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What will happen in Croatia’s real estate market? Will prices go up or down? Is Dubrovnik still a hotspot for foreign investors? How is Croatia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Croatia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Real estate prices will rise gradually as Croatia strengthens its position in the EU
The Croatian real estate market is on the rise, with property prices climbing steadily in key areas like Zagreb and the Adriatic Coast.
In 2023, Zagreb experienced a notable surge in housing prices, with a year-over-year increase of nearly 14%. This upward trend has persisted into 2024, driven by a strong demand for homes in these sought-after locations. The buzz around Croatian real estate is largely fueled by foreign investors showing keen interest, especially after a significant uptick in tourist arrivals in recent years.
Tourism has played a pivotal role, as the influx of visitors has not only boosted the short-term rental market but also sparked interest in long-term residential investments. Many are now considering Croatia as a viable option for property investment, thanks to its appealing blend of natural beauty and economic potential.
Adding to the allure, Croatia's switch to the euro in January 2023 has brought about greater economic stability. This change, along with EU-funded infrastructure projects, has made the country even more attractive to investors. The limited availability of housing, particularly in coastal hotspots, continues to drive prices upward, creating a competitive market for potential buyers.
For those eyeing a property purchase, it's worth noting that the real estate landscape is evolving as Croatia strengthens its ties within the European Union. This integration is expected to further bolster the market, offering promising opportunities for investment.
Sources: Global Property Guide, The Dubrovnik Times, Cushman & Wakefield
2) Foreign investment in Croatian real estate will grow as the government offers incentives for international buyers
Croatia is becoming a hotspot for foreign real estate investors thanks to new government incentives.
In 2023, the country saw a 25.9% increase in new dwelling sales, with many of these purchases made by international buyers. This surge highlights a growing interest in the Croatian real estate market. The government is actively encouraging this trend by offering enticing incentives. For instance, investors can enjoy a free lease of inactive property for up to ten years if they invest at least EUR 3 million and create 15 new jobs within three years.
Tax credits are also on the table for those investing in fixed assets and job creation, making Croatia a very appealing option for international investors. The thriving tourism sector further fuels this interest. With more foreign tourists visiting, there's a rising demand for properties in coastal and holiday areas. This demand translates into stable rental income, with annual returns reaching 8-10%.
Such returns make property investment in Croatia not just attractive but potentially lucrative. The combination of government incentives and a booming tourism industry creates a perfect storm for real estate growth. Investors are particularly drawn to the coastal regions where tourism is booming, ensuring a steady stream of rental income.
For those considering a move, the Croatian government's proactive stance and the country's natural beauty make it a compelling choice. The incentives are designed to not only attract investment but also to stimulate job creation and economic growth. This strategy is paying off, as evidenced by the increased foreign interest in the real estate market.
Sources: Global Property Guide, PwC Tax Summaries, Veles Club
We made this infographic to show you how property prices in Croatia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
3) Coastal rental yields will drop a bit as short-term rentals flood the market
In 2023 and 2024, coastal areas like Dubrovnik saw a surge in short-term rental listings, with 4,503 active Airbnb listings by September 2024.
This boom in short-term rentals is part of a larger trend in Croatia's tourism sector, where new properties are being built specifically for this market. However, this has led to an oversupply, especially noticeable during off-peak seasons when demand drops.
Private accommodations are feeling the pinch, with average occupancy rates at just 62% compared to hotels, which enjoy a 95% occupancy rate. This gap highlights the struggle to maintain high occupancy outside peak times, impacting rental yields.
As more properties flood the market, competition among property owners intensifies. This often results in price cuts as owners try to attract guests, which can further squeeze rental yields.
In Dubrovnik, the market saturation is evident, and rental yields are expected to decline slightly as the area becomes saturated with short-term rental properties.
Sources: Airbtics, Karlobag.eu
4) Property prices in Istria will rise as it becomes popular for eco-friendly and sustainable living developments
The Istrian peninsula is becoming a hotspot for eco-friendly developments and sustainable living communities.
In 2023 and 2024, the demand for eco-friendly accommodations in Istria surged, thanks to the Eco Domus label, which certifies sustainable practices. This label has already been awarded to numerous accommodations, and the list keeps growing.
Another driving force is the rise in sustainable development projects across Istria. The European Green Party is pushing for strategies that focus on permaculture and ecology, which aligns perfectly with Istria's self-sustainability goals. This has caught the eye of international investors eager to dive into green developments.
