Short-Term Rentals in Istria: How They Increase Return on Investment (ROI)

As the summer season in Istria slowly comes to an end, investors and property owners are increasingly reflecting on the value of short-term tourist rentals. Over the past decades, Istria has solidified its position as one of Croatia’s most attractive regions for real estate investment, especially when it comes to the short-term rental market.

Tourism as a Growth Driver

According to the latest completed official data from 2023, Croatia recorded over 92 million overnight stays and 19.5 million tourist arrivals, with Istria leading all regions. Private accommodation—apartments, villas, and holiday homes—accounted for 44.5 million overnight stays, more than double the number achieved by hotels and campsites. These figures clearly reflect strong demand, and expectations are that trends in the final 2025 analysis will remain equally robust.

Room occupancy rates in Croatia fluctuated throughout the year, reaching their lowest point in January (24.8%) and peaking at 82.5% in August. This confirms the high seasonality of demand for short-term accommodation. For property owners, this means that despite seasonality, the concentrated summer demand can still secure a strong annual return.

Why Short-Term Rentals Deliver Higher ROI

Compared to long-term rentals, the short-term rental market in Istria can generate significantly higher returns. A two-bedroom apartment in Poreč or Rovinj, rented at an average rate of €150 per night, can achieve annual revenues far above what a long-term lease would yield. Villas with pools or authentic stone houses in prime locations often command premium prices, making them especially attractive investment assets.

Of course, higher returns also come with greater responsibilities. Short-term rentals involve higher operating costs such as frequent cleaning, guest communication, maintenance, and platform fees. The risk of empty months outside the main season must also be factored into the ROI calculation. Still, when managed correctly, the flexibility and income potential outweigh these challenges.

Trends Shaping the Rental Market in Istria

In recent years, Croatia has seen a pronounced shift among property owners from long-term renting to short-term rentals via platforms such as Airbnb and Booking.com. In Istria, this trend is even stronger thanks to the region’s reputation as a Mediterranean lifestyle destination.

Several key trends stand out:

Growth of the luxury segment

Demand for villas with pools, modern sea-view apartments and authentic stone houses continues to rise. International guests—particularly from Germany, Austria, Italy and Slovenia—are willing to pay premium prices for comfort and authenticity. This pushes the market toward higher standards in both design and service.

Professionalization of property management

More and more owners are entrusting agencies with managing bookings, guest communication, cleaning, and maintenance. This leads to better reviews, higher guest retention, and improved year-round occupancy.

Extension of the rental season

Although August remains the peak, Istria is no longer perceived as a strictly summer destination. Spring and autumn attract guests interested in gastronomy, cycling, wine culture and local events. This broadens the revenue window and reduces the risk of empty periods.

Digitalization of the market

While Airbnb and Booking remain dominant, dynamic pricing tools and data-driven strategies are becoming increasingly important. Owners who adjust prices based on demand patterns typically achieve higher annual ROI compared to those who maintain static pricing.

Sustainability and eco-tourism

Guests are increasingly attentive to environmentally responsible features such as solar energy, recycling systems or the use of local materials in villa design. Properties that incorporate these values are not only more appealing but also more competitive in the long run.

Together, these factors show that the short-term rental market in Istria is maturing—shifting away from the perception of additional seasonal income and evolving into a structured, competitive investment environment with clear opportunities for growth. Despite seasonality and higher operational requirements, the core fundamentals remain strong: consistent tourist demand, attractive returns, and the enduring appeal of the Istrian lifestyle.

If you are considering investing in the short-term rental market in Istria, feel free to contact us for deeper insights, opportunities, and local expertise.