When the State Steps In: Croatia’s Attempt to Untangle a Broken Planning System

Criticism of the new legislative package is not without merit. Concerns raised by parts of the professional community regarding centralisation, accelerated permitting and the potential erosion of planning safeguards deserve careful attention. Yet much of the public debate suffers from a striking omission. It largely ignores the structural failure that prompted state intervention in the first place: the prolonged inability of a large number of local governments to exercise the responsibilities they have long been entrusted with.

Croatia already possessed, as early as 2014, a highly demanding planning framework. Detailed urban plans were mandatory where prescribed, infrastructure provision was a prerequisite for development, and land readjustment (urban land consolidation) existed as a legal instrument. This model closely resembled continental European planning doctrine and is often nostalgically cited today as a lost gold standard.

In practice, however, it proved largely unworkable. Many municipalities failed to adopt lower-tier plans, infrastructure remained unbuilt, and development either stalled or proceeded through ad hoc exceptions. The private sector—developers, engineers and planners—has for years pointed to chronic administrative bottlenecks and uneven institutional capacity across local authorities. The problem was not excessive regulation per se, but the gap between formal autonomy and actual ability to implement policy.

Local self-government in Croatia is caught between responsibility and political reality. A significant number of municipalities lack sufficient professional staff, organisational depth or fiscal capacity to manage complex planning processes or finance infrastructure for areas they themselves have designated as developable. The result is not the protection of space, but paralysis: legal uncertainty for investors, deferred projects and lost development opportunities.

This dysfunction is compounded by local political incentives. Local electorates often prioritise short-term preservation of the status quo—particularly in areas shaped by small-scale tourism and informal rental economies. Strategic development, which typically demands consolidation of land, infrastructure investment and long time horizons, is politically costly. Local politicians, understandably risk-averse, frequently avoid decisions that might provoke resistance, even when such decisions are essential for long-term economic sustainability.

It is within this context—not out of ideological zeal for centralisation—that the state has expanded its role. Instruments that allow higher-level intervention where local planning fails are less a power grab than an attempt to unblock a system that has ceased to function. These solutions are far from perfect. Yet viable alternatives capable of delivering results in the short term are notably scarce.

The same realism applies to construction permitting. Administrative backlogs, staff shortages and procedural fragmentation are well documented. Digitalisation and procedural simplification, particularly for single-family housing, are intended to restore basic predictability. Expectations of dramatically shortened timelines should be treated as aspirational rather than guaranteed; the legal framework still rests on general administrative law. Nonetheless, accelerating the simplest forms of development is a defensible response to systemic inertia, not a reckless abandonment of standards.

Perhaps the most misunderstood element of the reform is urban land consolidation. Far from being a covert form of expropriation, consolidation is a planning mechanism designed to overcome the extreme fragmentation of land ownership that renders coordinated development impossible. It temporarily reorganises parcels within a defined area so that infrastructure, public space and functional plots can be created, with owners receiving land of equivalent value.

Without such tools, development defaults to what Croatia knows all too well: plot-by-plot construction, delayed infrastructure, narrow access roads and a chronic deficit of public space. Resistance to consolidation stems from historical distrust of institutions, fear of abuse and political opportunism. Yet the instrument itself is indispensable. What Croatia lacks is not the legal concept, but the institutional capacity to implement it at local level.

Expecting municipalities—many already overstretched—to independently manage complex consolidation processes is unrealistic. A hybrid model, combining public oversight with private-sector execution, may be the only workable path forward. Such arrangements are common in both Western Europe and the United States, albeit in different institutional forms. For Croatia, theoretical purity matters less than operational feasibility.

Tourism development presents another unresolved tension. Restrictions on the subdivision of tourist accommodation aim to curb speculative apartmentisation, a legitimate policy objective. At the same time, high-quality resort investment often relies on diversified ownership and financing structures. Current legislative solutions lean towards cautious, transitional compromises. A more evidence-based, long-term framework will be required if tourism destinations are to remain both investable and sustainable.

Ultimately, the fiercest critics of the reform risk overstating their case. The laws are imperfect, but the status quo was untenable. Years of procedural stagnation, capacity shortages and political avoidance left little room for incremental adjustment. This government has at least acknowledged the depth of the problem and attempted to confront it.

The decisive test will lie in implementation. Accelerated procedures must remain firmly tied to detailed planning and demonstrable infrastructure feasibility. If these conditions are enforced, fears of unchecked spatial degradation will prove overstated. If they are not, no legal architecture—centralised or decentralised—will prevent further disorder.

These reforms do not resolve Croatia’s planning dilemma. They do, however, signal a departure from denial. In a system long paralysed by institutional weakness and political hesitation, recognising the problem is not a trivial step. It is the necessary beginning of reform.