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Everything you need to know is included in our Croatia Property Pack
Are you thinking of investing in property in Croatia? Are you unsure if it's better to buy now or wait until next year?
Everyone has their own viewpoint when it comes to market timing. Your Croatian friend might suggest that now is a perfect time to invest in property, but your colleague from Zagreb may have a different view and recommend waiting for more stability.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Croatia, we believe that facts and data are more important than opinions and rumors, so we prioritize them.
We have carefully gathered and analyzed official reports and government website statistics. Using this information, we have created a reliable database. Here's what we found that can help you decide whether it's a good time to buy real estate in Croatia.
We hope you'll find practical value in this article.
How is the property market in Croatia now?
Croatia is, today, a country with a lot of stability
Positive
Stability is a necessary condition when investing in real estate because it minimizes legal, regulatory, and political risks. It is an information you need as a foreigner looking to buy real estate in Croatia.
The good news is that Croatia is a stable country. The last Fragile State Index reported for this country is 45.9, which is an excellent score.
Croatia's stability today can be attributed to its integration into the European Union in 2013, which has bolstered its economic development and governance standards through access to EU funds and regulatory frameworks. Additionally, Croatia's strategic focus on tourism and infrastructure development has strengthened its economy, while its relatively homogeneous population has minimized ethnic tensions that previously contributed to regional instability.
There is a strong basis for investment in the country. Now, let's review the economic projections.
Croatia is on track for significant expansion
Positive
Before buying a property, take a look at how well the country's economy is doing.
According to the IMF, Croatia is set to conclude 2024 with a growth rate of 3%, which affirms the country's positive direction. If we take 2025, the experts say 2.7%.
Besides that, the economy will keep growing since Croatia's economy is expected to increase by 12.6% during the next 5 years, resulting in an average GDP growth rate of 2.5%.
The expected sustainable growth rate in Croatia indicates a stable and growing economy, which can lead to increased property values and rental demand, making real estate investments more profitable. Additionally, a stable economy reduces investment risks, providing a safer environment for long-term real estate investments.
Now, let's delve into other metrics worth exploring.
Croatian business owners have faith in the economy's growth prospects
Positive
GDP growth is important for evaluating the Croatian property market, but it may not reflect the sentiments and expectations of the business community. Fortunately, in Croatia there is an established metric that is routinely disclosed. It's not the case for every country, so we're lucky.
The metric, commonly referred to as the Business Consumer Index (BCI), quantifies business leaders' confidence in the current and future economic conditions through surveys and assessments.
The Global Economy's data indicates that the Business Confidence Index is currently 10 for Croatia. It can be regarded as a rather neutral score.
Things haven't changed much, as the BCI score was, 12 months ago, at 8.
The moderate level of business confidence among local businesses in Croatia presents promising opportunities for property investors. This moderate outlook on the country's economy suggests a stable environment, which could lead to a steady increase in job openings and incomes. While not overly optimistic, this sentiment still supports a consistent demand for properties, making it a suitable time for investors to consider generating rental income and potentially benefiting from property value appreciation over time.
Croatia is providing a lot more building permits
Positive
The number of permits given for building houses can help you decide if it's a good time to buy property in a country. When more building permits are issued, it implies an encouraging and favorable state of the property market.
We have great news for you: the number of building permits delivered is surging in Croatia.
Throughout the previous 12 months, according to Croatian Bureau of Statistics, the number of building permits issued by the Croatian municipalities rose by 17.1%, from 10,659 to 12,485 units.
Without any doubt, the data shows that many people think it's a favorable time to invest in property.
It's worth mentioning that more real estate will become available in the market. This data suggests a potential future drop in property prices in Croatia in 2025.
The growth of property prices in Croatia remains on an accelerated trajectory
Positive
Croatia's home prices have increased by 56.9% in 5 years according to eurostat.
It means that if you had bought a seaside villa in Dubrovnik for $500,000 five years ago, then it would now be worth around $784,000.
Currently, property prices are experiencing continued and accelerated growth, it has been the case for 5 years now.
It's a promising signal. Croatian property prices are trending up. The trend is even accelerating. However, you might want to pause and wait for a market correction, so you can get a better price.
You can find a more detailed analysis of the real estate prices in our property pack for Croatia.
Everything you need to know is included in our Croatia Property Pack
Croatia's population is getting a lot richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Croatia, the average GDP per capita has changed by 20.6% over the last 5 years. Very few countries have achieved superior results.
This means that, if you purchase a seaside villa in Dubrovnik and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Croatian cities like Zagreb, Split, or Dubrovnik in 2025.
Properties promise modest rental yields in Croatia
Neutral
Rental yield is a popular way to estimate the earnings from real estate investments.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Croatia is purchased for 1,000,000 HRK and generates 60,000 HRK in annual rental income, the rental yield would be 6%.
The website Numbeo indicates that rental properties in Croatia promise gross rental yields from 1.7% and 4.4%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Croatia.
It suggests a satisfactory level of income relative to the property's value.
Also, as we have seen before, there might be a fall in housing prices (because of more available properties) and potential tenants are getting wealthier. Consequently, gross rental yields are very very likely to soar in Croatia in 2025.
Everything you need to know is included in our Croatia Property Pack
In Croatia, inflation is anticipated to be minimal
Neutral
In two words, inflation is when values surge.
It's when your favorite plate of seafood in Dubrovnik costs 150 Croatian kunas instead of 130 Croatian kunas a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
- real estate can act as a hedge against inflation, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
According to the IMF, over the next 5 years, Croatia will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
It means that Croatia is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.
Is it a good time to buy real estate in Croatia then?
Time to conclude !
2025 is shaping up to be an excellent time to invest in property in Croatia, thanks to the country's current stability. Croatia has been enjoying a period of political and social stability, which is a crucial factor for any real estate investment. A stable environment means fewer risks and more predictability, making it an attractive option for both local and international investors. This stability is a solid foundation for the country's economic growth, which is expected to continue over the next few years.
Speaking of economic growth, Croatia's economy is projected to grow by 12.6% over the next five years, with an average GDP growth rate of 2.5%. This sustainable growth rate is a positive indicator for the real estate market, as it suggests that property values and rental demand are likely to increase. A growing economy often leads to higher property values, making real estate investments more profitable. Additionally, a stable and growing economy reduces investment risks, providing a safer environment for long-term real estate investments.
Another factor contributing to the attractiveness of the Croatian property market is the increase in building permits. This indicates that the country is actively working to meet the growing demand for housing, which can help keep property prices on an upward trajectory. As the population becomes wealthier, there is likely to be an increased demand for both purchasing and renting properties, further driving up property values and rental yields.
According to Numbeo, rental properties in Croatia offer promising gross rental yields ranging from 1.7% to 4.4%. This, combined with the anticipated minimal inflation, makes Croatia an appealing destination for real estate investment. Minimal inflation helps maintain the purchasing power of your investment returns, ensuring that your property investment remains lucrative over time. All these factors together make 2025 a promising year to consider buying property in Croatia.
We genuinely hope this article has been helpful and informative to you!. If you need to know more, you can check our our pack of documents related to the real estate market in Croatia.
-Will real estate prices go up in Croatia?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.