The director of CBS International for Serbia, Goran Zivkovic, explains which segment of real estate the global pandemic has left the most traces on, but also how it will develop in the coming period.
After a record 2019, when the real estate market is in question, 2020 is marked by a coronavirus pandemic. What changes has this year brought to the market? Which market segment was the first to be “hit” and when do you expect a recovery?
– Analyzing the real estate market in Serbia, we started this year on a strong basis and with a continuous growth of supply and demand, which began in late 2016. The demand rate for office space lease has been healthy and high for several years, with a visibly positive trend in effective lease heights, while the rate of available space is constantly declining. At the same time, strong development activity was recorded in practically all segments of the real estate market. With the beginning of the pandemic, the real estate market, like all other business segments, experienced a certain decline in activity. The most affected segments that directly depend on interaction with people, such as the retail space market or the hotel industry, while other market segments such as office space, warehouse and logistics capacities, as well as the residential real estate segment proved to be much more resilient.
What do you think is the current situation?
– Our observation, as well as statistical indicators, show that the recovery of the market is largely underway, so that in June this year, the number of transactions on the real estate market in Serbia exceeded by more than 19% the number of transactions in the same period in 2019. This obviously shows that the market is active and that it is rapidly compensating for the period of stagnation during the state of emergency. Although the retail segment was most affected by the pandemic due to the closure of shopping malls and the reduced volume of movement of people, after the lifting of measures, it is recovering very quickly. With the opening of cinemas, which are mostly located in shopping malls, as well as the extension of working hours of stores, we can say that the situation has largely normalized.
CBS International conducted a survey that included nearly 300 housing projects in central Belgrade municipalities. What are the most important results?
– Our research included the analysis of 296 housing projects in different phases of construction in the central Belgrade municipalities, and we also analyzed the secondary market. The results show that there has been no significant change in apartment prices in new construction projects. Namely, large investors did not change the selling prices that were determined before the beginning of this situation. A slight drop in prices is visible for smaller, financially sensitive investors, usually those without project financing of the bank, who are developing projects of up to 50 housing units. They were forced to speed up the sale process by offering lower prices, as the construction process is often financed from the sale of apartments. When it comes to the secondary market, the trend of falling prices is visible in less than five percent of the offered apartments.
CBS International has several active residential and commercial real estate projects. How are the projects progressing? What is the interest of customers?
– Our company is a partner of the largest international and domestic clients in the implementation of their important projects, which are already positioned on the market and in addition to construction in attractive locations, buyers and tenants have imposed themselves on the quality of construction. In Serbia, there were no measures restricting construction works and most construction sites were active all the time with preventive measures taken, so the construction mostly went according to plan. What is very positive is that the new phases of the existing projects will start with the construction, while the new projects will be developed according to the pre-planned plan, and some of them will start with the construction by the end of the year.
The company recently mediated in one of the largest investments in the logistics real estate market in Serbia, when BIG CEE, part of BIG Shopping Centers Israel, realized the acquisition of a logistics and distribution complex in the long-term lease of Kuehne Nagel in Serbia. Has the market for logistics and distribution centers proved to be the most resistant?
– The market of logistics and distribution centers has shown the greatest resistance to the current situation. Precisely for that reason, it is not surprising that the first transaction in the field of capital investments in Serbia in the conditions of the coronavirus pandemic, was registered in the sector of logistics and distribution capacities. CBS International mediated in this extremely important acquisition, which puts Serbia on the map of key international investors in the field of capital investments, with extremely attractive rates of return, both in the segment of the logistics market, and the retail and office space market.
In which market segment do you expect the greatest growth in the coming period? Where is the greatest potential?
– In the last few years, there is a strong activity on the market of office, retail and residential space, while the market of logistics and distribution centers is the least developed in relation to other market segments. The primary reason for that is that there were no international investors on the market, but even that began to change. The global pandemic especially pointed out the importance of distribution and logistics centers, because it additionally initiated the development of online sales, which in order to develop requires the accelerated development of distribution centers, eKapija reports.
