Local newspaper Makarska Chronicle said Gaddafi’s wife Safia, a Bosnian Croatian national, was planning to buy a resort in the town of Igrani, which before the breakup of the former Yugoslavia belonged to a Serbian utility company.
Safia was born Sofia Farkas in Yugoslavia, in the city of Mostar, present day Bosnia and Herzegovina. She is Gaddafi's second and present wife.
The newspaper said the negotiations started when rebel offensive to depose Gaddafi intensified in Libya and were now in an “advanced phase”. Safia and her three children fled to Algeria after rebels took over Tripoli late last month.
Meanwhile, the new Libyan authorities have said they have located Gaddafi, who is believed to be still hiding in Libya, and it was just a matter of time before he was “arrested or killed”.
Gaddafi himself attended the Yugoslav Air Force Academy and forged close ties with late Yugoslav dictator Josip Broz Tito as leaders in the non-aligned movement.