The construction sector accounts for approximately 10% of Croatia’s total GDP — above the European average of 5.5%. The sector is recording significant investment and the successful delivery of major projects:
- Total construction investment for 2023 is estimated at €10 billion.
- A further 5% growth in investment is expected in 2024.
- Successfully completed projects include the Pelješac Bridge, the Sljeme Cable Car, and the Dalmatia Tower skyscraper.
- Numerous infrastructure projects are currently underway, including the A11 motorway, the LNG terminal on Krk, and post-earthquake reconstruction.
Construction Activity in 2024
Croatia’s construction sector is recording strong growth, though it faces significant challenges. In March 2024, construction volumes grew by 14.6% compared to March of the previous year. Residential construction activity recorded an even higher increase of 19.4%. The number of building permits issued also grew by 4.9% compared to the same period in 2023.
Civil engineering activity is primarily linked to EU-funded projects (such as railway infrastructure investment), while residential construction remains the dominant activity in the Croatian construction sector. In terms of permit type, 87.1% of permits issued relate to buildings, while the remaining 12.9% cover other infrastructure projects such as roads, railways, pipelines, bridges, and sports facilities.
2023 Year-End Summary
2023 closed on a strong note for Croatian construction — 11,564 building permits were issued, representing a 3.6% increase on 2022. The projected value of works grew by 22.3% to a total of €7 billion. In terms of permit type, 77.6% were issued for new buildings, while 22.4% covered the reconstruction of existing structures.
Tax incentives — particularly those for the renovation of existing buildings — had a positive impact on investment. In 2023, they generated €80 billion, of which €44 billion came from the Superbonus scheme. The Superbonus is a tax incentive for those wishing to renovate a property and qualify it as an energy investment, including seismic modernisation.
Challenges and Opportunities
Rising construction costs — up 40% since the pandemic — are affecting the profitability of new projects. Given the forecast price correction of approximately -5% in the residential property market in 2024, many investors may gravitate more towards infrastructure projects such as roads and railways, which appear more financially viable at present.
Despite labour market difficulties, Croatian construction companies closed 2023 with strong financial results. The six largest firms achieved revenues exceeding €100 million, with Kamgrad and Strabag each earning over €200 million. Net profit for market leaders ranged from several million to €20 million, reflecting the sector’s significant potential.
Croatia’s construction market is dynamic but continues to face a shortage of skilled labour. In 2023, employment in the sector grew by 12,000 people, reaching a total of 147,000 workers — yet staffing shortages remain tangible and are driving companies to recruit internationally. This trend is likely to continue in 2024, with additional challenges potentially arising from rising material costs and inflationary pressure.
For foreign entrepreneurs interested in international expansion, Croatian construction offers broad opportunities for development and collaboration. Would you like to find out more or explore investment options? Get in touch today and follow CroBiz on social media to stay up to date.