Published on and written by Cyril Jarnias
Away from the spotlight, the Croatian real estate market is undergoing subtle yet significant transformations, caught in a whirlwind of geopolitical circumstances.
The war in Ukraine, though distant, is sending shockwaves to the sunny Adriatic coast. This conflict situation is generating population movements and readjustments in investment priorities, strengthening demand for real estate outside risk zones while redefining the lines of the local market.
Faced with this new reality, investors, property owners, and potential buyers find themselves navigating a fluctuating landscape, confronting both economic and political challenges.
Consequences of the Ukrainian Crisis on the Croatian Real Estate Market
Direct and indirect repercussions of the conflict on the Croatian economy and real estate market:
- Increased inflation: The war in Ukraine has contributed to persistent inflation, affecting all of Europe, including Croatia. This translates to rising construction and material costs.
- Decreased purchasing power: Inflation reduces household purchasing power, making it more difficult for local buyers to access mortgage loans.
- Pressure on regional economic stability: Uncertainty related to the conflict generates increased caution among both local and foreign investors.
Impact on Foreign Investment Flows in Croatian Real Estate
Geopolitical uncertainties are pushing some investors to seek “safe havens” in Central and Southern Europe.
While some neighboring markets (notably Bulgaria) have seen a marked influx of Russian or Ukrainian capital fleeing their home countries, Croatia is also attracting these flows, especially in its already popular tourist regions.
By 2025, despite regional tensions, interest in Croatian real estate remains sustained thanks to its relative stability and tourist appeal.
Possible Price Fluctuations Resulting from Changes in Demand (Purchases/Sales by Ukrainians or Russians)
| Factor | Observed Consequence |
|---|---|
| Potential influx of buyers | Local price increases in certain coastal or tourist areas |
| Accelerated sales by Russian nationals (sanctions) | Increased supply potentially temporarily moderating certain segments |
| General inflation | Widespread increase in sale prices |
Note: Price increases remain limited by the general context of decreasing affordability for domestic buyers.
The Role of the Rental Market Facing a Possible Influx of Ukrainian Refugees
- The significant number of Ukrainian refugees welcomed since 2022 has locally increased pressure on the residential rental stock.
- In some coastal cities or Zagreb, this additional demand has led to:
- Temporary rent increases
- Temporary scarcity of available housing
Possible Government Measures Taken to Stabilize the Market
Non-exhaustive list:
- Planned/projected increase in property taxes starting in 2025 to:
- Limit speculation
- Partially discourage some purely speculative purchases, particularly from non-resident investors
- Temporary strengthening of social support for vulnerable households facing soaring rents
Recent Perspectives According to Experts
Future evolution will heavily depend
- On the maintenance/decrease of migration flows related to the conflict,
- On national fiscal policies,
- And especially on the potential return to a more stable geopolitical situation that could normalize investments and international mobility.
The combination of international tensions and internal dynamics means the Croatian real estate market remains under pressure but continues its overall progression at varying rates depending on regions.
Good to Know:
The Ukrainian crisis has profoundly affected the Croatian real estate market, with notable influence on the national economy and foreign investments. The economic insecurity caused by the conflict has reduced real estate investment flows, while regional uncertainties have dampened international investor confidence. Demand for properties has evolved, with some Ukrainians seeking to purchase to enhance their personal security, while others sell at reduced prices under economic pressure. This imbalance has led to price fluctuations, especially in major cities. Additionally, the rental market faces an additional challenge of accommodating Ukrainian refugees, requiring an increase in rental supply. The Croatian government has responded by proposing tax incentives and support measures to stabilize the market, addressing fears of overheating or sudden price collapse. Experts emphasize the need for continuous monitoring to adjust measures in response to the evolving geopolitical context, ensuring a resilient and balanced market.
The Impact of Ukrainian Refugees on Housing in Croatia
The arrival of Ukrainian refugees in Croatia since the beginning of the conflict has had a measurable impact on the real estate market, mainly in urban and coastal regions where most of them have settled.
Statistics and Geographic Distribution
- By 2025, Croatia is hosting approximately 28,000 Ukrainian refugees according to the latest Croatian government data.
- The distribution is mostly concentrated in Zagreb (nearly 40%), followed by Split, Rijeka, and Osijek.
- Coastal regions (notably Split-Dalmatia and Dubrovnik-Neretva) are also seeing an increase due to the search for cultural proximity, seasonal employment opportunities, and existing community networks.
| Region | % of Ukrainian Refugees |
|---|---|
| Zagreb | 40% |
| Split | 18% |
| Rijeka | 10% |
| Osijek | 8% |
| Other regions | 24% |
Variations in Rent and Property Prices
- Rents have increased by 10 to 18% in Zagreb and Split since 2022, according to local real estate agencies and tenant testimonies.
- Increased demand for studios and family apartments has reduced the availability of rental properties, particularly in affordable segments.
- Purchase prices have risen by 6 to 9% in major cities, but the effect is more moderate than in the rental market, as most refugees opt for short or medium-term rentals.
Evolution of Demand and Market Adaptation
- Short term: Strong increase in demand for furnished, temporary housing, often subsidized or accompanied by assistance programs.
- Medium term: Gradual shift in demand toward indefinite-term leases, with some refugees obtaining employment and seeking to stabilize their situation.
- Property owners report increased professionalization, with more regulated leases and stricter selection of applications.
Government Initiatives and Investments
- The Croatian government, in partnership with local authorities and NGOs, has invested in renovating social housing and providing subsidies for property owners accepting refugees.
- Calls for projects for the construction of temporary modular housing have been launched in Zagreb and several coastal cities.
- Some municipalities have repurposed public buildings (former boarding schools, student residences) to house Ukrainian families.
