Croatia: Great Real Estate Potential for Higher Level Tourism

The Croatian Mediterranean is the destination of choice

For decades Croatia has attracted visitors through its natural beauty and the richness of its cultural and heritage. Famous for its crystal clear sea, natural beaches, a highly indented coastline, more than 1,000 islands, greenery, woods, and many other natural attractions, Croatia has always been a Mediterranean destination of choice. Global market trends show, however, that so-called “sun and sea” tourism no longer satisfies the needs of modern tourists Croatia aims to attract and it is certainly not attracting visitors with a high quality, diverse tourism industry.

Recognised need for tourism development

At the moment, Croatia lacks some of the infrastructure necessary for modern tourists. Currently hotels make up only 13 % of all accommodation – and only 40 % of those hotels that do exist – fall within the four- and five-star category. Instead, capacity is dominated by private accommodation (making up almost 50 % of the total) with campsites making up another 25 %.

In addition to a shortage of high-quality hotels, Croatia lacks congress centres, theme parks, golf courses, high-quality cycling tracks, and other facilities necessary to increase tourism and position itself competitively in the tourist market.

One of the reasons for the insufficient development of the Croatian tourist industry lies in the fact that, until recently, successful investments required overcoming uncoordinated and complicated legal regulations and bureaucratic obstacles such as long waiting periods for issuing of necessary permits. The need to develop and modernise Croatian tourism and the potential that lies in the Croatian tourism sector, however, has been recognised both by the Croatian Government and by potential investors. Accordingly, although the problems described above have not been entirely solved, the Croatian Government has considerably increased incentives for launching investment projects, and it is implementing new regulations to generate further investment in the tourism sector. The aim is not only to accelerate the development of tourism on the coast, but also to activate tourism in continental Croatia which carries significant tourist potential as well.

Recent and ongoing projects and investment opportunities

Since June 2013 the Croatian Agency for Investment and Competitiveness has published the Catalogue of Investment Opportunities in Croatia, which provides relevant information on projects for sale or projects needing strategic partners, resulting in several successful linkages between tourism companies and strategic partners. In addition, public invitations for expression of non-binding interest have recently been published for several projects owned by the Republic of Croatia, including the Hoteli Maestral Plc. Dubrovnik, the Imperial Plc. Rab, and the Home for the Elderly and Disabled – Gerontology Center Volosko.

The newest edition to the Catalogue, published in July 2015, includes 54 investment projects, 30 of which are public projects (state-owned portfolios) and 24 of which are private. Almost half of these projects involve the tourism sector (eg, the “Aquae Balissae” Hotel project, which involves the construction of a family thermal hotel with additional facilities in the central part of continental Croatia; the “Esterhazy Castle” project, involving the reconstruction of the castle complex into a five-star hotel in the eastern part of continental Croatia; and the “Kupari” project, involving the development of a high-end tourism resort on in south Dalmatia).

Market development and predictions, along with the increasing number of ongoing projects, demonstrate the obvious growth potential and, thus, point towards key investment opportunities in Croatia in specific tourism sectors, including the nautical, high-end hotels, health, gastronomy, oenology, rural and mountain, golf, adventure and sport, and eco-tourism sectors. It is reasonable to believe that such growth potential and investment opportunities will not be overlooked by prospective investors, both domestic and foreign.

The natural comparative advantages of Croatia – such as its crystal clear sea, highly indented coast, more than 1,000 islands, greenery, woods, more than 1,000 castles and fortifications and other cultural monuments, climate, location and accessibility – serve as a great basis for Croatia to become an established high-end tourism destination. Investment is required in order to realise the potential Croatia has to offer. With Croatia being recognised as a rising star in the global tourism market, now is the right time to invest.

authors: Jana Cvirn Adamčić, Ksenija Šourek