The Impact of the Tourism Market on Real Estate Prices in the Adriatic

The tourism market has a significant impact on real estate prices in the Adriatic, especially in popular coastal destinations such as Dubrovnik, Split, islands like Hvar and Istria. High demand for accommodation, driven by the increase in the number of tourists and investors in short-term rentals (e.g., through platforms like Airbnb), has led to an increase in real estate prices, often beyond the purchasing power of the local population.  

This is changing the structure of the real estate market – there are more and more luxury apartments and holiday homes, while residential spaces for long-term rent have become less available. This trend can contribute to the depopulation of the local population and challenges in the sustainable development of coastal cities.  

Historical Overview of the Impact of Tourism on the Real Estate Market

The impact of tourism on the real estate market is visible throughout history, especially in popular tourist regions. In the second half of the 20th century, with the development of mass tourism, many coastal and historical destinations experienced an increased demand for accommodation, which influenced the growth of real estate prices.  

In Mediterranean countries, including Croatia, mass tourism development in the 1960s and 1970s encouraged the construction of hotels, apartments and holiday homes. After the Homeland War, with the opening of the market and the arrival of foreign investors, prices rose further, and the development of short-term rental platforms in the 21st century further intensified this trend.  

Today, tourism remains one of the key factors shaping the real estate market in attractive destinations.

Growth of Tourism and the Real Estate Sector Over the Last Decades

Over the past decades, the growth of tourism has strongly influenced the real estate sector, especially in attractive coastal and urban destinations. Globalization, digitalization and the increase in low-cost airlines have made travel easier, increasing the number of tourists and the demand for accommodation.  

In many popular regions, including the Adriatic, this has led to an increase in investments in apartments, villas and other tourist properties. The development of short-term rental platforms, such as Airbnb, and others, has further encouraged this trend, often causing price increases and reducing the availability of housing for the local population.  

This dynamic relationship between tourism and the real estate sector continues to shape the economic and social landscape of many tourist destinations. 

Changes in the Structure of Real Estate Demand

The structure of real estate demand has changed significantly in recent decades under the influence of tourism, global economic trends and digitalization. An increasing number of foreign buyers are looking for luxury properties, apartments and villas for tourist rentals, while the demand for traditional residential spaces has decreased in many tourist destinations.  

The increased popularity of remote work has further contributed to the interest in real estate in attractive regions, which has raised prices and reduced availability for the local population. Also, environmentally and energy-efficient properties are becoming more and more in demand due to the growing awareness of sustainability and energy costs. 

Seasonality and Its Impact on Real Estate Prices

The seasonality of tourism strongly influences real estate prices, especially in destinations that depend on the summer tourist season. During the peak of the season, the demand for short-term rental properties increases significantly, which increases the profitability of tourist properties and thus raises their market value.  

On the other hand, outside the season, lower demand can reduce the utilization of real estate, but not necessarily their prices, as owners often count on high seasonal incomes.  

This dynamic can lead to significant differences in real estate prices between tourist and non-tourist regions and make housing less accessible to the local population. 

Differences in Real Estate Prices by Adriatic Regions

Real estate prices on the Adriatic vary depending on the region, attractiveness of the location and level of tourism development. The highest real estate prices are recorded in popular destinations such as Dubrovnik, Split, Hvar and Rovinj, where high demand for luxury real estate and tourist accommodation raises the value per square meter.  

In less developed or less well-connected parts of the coast, such as parts of the Dalmatian hinterland or certain islands, prices are significantly lower, but still rising due to the increasing interest in quieter and more authentic locations. Also, Istria stands out with a stable market, while the south of Dalmatia is more expensive due to exclusivity and limited supply.  

These differences reflect the influence of tourism, infrastructure and investment trends on the real estate market. 

Which cities and islands are the most expensive to buy real estate?

The most expensive cities to buy real estate on the Adriatic are Dubrovnik, Split and Rovinj, where high tourist demand and limited real estate supply keep prices high above average.  

Dubrovnik leads due to its global popularity, historical heritage and limited space for expansion, while Split records a constant increase in prices due to mass tourism development and the development of urban life. Rovinj is the most expensive city in Istria, attracting luxury buyers and foreign investors.  

Among the islands, Hvar and Brač have the highest prices, especially in the towns of Hvar and Bol, where luxury villas and apartments reach high values. Real estate in Vis and Korčula are also becoming increasingly sought-after destinations, while exclusive areas such as Lošinj and parts of Cres are recording price increases due to limited supply.  

How does the distance from the coast affect real estate prices?

The distance from the coast has a significant impact on real estate prices, with properties by the sea being significantly more expensive than those in the interior. Real estate with a sea view, especially those in the first row to the coast, achieve the highest prices due to the high demand from foreign buyers and investors.  

As the distance from the coast increases, prices gradually decrease, as such locations are less attractive for short-term rentals and tourism. The interior, such as the Dalmatian hinterland or the Istrian hinterland, offers significantly more affordable real estate, although in recent years there has been a growing interest in rural villas and holiday homes.  

Good transport connections and infrastructure development can reduce the difference in prices, but coastal areas still remain the most expensive due to limited supply and constant demand.

Investment Potential of Real Estate in Tourist Areas

Real estate in tourist areas has high investment potential due to the high demand for accommodation and the constant growth of tourism. Buying apartments, villas or houses for short-term rent can bring a significant return on investment, especially in popular destinations such as Dubrovnik, Split, Hvar and Rovinj.  

The tourist season, the number of visitors and the proximity of attractions are key factors that influence the profitability of such investments.m In addition to rental income, the value of real estate in these areas usually increases over time, making them a safe investment.  

However, investors need to consider seasonality, maintenance costs and possible regulations that limit short-term rentals. Despite these challenges, tourist real estate remains one of the most attractive forms of investment on the market. 

The Future of the Real Estate Market in the Adriatic

The future of the real estate market in the Adriatic will depend on the further development of tourism, economic stability and regulatory changes. Continued price growth is expected in attractive destinations such as Dubrovnik, Split, Hvar and Rovinj, while less developed areas could become increasingly interesting to investors.  

Trends such as sustainable construction, environmentally friendly real estate and luxury residences could shape future demand. Short-term rental regulations and possible restrictions for foreign buyers can affect market dynamics, while infrastructure projects and better transport connections will increase the attractiveness of certain regions.  

Despite the challenges, the Adriatic will likely remain one of the most desirable locations for real estate investment due to its natural beauty and constant interest from tourists.  

Conclusion

The tourism market has a strong and long-term impact on real estate prices in the Adriatic, encouraging their growth in the most attractive destinations. High demand for accommodation, especially for short-term rentals, has increased investment interest, which has led to more expensive real estate and reduced availability of housing for the local population.  

Seasonality and differences between regions further shape the market, with properties by the coast and on popular islands being the most valuable. Although the tourism sector brings economic benefits, it also poses challenges related to sustainability, market regulation and the living conditions of the local population. In the future, the balance between tourism growth, infrastructure development and real estate market regulation will be crucial for the stability and long-term sustainability of this sector.