ljubljana range from EUR16 to 20 per square metre per month, and these rates have held steady throughout 2024.
On the other hand, the past years have seen a growing mismatch between supply and demand for large prime office premises. The lack of the latter – though surely in combination with other reasons such as taxation policy and payroll burdens – caused certain multinationals to reconsider having their regional office in Slovenia. However, with some projects being finished in 2024 (like DCB Montana) or on their way (spearheaded by Vilharia and Emonika), this is finally changing.
And this change is more than welcome, since the growing emphasis on sustainability and ESG compliance has become a defining factor in both new developments and tenant requirements. Green certification and high energy performance are increasingly non-negotiable in major leasing decisions. Developers are also paying closer attention to tenant experience, with amenities such as smart building systems, wellness features and flexible layouts becoming standard in new projects.
There is also an uptick in retrofit projects targeting older office buildings, especially in secondary locations, which are being repositioned with upgraded mechanical systems and interior redesigns to appeal to smaller, agile tenants who prioritise flexibility over floor space. Expertise in the above services could however also come handy for an investor who – if the rumours turn out to be true and NLB bank decides to put its office building on the market – would be willing to tackle a refurbishment of a 50-year-old building with some 50,000 square metres of usable space in the centre of Ljubljana.
Retail
Retail continues to outperform expectations, particularly in the retail park and single-tenant segments. Investors are gravitating towards assets that provide stable, long-term income, with grocery-anchored retail properties proving especially popular.
Although consumer spending has not fully returned to pre-2020 levels, the general retail recovery is sufficiently robust to sustain investment interest. Moreover, retail formats that blend traditional shopping with lifestyle and entertainment offerings are gaining traction, reflecting a broader trend towards experiential retail. Vacancy rates remain low in prime locations, and demand for refurbishments of older assets is growing, particularly those that can be upgraded to meet modern ESG standards. Online shopping habits established during the pandemic remain firmly in place, but the Slovenian consumer still prefers physical retail for daily essentials and high-value purchases, which continues to support footfall in key urban and suburban centres.
Since the retail market is well developed, there is not much room for large developments, save for some specific opportunities. One of them is a major ongoing development called Emonika in Ljubljana, which has picked up pace since Hungarian OTP took charge of the revitalisation. Another, also in Ljubljana, is the commercial part of the Sport Park Stožice project which was the first PPP of its type in Slovenia. However, after the core and shell was constructed and the private investor went bankrupt in 2012, the City of Ljubljana took control of the stadium and sport arena, while the commercial part – a retail centre of approximately 50,000 square metres of gross leasable area – remained unfinished and partially exposed to the elements.
Logistics and Industrial
Slovenia has witnessed a shift towards ESG-compliant, large-format assets also in the logistics and industrial space. Proximity to the Adriatic coast and key European logistics corridors adds to Slovenia’s appeal in this segment. Noteworthy projects include the 40,000 square metre logistics centre in Zalog and LOGspot’s 26,000 square metre warehouse in Logatec. As tenant requirements evolve, the emphasis is now squarely on automation, sustainability and strategic location.
Developers are increasingly incorporating solar energy solutions, water recycling systems and electric vehicle infrastructure into their warehouse designs. This aligns with the growing demands of logistics companies aiming to reduce their carbon footprints and comply with stricter EU transport and environmental regulations. Furthermore, the market is witnessing an uptick in demand for smaller last-mile logistics hubs close to urban centres, supporting the rise of e-commerce and same-day delivery expectations. The shift to omnichannel retail models has also created demand for hybrid spaces that integrate showrooms with warehousing and delivery capabilities, a niche in which Slovenia is seeing pioneering activity.
