June 5, 2021 – The Croatian real estate market is very interesting and full of good investment opportunities. Many potential buyers were expecting prices to go down significantly during 2021, but is this really happening? A look at real estate in Croatia. 

Croatian economy has been going through turmoil in the last year. While the pandemic is wreaking havoc on the travel and tourism industry, devastating earthquakes in Zagreb and Central Croatia caused even more problems and shifts in the local economy. Incredibly, the traditionally volatile real estate market in the country doesn’t seem to be going through a serious disruption, at least when it comes to prices.

Zagreb, the country’s largest city, is experiencing a turbulent period. The real estate market of the city has been rattled both literally and figuratively by a series of earthquakes. The damage from the earthquakes exposed a poor state of many buildings within the city’s centre. At the same time, much of the Croatian coast has had a rise in property prices due to the region becoming a global travel hotspot in the last 5-10 years. Many of the most attractive areas like Dubrovnik or Split centres seem overpriced to anyone looking to buy. With all this in mind, it would seem logical the crisis Croatia is facing at the moment would force the prices to drop. Still, according to an article by Dnevnik.hr, the prices generally seem to be stable or are even rising.

Regional Differences

The real estate situation in Zagreb is dynamic. The aftermath of the earthquakes left many searching exclusively for new buildings outside of the city centre. Consequently, there is a rise in prices for such properties. At the same time, there is a drop in prices for some centrally located apartments, but the buyers are rare, especially in buildings that are awaiting renovation. On the coast, Dubrovnik, the country’s most expensive real estate market, is seeing a drop in sales. Reduced demand doesn’t seem to be having a direct impact on the average price. It seems most property owners believe in a quick recuperation of this popular travel hotspot. This is also true for the rest of the popular Dalmatian areas. In Istria, the market seems stable and attracts plenty of foreign buyers, especially from Slovenia, Italy, and Austria. Around half of the properties sold in Istria are bought by foreigners.

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As Novac/Korana Sutlic writes on the 31st of May, 2020, the Croatian real estate market has come to life in the area of ​​Kvarner and Istria, despite the ongoing coronavirus pandemic and the shallowness of people's pockets.

Among those who are particularly active are foreign buyers, who have clearly recognised Croatia's advantage in times of crisis and owning a house on the coast. This isn't surprising, because last weekend and last week in Kvarner, visits from wealthy foreign tourists were already going on in some places.

''We're witnessing a rapid adjustment of people to this new situation. A couple of weeks of weeks ago, when compared to the same period last year, we've had far more inquiries from foreign clients wanting to purchase Croatian real estate on the coast. Accordingly, we expect a daily increase in the number of realisations of those purchases,'' said Branko Papes, the director of Dogma real estate, stated.

It is interesting that currently there is an increase in the number of inquiries for exclusive Croatian real estate and villas with large gardens being taken by the aforementioned company, and often the first row to the sea is sought. This increase is significant when compared to previous periods.

''We'd like to invite the owners of such real estate to contact us if they want to sell their properties, because now there is really no shortage of more exclusive buyers,'' Papes pointed out.

Unlike the situation during the coronavirus-induced lockdown, when customer inquiries were purely informative, he added, now visits to apartments and houses have started again, offers are being made and an increase in the number of real estate purchases being realised is being felt.

''We can say that the Croatian real estate market has recently become quite active, what went on in the last two months were probably the biggest changes that our industry has ever felt. Namely, real estate brokerage is a standardised and traditional activity where changes happen slowly, which makes sense if we keep in mind that buying and selling real estate in the perspective of buyers and sellers is one of the biggest investments made in life,'' noted Branko Papes.

However, buyers have noticed, he added, a kind of shift in the way of thinking, and Croatian real estate that until recently remained unattractive, such as secluded cottages or ground floors in buildings, is now in higher demand.

''The pandemic is certainly one of the most stressful events we've lived through recent times and we'll only feel the real consequences through the changes that will follow, but except in parts of Zagreb due to the earthquake, the prices still haven't undergone their expected correction,'' explained Papes.

People have become more aware than ever of what kind of properties they live in, but what in terms of our attitude towards real estate has changed the most after the last, tumultuous period?

''We're witnessing hectic and busy lifestyles that leave many people with little time to spend at home, but now a significant turnaround has taken place - when you're not allowed outside and have to be home for a long time, it isn't the same if you are in an apartment spanning 30 square metres or in a house with a garden. Clients have now, more than ever before, set up some priorities and realised that it's more important to have a property that provides them with a quality life than it is to own an expensive car, not to mention real estate as a form of investment at a time when stock prices are rising and falling, and interest rates being provided by the banks are at historically low levels. More than ever, we have inquiries for apartments with yards, houses with gardens, apartments with terraces and sea views,'' explained Papes.

Simply put, real estate is no longer perceived only and exclusively as a place to sleep, but as a place where quality time is spent. What of the forthcoming period? Will attitudes towards Croatian real estate and property in general continue to alter as the situation unfolds?

''We expect the situation to normalise, which is exactly what is happening now,'' he stated.

''The demand for the purchase of houses in Istria, on the islands, and even in Gorski Kotar has increased. What's important to understand is the fact that real estate, although it is a big decision, is actually the place where the family gathers and where the most beautiful moments are spent with loved ones, and often, preoccupied with many obligations, we forget that it's precisely such situations as the ones we've experienced recently that make us aware of that,'' Papes added.

Just what exactly is happening with Croatian real estate prices, especially in the area of ​​Rijeka, Kvarner and Istria, however?

''Unlike other parts of Croatia where the prices before this situation were already ‘wild’, in our area, this wasn't the case, but as a rule they were certain limits. The market, ie the relation between supply and demand, is such a mechanism that regulates possible deviations,'' he concluded.

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