Srdjan Teofilovic, Head of Capital Markets & Investor Services at CBS International – How to reduce investment risks

The figures, trends and the state of the real estate market over the last few years are a clear indication that Belgrade is becoming more and more interesting for investors. When it comes to investing in real estate, the Serbian market is considered to be an increasingly attractive investment destination, which has been gaining more and more importance over the past 15 years.

Srdjan Teofilovic, Head of Capital Markets and Investor Services at the leading real estate consulting agency CBS International, part of Cushman & Wakefield Group, says that it is our capital that is graded highly regarding investment attractiveness and investment safety.

– The real estate market is moving in cycles and consists of several stages, expansion, stagnation and contraction. Belgrade is now in an up-market phase of the cycle in all market segments. For several years, the housing sector has been continuously recording the demand that is three times higher than the new offer. Large complexes with 300 or more units, which are also the primary choice of buyers, imply a phased construction that carries a price increase of an average of 5 percent with each new phase, which motivates buyers to opt for purchases at the earliest phases of the complex, because it takes 4 to 5 years on average for the completion of the construction of the entire complex, and the value of the property purchased at the beginning means there is an increase in the value of this property by as much as 20 percent. On the other hand, the activity in the part of the retail market where we have about 180,000 square meters of malls currently under construction is also impressive, and it will increase the total offer of such space by almost 50 percent by the end of next year. A similar situation exists in the office space market, where record levels of demand are also being recorded, creating the needs for new business buildings, keeping rent levels very high in relation to some other cities in the region – Srdjan says and explains how to reduce the investment risk.

– The relatively inelastic offer and the fact that, in relation to the demand growth at this moment, the offer takes a few years to respond to it with a specific product, are precisely the reasons why this kind of investment is more risky than investing in other forms of property. In order to reduce the potential risk, investors must try to anticipate trends in parts of the market in which they want to invest and to assess how and in which way the fundamental economic indicators will flow on one hand, and, on the other hand, how will the supply and demand flow on the part of the real estate market which is interesting to them. In other words, the excess supply of a real estate type may result in a fall in prices, especially if it coincides with a negative economic environment. It is desirable to consult experts who are engaged in this business, so that they could assess from a professional point of view whether the real estate has the potential for improvement and, as such, be adapted for a wider circle of buyers or tenants – Teofilovic points out and emphasizes that, in all likelihood, Belgrade will soon begin to compete with surrounding capitals such as Budapest, Bucharest or Sofia with its offer and quality of construction.

CBS International Beograd

Cushman i Wakefield SYDNEY

CBS International

Cushman & Wakefield Group

Srđan Teofilović

real estate market in Serbia

real estate market in Belgrade

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