Government backing is also a big deal here. Both the Croatian government and the Istrian region are actively promoting sustainable construction and renewable energy. This support is crucial in making Istria a magnet for eco-conscious buyers.
With all these elements in play, it's no wonder that Istria is gaining a reputation as a prime spot for sustainable living. The combination of local initiatives and international interest is setting the stage for a property boom.
As more people look for eco-friendly options, Istria is poised to see a notable increase in property prices, driven by its commitment to sustainability and green living.
Sources: Green Destinations, European Greens, ET Edge Insights
5) Demand for homes with office spaces in Croatia will grow as remote work becomes more common
In Croatia, 78% of employees want to keep working from home, reshaping the real estate market.
With more people setting up home offices, there's a noticeable uptick in demand for home office furniture and equipment. This isn't just a Croatian trend; it's happening all over Central Eastern Europe. People are keen on creating comfy and efficient workspaces, which naturally makes them look for homes that can fit these needs.
Real estate listings in Croatia are catching on. As remote work becomes the norm, homes with dedicated office spaces are becoming hot properties. This mirrors trends in other regions where remote work is big, showing that Croatian buyers are now prioritizing homes with good work environments.
The Croatian government is also on board, supporting remote work with initiatives like the Digital Nomad Visa. This has drawn many digital nomads to Croatia, further increasing the demand for homes with office spaces. With these dynamics, it's clear that homes with dedicated workspaces are gaining popularity.
Sources: Total Croatia News, World Furniture Online, Schengen News
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6) Affordable housing policies in Croatia will change supply and demand in cities
In Croatia, housing prices in major cities have been climbing steadily.
In 2024, the average price per square meter in these urban areas reached 2,377 euros. Zagreb, the bustling capital, saw prices soar to 2,830 euros per square meter, marking a significant 10% annual growth rate, the highest in the Eurozone. This surge is reshaping the real estate landscape, making it a hot topic among potential buyers.
Meanwhile, there's a noticeable uptick in demand for rental properties. The Croatian government is stepping in by restricting short-term rentals to prioritize housing for locals over tourists. This policy shift aims to tackle the housing shortage and ease overcrowding in cities, a move that could make urban living more accessible for residents.
Reports from the OECD highlight that high homeownership rates and rising house prices are making it tough for people to move to economically vibrant areas. The issue is compounded by unused properties and secondary homes, which are reducing the number of available dwellings and worsening the housing crisis.
These dynamics are crucial for anyone considering buying property in Croatia. The government's efforts to promote affordable housing could significantly impact the supply and demand in urban areas, potentially altering the market landscape.
Sources: Total Croatia News, OECD Economic Surveys, Intellinews
7) New tax incentives in Croatia will boost demand for energy-efficient homes as buyer preferences shift
Croatia is rolling out new property tax incentives to boost energy-efficient home development.
These incentives are part of a larger push to embrace sustainable living and cut down on carbon emissions. The Environmental Protection Fund is stepping in with generous co-financing for energy renovations, covering things like better thermal protection and renewable energy systems. This financial backing makes it easier and more appealing for homeowners to upgrade their homes to be more energy-efficient.
In 2023 and 2024, the demand for energy-efficient homes in Croatia saw a noticeable uptick. There was a 25.9% increase in new dwelling sales, especially in coastal and holiday spots. This shows that buyers are leaning towards homes that are not just green but also save money over time. Energy-efficient homes cut down on energy use, which means big savings on utility bills, a major draw for many buyers.
The Croatian government isn't just sitting back; they're actively pushing for sustainable housing through public campaigns and educational programs. These efforts have made people more aware of the perks of energy-efficient homes, nudging buyer preferences in that direction. With a new property tax law coming in 2025, there's an expectation that this will further encourage property owners to make their homes more energy-efficient.
Sources: Environmental Protection Fund, Global Property Guide, EBRD, Wolf Theiss
8) Interest in inland properties in Croatia will grow as rising sea levels affect coastal property values
Rising sea levels are becoming a major concern for coastal properties in Croatia.
In recent years, towns like Rovinj, Pula, and Split have seen increased flooding and erosion, making potential buyers wary. This trend is expected to worsen, with projections indicating a sea level rise of up to 65 cm by 2100. Even a small increase can lead to more frequent and severe flooding, impacting property values.
