The Southeast European real estate market is growing and foreign investors are targeting Serbia as well.
In the coming years, Serbia may experience a major growth in the real estate sector, especially in the construction of logistics centers, small shopping centers, office space and residential complexes.
But in order to place Serbia above the competing countries of the region, it is necessary to reduce the risk to investors by implementing law, tax reforms, public administration reform and reducing corruption, panelists of the Balkans Property Forum 2019 International Real Estate Conference concluded.
“Serbia is one of the most underdeveloped markets in the region, but in the years ahead, it offers great opportunities to all those involved in real estate development”, said CBS International Serbia’s Srdjan Teofilovic.
The conference emphasized that the potential for market development exists, but that in Serbia the real estate market is still not institutionalized.
“If an investor from Germany came to Serbia and said he wanted to buy real estate for 100 million euros, he would have nothing to buy here or from anyone. There are simply no funds”, said Matevz Mencak, director of Real Estate Funds, Generali Investments LCC Slovenia.
“But the situation is slowly changing, and more and more projects are worth 70+ and 100+ million euros. In order to develop financing for such projects, it is necessary to find a good local partner, and a good bank that manages the regulations and supervision of the NBS”, said Hannes Wimmer of Erste Group Bank. He emphasized that banks are very happy to support investors, but only when they are convinced of their financial ability to implement the project. For them, location, market risk and cash flow are very important, but also the percentage of repayment of real estate. For example, when it comes to investing in a residential property, the condition is that 30 percent of the property is pre-sold. In other words, banks do not want to share risk with investors, but they are ready to support any project that meets the conditions.
Dubravka Negre, Director of the Western Balkans Office in the EIB, pointed out that if an investor can choose, he will choose to invest in EU countries rather than non-EU countries because his investment in the EU is safer.
“That has to change, but before the start of real estate construction, we have to have a foundation, ie the development of vital infrastructure – roads, water supply, sewage, wastewater treatment, not only in Belgrade but also outside it. Only then will the potential of our market be harnessed”, emphasized Negre and emphasized that EIB and partners’ investments in the infrastructure sector in 2018 reached over one billion euros and continued in the same direction this year.
She stressed that the countries of Western and Central Europe completed the construction of roads in the 1980s and 1990s, and that Serbia is quite late in this regard, but that the EIB continues to invest in road and rail infrastructure. She assessed the construction of Corridor 10 as important because it is very important for the development of the economy, and in many municipalities, especially Leskovac, Pirot, Niš, where industry is growing, new facilities are being built.
Nebojsa Nesovanovic, of CBRE’s real estate consultancy, admitted that they had projected a slowdown in price growth a year ago, but that didn’t happen.
“We cannot expect a price drop just like that. We expect strong demand and hope that due to increased supply, prices will slow down with growth. The goal is to slow growth, and only then to talk about price correction, housing construction and housing prices, as well as office space, occupancy and rents. Retail sales are rather full in all countries of the region except Serbia. We are still developing in our country and expect it to be filled in a year or two”, he said and also added that in Serbia there is an increased demand for office space as many from the wider region are moving to our country.
The biggest demand is for real estate in New Belgrade and it can be expected that most will be built there, especially in Block 65. Speaking about shopping malls, he pointed out that in addition to the existing three that are being built, there is a possibility of building another one as consumer habits change. Previously, 85 percent of malls belonged to commerce only, and now retail space is shrinking, with additional entertainment and leisure facilities beginning to dominate.
