Croatia’s construction sector has been experiencing robust growth for several years and is one of the key drivers of the national economy, accounting for approximately 10% of GDP. In recent years, investment in residential construction, infrastructure, and tourism has fuelled strong market expansion, driven by EU funds and private capital. However, this growth is constrained by administrative barriers, labour shortages, and the persistent issue of illegal construction. Despite these challenges, Croatia offers foreign investors a wealth of opportunities — particularly in sustainable construction, digitalisation of building processes, and the development of modern infrastructure.
Strong Construction Growth in Croatia – Key Figures
- 11,823 building permits issued in 2024 – an increase of 2.2% year-on-year.
- €7.54 billion in investment value – up 7.5% compared to 2023.
- 20,405 new residential units under construction – growth of 8.5%.
- Significant infrastructure development – modernisation of roads, railways, and urban spaces financed through EU funds.
- Digitalisation of construction processes – a key area where Croatia still has considerable ground to cover.
Growth in Infrastructure and Residential Investment
The vast majority of new building permits relate to residential buildings, hotels, and tourist complexes. In 2024, 87.1% of permits issued covered buildings, while 12.9% related to infrastructure such as roads, bridges, and pipelines. The increased interest in infrastructure investment is linked to EU funding and the need for post-earthquake reconstruction in the Zagreb and Banovina regions.
Tourism continues to play a pivotal role in shaping Croatia’s construction market. Many new developments involve the expansion of hotels, rental apartments, and tourist infrastructure. In coastal regions such as Istria and Dalmatia, the number of premium-segment projects is growing, drawing significant international capital.
Illegal Construction – A Challenge and an Opportunity for Investors
Illegal construction remains one of Croatia’s primary urban planning challenges, particularly in tourist regions. In 2025, over 120 structures were demolished in the Istria region — 80 voluntarily by their owners, and 40 at the direction of building inspectors. Many properties were built on protected land or without the required permits, resulting in economic losses and urban planning disorder.
The introduction of stricter regulations and more effective law enforcement is creating new opportunities for investors interested in the legalisation and adaptation of such properties. Local authorities are offering incentives and preferential conditions to businesses willing to collaborate on converting illegal structures into lawful developments that comply with spatial planning requirements.
Labour Shortage and the Need for Investment
A shortage of skilled labour is another significant issue facing the Croatian construction sector. Over the past several years, more than 50,000 construction workers have left the country, driving up labour costs and causing delays in project delivery. In response, the government has simplified procedures for hiring foreign workers, resulting in an increased number of employees from Bosnia and Herzegovina, Serbia, and Nepal working in the sector. Reforms to vocational education are also underway, aimed at attracting young people to the industry.
The paradox is clear: property prices continue to rise, and the reason is straightforward — not enough is being built. In 2007, 25,600 residential units were constructed across Croatia annually; by 2023, that figure had fallen to 16,552. The figures for Zagreb are even more striking: 8,895 units in 2007, compared to just 2,945 in 2023 — more than three times fewer. With such constrained supply, rising prices are all but inevitable.
Mobile Homes – An Alternative to Traditional Construction?
Rising construction costs and complex administrative procedures are prompting investors to explore alternative housing solutions. Mobile and modular homes are gaining traction as a relatively flexible option that can be adapted to users’ needs.
Can a mobile home be placed on agricultural land? Agricultural land is primarily designated for farming purposes and may only accommodate structures with an agricultural function — such as storage facilities, stables, greenhouses, wineries, and agricultural processing buildings. Exceptions exist: some local spatial plans permit residential construction, but under specific conditions — for example, where the plot exceeds 20 hectares. It is advisable to consult the local urban planning department before purchasing land.
In Croatia, agricultural land is predominantly reserved for agricultural use, but in certain cases it is possible to install mobile homes. Under current legislation: mobile homes do not require a building permit if they are not permanently attached to the ground; however, if the home is connected to water, sewage, or electricity networks, it is treated as a permanent structure and requires a permit. In some regions, it is possible to obtain approval for modular homes on large agricultural plots exceeding 20 hectares.
Why Invest in Croatia’s Construction Sector?
- Modern residential construction – growing demand for premium apartments and rental properties.
- Infrastructure projects – stable EU funding provides a secure investment environment.
- Dynamic tourism sector – rising investment in hotels, apartments, and luxury residences.
- Urban regeneration – modernisation of existing buildings and development of new districts.
- Automation and digitalisation – opportunities to implement cutting-edge technologies in construction.
Despite its challenges, Croatia remains one of the most attractive construction markets in Southern Europe. Growing investment volumes and building permits, substantial EU funding, and increasing demand for real estate make Croatia an ever more compelling market for investors.
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