Historically, these coastal areas have already experienced value fluctuations due to natural hazards. The insurance industry is taking note, updating risk assessments to reflect a higher flood risk for coastal properties. This has made coastal real estate less attractive, pushing buyers to look inland.
Real estate market analyses show a clear shift in demand from coastal to inland areas. This shift is driven by the increasing risks associated with coastal properties. Inland areas are becoming more appealing as they offer a safer investment with less exposure to flooding.
For those considering buying property in Croatia, it's important to weigh these factors. Inland properties are gaining popularity, offering a more stable investment opportunity. The trend is clear: inland real estate is on the rise as coastal risks increase.
As the situation evolves, staying informed about these changes can help you make a smarter investment decision. The shift in the market is not just a trend but a response to the growing environmental challenges facing coastal areas.
Sources: ClimateChangePost, Frontiers in Climate, EECFA Blog
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Croatia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
9) Demand for retirement-friendly housing in Croatia will grow as the population ages
Croatia is seeing a noticeable rise in its aging population, with 22.70% of people aged 65 and over as of December 2023.
This trend is expected to continue, and by 2050, 31% of the population will be over 65. Many retirees are drawn to Croatia for its affordable cost of living and mild climate, making it an attractive place to settle down. However, the current long-term care (LTC) system is underfunded, leading to high out-of-pocket expenses for individuals.
The OECD has pointed out the need for better LTC infrastructure to support this aging demographic. The OECD Economic Surveys from 2023 also discuss housing shortages and overcrowding in main cities, which could worsen as the population ages.
These factors suggest a growing need for housing solutions that cater specifically to older adults. Retirees are particularly interested in areas with rich cultural heritage, adding to the demand for retirement-friendly communities.
Investing in property in Croatia could be a smart move, especially in regions that are developing infrastructure for older residents. The combination of natural beauty and cultural richness makes it a compelling choice for those looking to retire.
Sources: Trading Economics, 385 Home, OECD Report, OECD Economic Surveys
10) Multi-generational living will become more popular in Croatia, affecting the design and size of new homes
In Croatia, 22.70% of the population is now aged 65 and over, marking a notable demographic shift.
This aging trend is prompting families to rethink their living arrangements, often opting to include elderly family members under one roof. With 84% of people living in overcrowded homes, it's clear that many are already adapting to accommodate multiple generations. This overcrowding isn't just a statistic; it's a reflection of the growing need for homes that can flexibly house extended families.
As the cost of living independently continues to rise, multigenerational living becomes an appealing option. Families are finding that by living together, they can share expenses like housing, childcare, and eldercare, which eases financial burdens. This isn't just a trend; it's a practical response to today's economic challenges.
In Croatia, the design and size of new homes are beginning to reflect this shift. Developers are increasingly considering the needs of multigenerational families, creating spaces that are both spacious and adaptable. This means more homes with features like separate living areas and additional bathrooms, catering to the needs of all family members.
For those looking to buy property in Croatia, understanding this trend is crucial. The demand for homes that can accommodate multiple generations is likely to grow, influencing the real estate market significantly. This shift not only affects the types of homes being built but also the way families live and interact.
Sources: Trading Economics, Roma Civil Monitoring Group, Hines
11) Demand for high-rise apartments in Croatian cities will increase as urbanization rises and space becomes limited
Urbanization in Croatia is on the rise, with over 2.2 million people now living in cities.
As more people flock to urban areas, the demand for housing has surged. This trend is particularly evident in the first half of 2023, where there was a 25.9% increase in demand for new dwellings compared to the previous year. With land becoming scarce, high-rise apartments are emerging as a practical solution, offering more living space within a smaller footprint.
Land prices, especially in popular coastal areas, are climbing, making high-rise apartments an attractive option. As land becomes pricier, building upwards is more cost-effective for both developers and buyers. This shift not only addresses space constraints but also aligns with economic considerations.
In cities like Zagreb and Split, where urbanization is most pronounced, high-rise living is becoming the norm. These cities are experiencing a transformation, with new skyscrapers altering the skyline and offering modern amenities that appeal to urban dwellers.
For potential buyers, investing in a high-rise apartment could be a smart move. With urbanization continuing, the value of these properties is likely to appreciate. This makes them not just a place to live, but a promising investment opportunity.
As space becomes a premium, the trend towards high-rise apartments is expected to grow. This shift is reshaping the real estate landscape in Croatia, offering a glimpse into the future of urban living.