Further development of the Port of Koper and expected further development of the capabilities in the vicinity of the Ljubljana airport should spearhead further development on this part. There are also some other new areas being zoned for this purpose and a material scope of brown-field opportunities for which it seems there is not sufficient investment incentive. In the context of green-field project development, the main hindrance in achieving a quick development is the manner in which new areas are zoned and made accessible to investors. Typically, an area is privately owned by several owners and is used for agriculture, before it is zoned for general construction use. Thus, the first step of an investor – prior to initiating a detailed zoning followed by a permitting process – is to enter into a painstaking and uncertain negotiation with several private individuals for the purchase of land. This gives leverage to each owner, which results in high pricing of land in an optimistic scenario, and inability to execute the project in a pessimistic one. This should be addressed by the legislators in order to assure a more stimulating environment for new investments.
In very limited cases, a project will be eligible for investment incentives which, besides money, may also include alleviation options for expropriation of land designated for the project.
Hospitality
Despite concerns around energy costs and workforce shortages, the sector remains on an upward trajectory. The rebound is fuelled by a strong tourism performance as, in 2024, Slovenia recorded a 5% increase in tourist arrivals year-on-year, with visitors predominantly from Germany, Austria and Italy. This uptick has reinvigorated hotel development, with new projects targeting both the upper-midscale and boutique segments. International operators are increasingly entering the market through franchise and management agreements, while local investors are modernising existing facilities to cater to evolving tourist expectations. Wellness tourism and eco-friendly accommodations are also gaining momentum, supported by Slovenia’s natural landscape and its government’s active promotion of green tourism. Additionally, public investment in regional airport infrastructure and sustainable mobility solutions – such as electric shuttle networks and rail link upgrades – is expected to enhance accessibility and further stimulate hospitality sector growth in less developed areas.
Forests and Agricultural Land
Slovenia is the third most forested country in Europe, trailing only Sweden and Finland. But the ownership is, for historical reasons, particularly dispersed with one quarter of the population owning or, in most cases, co-owning a small part of a forest. This causes hardship to effective management of the forests and prevents Slovenia from fully exploiting the ecological and economic potential of this natural resource. The state is the largest owner of forests in Slovenia (followed by the Catholic church) and the state-owned company Slovenski državni gozdovi is at the forefront of consolidation efforts to improve the situation.
Agricultural land has a similar story and background. Traditionally, Slovenia is not a force in large-surface crop production but focuses on smaller farms, the management and further division of which is also regulated. Efforts are being made towards ecological and sustainable farming, but the fragmentation of land in Slovenia was probably one of the main drivers for a Slovenian visionary deciding to go to Serbia to establish a 3,700-hectare farm: there he is proving that large-scale sustainable farming supported by technological advances can go hand-in-hand with modern living trends.
Investment Environment
On the investment side, the retail sector leads in terms of volume, followed by logistics. A notable feature in 2024 is the growing use of sale-and-leaseback structures, which offer liquidity to owner-occupiers while allowing institutional investors to enter the market with reduced risk. Improvement of financing conditions due to easing interest rates is noted, but lenders tend to remain selective, focusing on assets with strong fundamentals. Yields remain compressed in prime segments, although secondary assets with repositioning potential are drawing opportunistic capital. Slovenian assets remain within the field of interest for cross-border investors who view the market as a relatively secure environment amid wider regional instability. Family offices and smaller private equity firms are also increasingly active, attracted by the manageable deal sizes and relatively low barriers to entry. Another trend gaining traction is the rise of impact investing within real estate, with funds targeting projects that deliver measurable social or environmental returns in addition to financial performance, particularly in sectors such as affordable housing, energy-efficient retrofits and senior living.
Legal Landscape and Trends
Traditional bank financing is still the leading source of money for development and acquisition of real estate properties of all types, but it is typically combined with equity participation. However, investing in various fund structures is gaining momentum and growing interest in property bonds seems to be a relevant legal development of particular relevance to real estate investors. These instruments allow developers to tap into debt capital markets to finance their projects, often offering real estate assets as collateral.
