Where Are the Buyers? - A Conversation with Ivan Kovačić, CEO, for Jutarnji.hr

For years, it seemed that the Croatian coast could absorb everything - unplanned construction, tourism euphoria, and rising property prices without real foundations. However, the illusion that the sea sells everything and that demand is inexhaustible has begun to collapse.

Real estate transactions in Croatia have been declining for the third consecutive year. Data for the first six months of this year show that nationwide transaction volume is 15 percent lower compared to last year, while in some coastal counties the decline exceeds 20 percent. By the end of the year, the figures are expected to be even worse. One of the main reasons, alongside years of price growth, is the absence of foreign buyers. This trend has not bypassed the northern Adriatic, particularly Istria and Kvarner, where market saturation is evident, caused by excessive construction that is often average in quality, lacking any coherent planning or control.

Experts warn that this is not a temporary slowdown, but a structural weakness in the spatial development model that has accumulated over many years. Ivan Kovačić, President of the County Association of Real Estate Agents at the Croatian Chamber of Economy for Primorje-Gorski Kotar County and CEO of Remington Real Estate, the exclusive representative of Christie’s Real Estate for Croatia, emphasises that the core issue is not financial or marketing-related, but urbanistic in nature.

A systemic failure

- Urban planning is the foundation of overall spatial value and the starting point of every serious development cycle, from infrastructure to the final property. In successful European coastal regions, urban planning functions as an operational framework that predictably guides private capital while simultaneously protecting the public interest. In Croatia, it is too often treated as an administrative obstacle or a political compromise, ultimately producing spaces without a clear development logic. As a result, today we face a mismatched supply on the coast, prices that have risen faster than the real quality of the product, and infrastructural deficits that further erode the perception of value. These are not isolated symptoms, but consequences of the same systemic failure: development without preparation, without a clear strategy, and without a professional industry capable of consistently delivering quality products - Kovačić points out.

For example, in Istria and the northern Adriatic we see villas being built on access roads barely wider than goat paths, sometimes even next to cemeteries, with asking prices reaching several million euros. This approach results in individual projects that are insufficiently thought through, lacking adequate infrastructure and amenities, and increasingly failing to materialise in actual sales. Investors face no real market pressure or incentive to complete projects to a high standard, instead relying on the assumption that, even if no “irrational buyer who falls in love with the location and agrees to an unrealistically high asking price” emerges, they will still profit through tourist rentals.

The “honeymoon” phase is over

- The phenomenon of private tourist rentals is not inherently problematic; it is a rational decision for households in tourist regions. The problem arises when the tax and regulatory framework makes rentals so favourable and almost automatic an exit strategy that they become a substitute for professional real estate development. Tourism based on short-term rentals has created a generation of “investors” who are not investors at all. In Croatia, any house can obtain categorisation, which effectively turns everyone into a developer without the usual risks associated with real estate development. As a result, we have hundreds of amateur projects, houses without clearly defined architectural programmes, without a highest and best use analysis of the specific location, and without a concept. Supply is high in volume, but qualitatively uneven and often misaligned with long-term market standards - Kovačić emphasises.

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