Croatia is a country where real estate investment is traditionally preferred, while investments in stocks, bonds, gold, and cryptocurrencies still have a limited presence in the investment portfolios of the broader population.
Despite global trends and the increasing availability of financial instruments, there is a deep-rooted culture of investing in real estate in Croatia. In fact, Croatia has one of the highest rates of property ownership in the EU and the world, with more than 90% of citizens living in their own property.
In the current economic environment, with inflation continuing to erode purchasing power and interest rates rising, an increasing number of citizens are considering safe ways to invest their money. While global capital markets and cryptocurrencies remain volatile, real estate in Croatia continues to retain its appeal as the most conservative and secure form of investment.
Reasons for the Lack of Investment in Other Instruments
Many Croatian citizens are generally not well-versed in the basics of investing in capital markets, and fear of risk often outweighs the potential benefits. Investing in stocks carries volatility and unpredictability, which creates distrust among many citizens.
Bonds, on the other hand, are relatively safe but offer lower returns compared to real estate, which discourages people from seeing them as an attractive option for long-term investments. Gold, although traditionally considered a safe haven during times of inflation and uncertainty, is currently priced so high that it is not accessible to the average investor.
Cryptocurrencies like Bitcoin are relatively new financial instruments. Bitcoin can lose or gain a significant percentage of its value in a single day, making it too risky for the wider population. In countries with higher levels of financial literacy, such investments are becoming increasingly popular, but in Croatia, interest remains marginal.
“We don’t have a developed culture of investing in stocks, bonds, Bitcoin, or gold, which is currently at historically high levels. Real estate has always proven to be the most conservative and safest form of investment,” said Goran Pikunić, director of the real estate agency Libertas Homes.
Real Estate as the Safest Form of Investment
“Economic analysts have diametrically opposed views on the market – many have been predicting a decline in real estate values for years, but prices have not fallen,” said Goran Pikunić, adding that people continue to invest their surplus money in real estate.
Despite earlier predictions about possible price declines, most investors still view real estate as the safest form of capital protection. Many are aware of the fact that, even if there are short-term fluctuations, real estate tends to retain and grow in value in the long term, especially in a country with limited resources.
Real estate in Croatia has proven to be the most stable long-term investment. Even when market conditions suggested otherwise, they remained stable, which further strengthens the perception of safety among investors. Many analysts had predicted a price decline, especially with the arrival of the COVID-19 pandemic (which temporarily froze the market), but prices continued to rise.
Croatia is a small market with a limited supply of quality real estate, which also plays a significant role in maintaining high prices. Data from the real estate agency Libertas Homes shows that demand, especially for apartments in urban areas like Zagreb or Dubrovnik, still exceeds supply, which further supports prices. The limited amount of land available for construction, slow bureaucracy, and strict building regulations only further slow down the increase in supply, creating continuous pressure for price growth.
Although at a slower pace than in previous years, property prices, according to Goran Pikunić, have continued to rise over the past year: “In Zagreb, the prices of new buildings continue to rise, and the quality of construction and energy efficiency further increase the value. For older apartments, the situation is somewhat more varied – those in good locations maintain high prices, while less well-connected locations have seen price stabilization or even a slight decline. In Dubrovnik, prices are traditionally high and show no significant decline, especially in the luxury property segment. Demand still exceeds supply, which means that investment potential remains strong.”
Inflation and Real Estate Investment
During periods of high inflation, purchasing real estate is often perceived as the best protection against the depreciation of money. While inflation erodes purchasing power, real estate retains or even increases its value, particularly in markets like Croatia, where supply does not keep up with demand.
Goran Pikunić states that Croatia is a small market with limited supply, which makes it unique, and adds: “Given that inflation continues to have a high impact on the economy, buying property currently seems like the best solution.”
Real Estate Investment is Both Financial and Emotional
Despite all the predictions and forecasts of price declines, the Croatian real estate market continues to grow. Due to historical heritage, a lack of financial literacy, and a perception of safety, investing in real estate remains the first choice for citizens. While stocks, bonds, Bitcoin, and gold are often volatile and prone to rapid changes, real estate offers stability, which is particularly important during times of high inflation. For most investors, purchasing real estate is not just a financial investment, but also an emotional and cultural one, which makes this form of savings so deeply rooted in our society.
