The purpose of this paper is to show the importance of building development through the impact on the environment and the economy with special reference to the Republic of Croatia. Building construction industry as one of the most problematic sectors in the economy due to environmental pollution along with the predicted urbanization can create major problems in terms of people's quality of life in the future. In addition to impairing the quality of life, it can also create an increased need for energy consumption which also affects the competitiveness of the economy. For these reasons it is very important to follow world trends in the industry and implement them as soon as possible. Smart homes and green buildings are one of these trends that have shown direct results in energy and financial savings and reduced CO2 emissions, and smart cities offer unavoidable solutions to the effects of urbanization that can create serious problems in cities such as urban climate or major traffic collapses. A city must be created in such a way that it can respond quickly to the needs of its citizens and that is exactly how smart cities were created. Houses, buildings and cities have existed since the very beginning of humanity, they have developed to this day and must continue to develop in order to not be a burden to the environment and the people.