Investors in all instruments typically require detailed security packages and rights of enforcement, and – in any modern-type investment structure – legal advisers must pay more attention in structuring these arrangements to ensure security enforceability under Slovenian law. In light of this, legal practitioners are seeing increased demand for structuring advice, especially regarding cross-border compliance, taxation issues and the ranking of security interests. The importance of the latter will increase if this trend proves to reflect a broader shift from traditional bank financing to more diversified capital sources.
It is further expected that the regulatory environment will need to evolve in the coming years to support more complex capital structures while ensuring investor protection. Furthermore, real estate transactions are increasingly shaped by compliance with foreign direct investment, anti-money laundering and know-your-client obligations, especially when foreign capital is involved. Advisers are paying closer attention to ultimate beneficial ownership structures and are working more closely with financial institutions to streamline approval processes.
Notably, the above-mentioned structures and instruments are not accessible to the general public on the consumer level. With approximately EUR27 billion cash being held by Slovenian households in their bank accounts instead of being invested in state bonds, pension funds or the security market, recent government efforts in tackling this are more than welcome: Slovenia’s second issuance of “people bonds” was made in March 2025, but the report on emission value is still awaited. The Ministry of Finance is reportedly also planning to introduce personal trading accounts based on the Swedish example, which might enable the general public also to invest in real estate funds in a disbursed manner.
Regulatory clarity remains one of the strong points for Slovenia. The country maintains a well-functioning land registry and relatively transparent zoning and permitting processes. However, some challenges persist, particularly around the length and complexity of procedures in cross-municipality developments (see above for structural issues). Stakeholder co-ordination and inconsistent interpretation of spatial planning rules can delay project timelines, especially in greenfield developments. Furthermore, the increasing stringency of energy efficiency requirements and ESG-related disclosure obligations means that legal due diligence must now encompass a broader array of compliance checks, including those related to environmental impact, heritage conservation and social responsibility standards. Investors are advised to work closely with local legal counsel and planning consultants from the earliest stages of project development. An emerging area of interest is the potential introduction of digital permitting systems, which are currently being piloted in select municipalities with the aim of streamlining approval workflows and enhancing transparency.
It is also worth mentioning certain legislative changes and initiatives aimed at supporting affordable housing. First is the recent change in streamlining the permitting process for modular and prefabricated housing, and the second is a renewed initiative to tax non-residential property (ie, each additional property which the owners do not use for their primary residence). The City of Ljubljana has also announced a potential limitation, which focuses on sparsity of leasing options for residents and students alike. The City plans to restrict short-term leasing over platforms like Booking and Airbnb, except during the summer vacation period. Such a measure would certainly increase dwelling accessibility but it is facing strong opposition from operators of such services.
Public-private partnerships are also gaining traction in certain sectors, particularly in the redevelopment of under-used urban spaces for mixed-use and community-oriented projects. In line with broader EU trends, Slovenia is also beginning to explore strategies for climate adaptation in real estate development, nature-based urban infrastructure and – after devastating 2023 highwaters – flood-resilient building techniques.
Summary
Slovenia’s real estate market in 2024 is defined by a mixture of caution and opportunity. While residential markets recalibrate and financing conditions evolve, core segments like logistics, office and retail remain buoyant. A supportive legal framework, solid infrastructure and growing sustainability awareness make Slovenia a compelling destination for both domestic and international investors. Yet, success will depend on adaptability to ESG standards, legal developments and the socio-economic reforms currently underway. As Slovenia continues to align its property sector with global trends and EU policy objectives, proactive engagement with legal, planning and financial advisers will remain essential for navigating an increasingly sophisticated and dynamic market. With the right strategic approach, investors and developers alike can benefit from Slovenia’s unique position as a bridge between Western Europe and the Western Balkans, and from its long-standing tradition of combining economic pragmatism with forward-looking policy-making.
Komenskega ulica 36
1000 Ljubljana
Slovenia
+386 1 300 76 50
+386 1 433 70 98
info@selih.si https://selih.si/en/