Testimonials and Field Reports
“I’ve received nearly three times more rental inquiries than before 2022, mostly from Ukrainian families. The competition is such that some agree to pay more or advance several months’ rent.”
A property owner in Split
“Finding affordable housing has become almost impossible. Prices have increased, and many properties are reserved for agencies working with refugee associations.”
A Croatian tenant in Zagreb
“The market changed very quickly. Many property owners now prefer medium-term leases to Ukrainian families, often assisted by NGOs or public programs.”
A real estate agent in Rijeka
Main Observed Effects:
- Rapid and localized rent increases in reception areas.
- Pressure on affordable rental stock, accentuated by the tourist season.
- Adaptation of public and private actors, with increasing investment in emergency and transitional housing infrastructure.
- Mixed perception among local residents, oscillating between solidarity and concern for housing access.
In Summary:
The influx of Ukrainian refugees has contributed to notable tension in the Croatian real estate market in reception regions, with rent increases, evolution of rental practices, and mobilization of public authorities to meet growing demand for suitable housing.
Good to Know:
Since the beginning of the conflict in Ukraine, approximately 20,000 Ukrainian refugees have settled in Croatia, mostly in urban regions like Zagreb and Split, leading to a notable 10-15% rent increase in these areas according to recent real estate data. Increased demand for affordable housing has resulted in reduced availability of long-term apartments, prompting some municipalities to consider constructing new social housing. Testimonies from tenants and property owners indicate increased competition for rentals, with leases often signed more quickly. The Croatian government, collaborating with international organizations, has had to redouble efforts to adapt its housing infrastructure and facilitate refugee integration, although these measures take time to fully materialize.
Geopolitical Analysis and Its Repercussions on Real Estate Investment in Croatia
Direct and Indirect Impacts of the War in Ukraine on the Regional Geopolitical Situation
- Strengthening of regional alliances: The war in Ukraine has accelerated military cooperation between Croatia and its neighbors, as illustrated by the signing of a defense pact between Croatia, Albania, and Kosovo in 2025. This rapprochement aims to strengthen stability in Southeastern Europe and secure the regional environment amid growing geopolitical uncertainty.
- Defense modernization: Croatia is participating in the European Readiness 2030 program, mobilizing investments in defense and industry to anticipate potential threats and reduce strategic dependence.
- Relations with the EU: European commitment to Ukraine has led to a stronger union, with revised energy policy, increased defense spending by member states, and reinforced pressure against Russia.
Economic Impacts on Croatia and Its Neighbors
- Inflation and energy shock: The war in Ukraine has caused an energy shock in Europe, directly affecting Croatia through inflation (approximately 7%), mainly due to rising energy and raw material prices.
- Increased EU integration: Since 2023, Croatia has joined the eurozone and Schengen area, facilitating capital and people mobility, which is a factor of attractiveness for investments, including in real estate.
Influence of Geopolitical Tensions on Real Estate Investment in Croatia
- Recent market fluctuations:
- Increased interest in Croatian real estate: Faced with uncertainty in Ukraine, Russia, and some neighboring countries, Croatia appears as a stable refuge for foreign investors, particularly those from countries affected by the war or high-risk regions.
- Influx of Eastern investors: There is an observed increase in demand from Ukrainian, Russian, and more recently Baltic and Central European buyers seeking to secure assets outside their zone of instability.
- Examples of fluctuations: After the war began, real estate transactions saw an increase, particularly in coastal regions and major cities, where foreign demand intensified.
| Factor | Effect on Croatian Real Estate Market |
|---|---|
| Regional instability | Growth in foreign demand |
| Energy inflation | Rising construction costs |
| Eurozone integration | Facilitation of cross-border transactions |
| EU/Russia restrictive policies | Diversification of investor profiles |
Croatian Government Strategies for Market Stability
- Regulatory strengthening: Implementation of increased controls on capital flows and verification of fund origins, particularly for major purchases by nationals from sanctioned countries.
- Tax incentives: Maintenance or strengthening of incentives for foreign investment, particularly in tourist areas or those requiring economic revitalization.
- Support for local construction: Programs to stimulate housing and infrastructure construction to limit speculation and meet growing demand.
Short and Long-Term Perspectives for Investors
- Short term:
- Opportunities linked to Croatia’s relative stability in a volatile regional environment.
- Persistent risks related to energy price fluctuations and potential deterioration of the geopolitical situation.
- Long term:
- Enhanced attractiveness thanks to European integration, political stability, and growth in the tourism sector.
- Potential for real estate asset appreciation, especially in major cities and the Adriatic coast, if regional stability is preserved.
- Need for increased vigilance regarding the evolution of European regulations and management of foreign investment flows in a context of persistent tensions.
Key takeaway:
Croatia benefits from a “safe haven” effect in the region, but the stability of the real estate market will depend on the government’s ability to regulate capital inflows and maintain investor confidence despite geopolitical uncertainties.
Good to Know:
The war in Ukraine has notable geopolitical repercussions in Croatia, an EU member country with significant economic and political ties to its Balkan neighbors. Tensions have disrupted the real estate investment climate, with recent market fluctuations resulting from regional uncertainty. Foreign investors, particularly from Germany and Austria, have reassessed their strategies, fearing increased regional instability. However, some see growth potential in Croatia, considered a relatively stable refuge compared to countries directly affected by the conflict. To stabilize the real estate sector, the Croatian government has implemented economic support measures and tax incentives to attract and retain investor interest. In the short term, investors are encouraged to focus on low-risk projects and monitor tension developments, while long-term prospects remain positive thanks to Croatia’s increasing integration into European networks, which could strengthen the resilience of its real estate market.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