Sources: Trading Economics, Global Property Guide
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12) More young professionals moving to cities for jobs will change demographics in urban Croatia
Urban areas in Croatia are seeing a demographic shift as young professionals flock to cities for job opportunities.
In 2023, Croatia's cities were already bustling with over 2.2 million residents, and this number is growing. The labor market is expanding, especially in business, services, and construction, with about 25% of new jobs targeting professionals. This makes urban life appealing to young, educated individuals. The Croatian government is also playing a role by promoting urban employment through initiatives like the Program for the Development of Green Infrastructure, which aims to create sustainable urban environments.
Many young Croatians are eager to live independently, and cities offer the best chance for this lifestyle. While some face financial constraints, a significant number are drawn to the vibrant city life. Urban infrastructure is improving, with green renewal strategies making cities more livable and attractive to young professionals.
Surveys reveal that young people see urban areas as the ideal place to achieve independence. The appeal of city life is strong, with its promise of better job prospects and a dynamic environment. The development of urban infrastructure, including green initiatives, is a key factor in this trend, making cities more appealing to the younger generation.
As more young professionals move to cities, the urban landscape is changing. This shift is not just about job opportunities but also about the lifestyle and independence that city living offers. The Croatian government's efforts to enhance urban employment and infrastructure are making cities even more attractive.
Sources: Trading Economics, Croatia Week, Energetski Portal, Cedefop
13) Demand for long-term rentals in Croatia will grow as more expats settle there
The demand for long-term rentals in Croatia is on the rise as more expatriates decide to settle there.
In 2023, Croatia welcomed 69,396 new immigrants, many of whom are expatriates eager to call this beautiful country home. This influx is not just about numbers; it's about a lifestyle choice. Croatia's stunning coastline, rich history, and vibrant culture are major draws for those looking to relocate.
Families are a big part of this trend. The growth of international schools in Croatia is a clear sign that expats are bringing their children and planning to stay for the long haul. These families need stable housing, which naturally boosts the demand for long-term rentals. It's not just about finding a place to live; it's about finding a community to belong to.
Foreigners are also investing heavily in Croatian real estate. In 2022 alone, 13,300 properties were purchased by foreigners. While some expats choose to buy, many opt for renting, especially if their stay is temporary. This preference for renting further fuels the demand for long-term rental properties.
Expatriates are drawn to Croatia for its quality of life, which includes a lower cost of living compared to many Western countries. This makes renting an attractive option, especially for those who want to experience the local lifestyle without the commitment of buying property. The trend is clear: more expatriates are choosing to rent long-term as they settle into Croatian life.
As Croatia continues to attract expatriates, the rental market is adapting to meet their needs. Whether it's the allure of the Adriatic Sea or the charm of historic cities like Dubrovnik and Split, the demand for long-term rentals is only expected to grow.
Sources: DZS Croatia, Welcome Center Croatia, Connecting Region
14) Property demand in Croatia's border regions will rise due to better transportation links with neighboring countries
Improved transportation links between Croatia and its neighbors are set to boost property demand in border regions.
The Croatian government is planning to invest over €4 billion in rail infrastructure over the next decade. This ambitious plan includes modernizing the passenger fleet and reconstructing local and regional railways, making border regions more accessible and attractive for potential property buyers. Imagine hopping on a train and reaching your destination faster and more comfortably than ever before.
In 2024, the Croatian construction industry is expected to grow by 4.4% in real terms, largely due to these government investments in transport infrastructure. This growth is likely to push property prices up in border areas as people flock to these regions for better connectivity and job opportunities. The completion of the Crocodile 3 Croatia project in June 2024 will further enhance travel times and connectivity, drawing even more interest to the area.
Business investments in border regions are on the rise, thanks to the government's focus on infrastructure. This creates a favorable business environment, attracting companies eager to set up operations near these improved transportation links. As businesses move in, the demand for property is expected to increase, making it a potentially lucrative time to invest in these areas.
The overall growth in the construction industry and tourism sector is anticipated to contribute to local economic growth. This economic boost will likely attract more people to the region, seeking better opportunities and a higher quality of life. With improved transport links, living in these border regions becomes even more appealing.
For those considering buying property in Croatia, these developments offer exciting prospects. The combination of enhanced connectivity, economic growth, and increased business activity makes border regions a promising investment opportunity.
Sources: Rail Journal, Business Wire, European Commission
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.