The number of issued building permits has increased for the second consecutive month, but unfortunately, that doesn’t necessarily mean more apartments will enter the market. As for prices, that’s another story.
Official statistics brought another optimistic piece of news today.
The total number of issued building permits in November 2023 (3,357) was 20.7% higher than a year earlier. The number of permits for apartment construction (3,783 planned units) is also 14% higher than the previous November.
These numbers are more promising since the number of apartments for which permits were issued had declined in the previous two months. However, this doesn’t mean that the Serbian market will receive as many apartments next year as approved in November.
But it also doesn’t necessarily mean that the “shortage” will automatically lead to higher prices for those already on the market or appearing on it.
Petar Matunović, the director of the construction systems company “Lastavica,” explains that these are all permits that were requested before the most severe blow of the recent crisis.
“Someone bought land a year and a half ago, then spent a year on the project, and the last six months completing the documentation, so now they got a building permit. Whether they will start construction now, I doubt. Perhaps most of these constructions will not materialize in the next two years,” says Matunović.
Lack of Active Investors
Dragan Rabatić, executive director of the real estate agency “Solis nekretnine” in Novi Sad, confirms that there is currently no large number of active investors in the market.
“There are no investors searching for locations. Figuratively speaking, ‘investors have pulled the handbrake.’ Those who bought locations in the previous period may now be completing the documentation process, which takes at least six months. However, there are those who now want to sell locations they bought a year ago or a little more. Until a year ago, there was a rush for locations, but now, when investors have drawn the line, not everyone is eager to build,” says Rabatić.
A Year of Stagnation in Construction, But Does It Apply to Prices?
The reason for this pessimism is the current situation in construction in Serbia, where, as Matunović says, the market is in significant stagnation.
“Banks have slowed down, if not stopped, credit investments, and there are few investors who can build without bank support. Also, we have the expected price drop in 2024 of, as the construction industry talks, 20%, so that doesn’t exactly attract investors to the business. Earlier, the situation was that if you ‘didn’t catch the first shovel’ when the investor started construction, you wouldn’t even get the opportunity to buy an apartment. Today, there are already unsold apartments in new construction,” notes Matanović.
Dragan Rabatić says that even in Novi Sad, which has had a good balance between supply and demand for some time, sales are now declining.
“If we exclude the 2022, which is non-standard in every way and stands out from the story, we had a good 2021 and an equally good 2023. However, the question is whether 2024 will be good as well. If it is at the level of 2023, that will be good for the market, but I don’t know if it will be so,” notes Rabatić.
For Petar Matunović, on the other hand, there is no doubt.
“I think this year will be the one that will resolve this inflated situation with apartments and prices in Serbia. I was in Vienna now, where an apartment in better neighborhoods sells for 3,000 euros per square meter. The same, if not a higher price, is in Belgrade, which cannot infrastructure-wise compare to Vienna for another hundred years. The question is what comfort of life someone buys in Belgrade for three, four, or five thousand euros per square meter,” concludes Matunović.
Sign up for business updates & specials
