An overview of the real estate sector in Serbia
As the summer period of 2020 quickly draws to a close, the uncertainty of autumn and the prospect of a second wave of COVID-19 outbreak gives rise to the necessity of ascertaining the current situation of the real estate sector and the projections for its possible future development.
One of the most important changes brought about by the necessity of social distancing is the greater emphasis on digitalization and flow of information. The frontrunner in this movement has certainly been the Republic Geodetic Authority (RGA) by implementing the Integrated Geospatial Information Framework which will assist in bridging the geospatial digital divide with other countries and secure socio-economic prosperity providing foreign investors with more opportunity, security and clarity in forming real estate investment trusts or groups aimed at the Serbian real estate market. As on the macro level, the day to day micro level has also been the recipient of the benefits of digitalization. Certified attorneys now have the ability to digitally acquire excerpts from the real estate cadastre i.e. legal proof of ownership, submit all requests which are related to changes of rights and titles on real estate, schedule meetings with officials concerning ongoing cases, access the digital noticeboard where all of the decisions passed by the RGA are posted, access the database of planning documents etc.
All of the abovementioned will undoubtedly have the desired effect of considerably speeding up real estate transactions and lowering their costs to the benefits of our clients. The effect of these macro and micro stimuluses can already be discerned from the report published by the RGA on the real estate market in the first half of 2020. One of the most important conclusions from the report is that even though that the overall transactions have been down 13% compared to the same period last year, which can be attributed to the 2-month standstill period where almost no transactions have been concluded due to the state of emergency, the overall monetary funds exchanged in these transactions have only been 8% less compared to the amounts exchanged in the same period of last year, meaning that the average price of real estate has been increased in 2020. Additionally, it can be noted that the biggest drop-off has been in the office space market (especially office space exceeding 50 m2) due to the “work from home” regiment most of the employers have adopted, while weekend homes and construction land have seen the biggest increase in the overall market share, especially in the northern parts of Serbia i.e. Vojvodina. The takeaway from the report is that real estate market in the first half of 2020 has been especially strong considering the circumstances, with the biggest indicators of market strength being the fact that 67% of the transactions have been concluded without any form of credit and that residential real estate currently has the highest value per meter square.
Similarly, the Ministry of construction, transport and infrastructure has highlighted the prospects of future investments in the real estate sector. According to official data, there have been issued 10,846 building permits for the first seven months, which is about equal to the number issued in the previous year for the same time period. Of note is that most of the building permits are issued for residential construction where 88.88% of the building permits are issued for buildings with three or more apartments, with the average apartment size of 63,62m2, with certain locations and building types reaching a significantly higher than average value per meter square. Additionally, per official data available the total number of construction sites as of 18th of August is 62,405 (16.000 more than in the same period last year) with most of the construction being completed in capital city of Belgrade, followed by cities of Novi Sad, Subotica and Kragujevac.
It is an insurmountable task to predict what the future will hold, by judging existing patterns and extensively working with clients it the real estate sector we can yet safely affirm our predictions that the COVID-19 pandemic will have minimal impact on the future prospects of the real estate market in Serbia. A contributing factor to this is that the population is being more and more financially empowered to conduct individual purchases and real estate is seen as a perfect investment and savings opportunity which is in turn followed by naturally rising real estate prices in hopes of reaching the European standard.
For any additional questions regarding this topic, please follow our announcements and/or contact attorney at law Nikola Šiljegović, nikola.siljegovic@zslaw.rs or your regular contact at the Zivkovic Samardzic law office.