Is this really the golden age of construction in Serbia?

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Construction is one of the industries whose business is most often auctioned in the domestic public. Veselin Raznatovic from the Union of Employers of Serbia recently stated that this sector accounts for as much as 20 percent of Serbia’s GDP, “which has never been recorded before.” Domestic builders, who are struggling with a shortage of labor and rising prices of raw materials, do not always agree to be in the “golden age”, according to Business and Finance.
According to the data of the Republic Bureau of Statistics (SORS), construction in 2019 participated in the GDP from 5.7 percent, while in 2020 that share dropped to 5.4 percent.
Last year, the manufacturing industry, traders, motor vehicle production, agriculture and information and communication were ahead of construction in terms of share in GDP.
The data provided by the SBS for this year really indicate better business compared to the previous one, but nowhere is it stated that construction has reached a fifth of GDP.
Last year, due to the problems brought by the pandemic, construction activity, except for the first quarter, recorded a double-digit decline in all remaining quarters compared to the same periods during 2019.
The total value of domestic construction works last year amounted to four billion euros, which was 4.3 percent less than in 2019.
Of the mentioned amount, more than half of the value was works on buildings, most of which were built in Belgrade, where the value of construction works reached almost 1.3 billion euros.
Last year, over 25,326 new apartments were built, which is 500 apartments more than in 2019, with the average price in Belgrade being the highest, almost 2,000 euros per square meter, while the cheapest was Kragujevac, with an average price of about 960 euros per square meter.
During 2020, over 22,000 building permits were issued in Serbia.
The value of work performed in the first half of this year increased by 22.8 percent, the value of new contracts by 3.1 percent, and the number of issued building permits increased by more than a third.
According to the National Bank of Serbia (NBS), 70.8 million euros of revenues were generated from the export of construction services by April this year, which is a decrease of 0.2 percent compared to the same period in 2020, while the total value of imports of construction services amounted to 109.7 million euros, 2.5 percent less than at the same time last year.
The inflow of foreign direct investments in the field of construction in the first quarter of this year amounted to 153.8 million euros, which is 15.8 percent more than in the first quarter of 2020, but half less than the record 307.3 million euros was an inflow in the third quarter of 2019.
This year, the number of employees in the construction industry increased by 5.4 percent, exceeding 159,000 workers, which makes 7.3 percent of the total employment in Serbia.

The average salary in construction in the previous six months amounted to slightly more than 600 euros, which is a growth of 4.4 percent compared to the same period last year. The highest average salary in this industry is over 850 euros and is 12.8 percent higher than the national average.
Salaries in the construction sector are not so much increased due to the fact that good craftsmen go abroad en masse, where they can earn three times more than in Serbia, since the per diems here range from 60 to 100 euros.
In addition to the increased costs for salaries, this year the expenses for raw materials are skyrocketing, some of which have risen in price by 100 percent, and due to shortages, most of them have to be paid in advance.
According to a survey of communities of designers, builders and craftsmen in southern and eastern Europe “DaiBau”, 92 percent of surveyed builders in Serbia say that their business was most burdened by the enormous increase in raw material prices, and 67 percent of them will be forced to increase their own prices.
The majority plans to increase prices by at least 5 percent, and 37 percent intend to increase prices by 15 percent. However, as many as 90 percent of respondents believe that next season will bring better business conditions.
Employees, even with the highest average salary in the construction industry, could hardly afford the amount of 1.47 million euros, which was the price of the most expensive apartment in a new building that was sold this year at the “Belgrade Waterfront” location.
In the third quarter of this year, the value of the real estate market was higher by as much as 74 percent compared to the same period in 2018, but the fact that 80 percent of total transactions are paid in cash, and that share of 68 percent when buying apartments changes the situation.
Citizens have an average of 60,000 euros in cash, and replenish the rest of the required amount from the loan, when the buyer transfers money to the seller, he usually buys real estate for cash, and so the money taken from the loan on the market “turns” four to five times , giving the impression that there is much more cash than is really the case.
The latest report of the Global Initiative against Transnational Organized Crime (GI-TOC) claims that such a rise in housing and business prices in such a small market and given the average standard, caused by money laundering, and the same estimates are given year after year, Nova Ekonomija reports.