Source: eKapija | Thursday, 04.06.2020.| 13:49
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Real Estate Market Fully Recovers Upon Revocation of State of Emergency, Prices Unchanged – New Concepts for Retail and Offices

Illustration (Photo: creator12/
The real estate market in Serbia has faced the fact that, during the state of emergency, the sales dropped by around 70% compared to the period before March 16, and the value was slightly above EUR 255 million, which is half what it was in the same period last year. Still, the data of the Republic Geodetic Authority (RGA) showed at the time that the prices of real estate had not dropped and that the percentage of the sale of apartments compared to all other kinds of real estate had increased.

– In the period after the state of emergency, in only ten days, the real estate market had fully recovered. The Department for Mass Evaluation of Real Estate of the RGA had processed all the contracts forwarded by the public notaries and it turned out that, in the purchases realized, there had not been a change in the prices of real estate – said Maja Radovic of the RGA.

To the end of looking into the situation in the housing market and the impact of the COVID-19 pandemic, CBS International conducted a survey this April which covered nearly 300 housing projects in central Belgrade municipalities. The results of the survey showed that the prices of the newly built apartments had not changed in the preceding period, especially pertaining to large housing projects which are built in phases and are financed by a bank.

– Such projects, which have already positioned in the market, appeal to the buyers because of their attractive locations and the quality of the construction and the finishing works, as well as numerous addition features. A minimal drop in sales prices was recorded in smaller housing projects, of up to 50 housing units, which are more financially exposed and in most cases do not feature project financing. When it comes to old real estate, the decision to lower the prices is up to apartment owners. According to the information available, prices had been dropped in less than 5% cases – a leading consultancy, CBS International, a part of the Cushman & Wakefield Group, told eKapija.

They also say that it is difficult to define the average sales prices of apartments in Belgrade with precision, considering the specificity of the capital. It also depends on where the property is located, on the special characteristics of the property, on the infrastructure and on similar factors, which can considerably influence the final price of apartments.

– In general, the price of a project depend on the location and the municipality it is located in, and the reputation of the investor, which tells the buyers how safe the investment is, also has some influence. Furthermore, the price of a project is also determined by the quality of the finishing works and the side features, as end users are now sophisticated in their demands more than ever. Investors have recognized this and there are now more and more housing projects where additional features are the key parameters in discerning and recognizing the unique advantages of a project and its competitiveness – the company says.

Construction deadlines could be moved by mere months

The Ministry of Construction, Transport and Infrastructure says that the construction sector was not stopped by the COVID-19 epidemic, as shown by the number of active construction sites, of which there were more than 58,000, which is around 17,000 active construction sites more than in the same period last year.

– When we are talking about the conditions of doing business in the real estate sector, the state has created all the conditions for construction in Serbia to continue, as seen through the electronic procedure and the most efficient procedure of issuing building permits and also by the 9th spot on the list of the World Bank's Doing Business list pertaining to the issuing of building permits – the ministry said for our portal and added that the COVID-19 epidemic could be expected to leave certain consequences in the sense of extension of the deadlines for the completion of certain projects, but that it would be measured in mere months.

CBS International says that the situation with the coronavirus has had an impact on all segments of the real estate market, but that certain segments were more exposed to risks and consequences than others.

– Those segments which depend directly on social contact or interaction with people, such as the hotel industry or the retail space market, are affected the most due to the ban on travel and work, whereas other segments, such as the markets of office space, storage and logistics facilities and housing real estate, are more resilient, but not totally immune. It is to be expected that such segments of the market will recover more quickly than those more affected by the pandemic – they say.
(Photo: ImageFlow/

Which real estate to invest in?

Nenad Stankovic of the Stankovic & Partners Law Office (NSTLAW) says that investing in real estate now depends on the time period in which the investors intend to make a return on the investment and when they plan to have the first income.

– If they are planning to invest in construction, I recommend investments in the development of commercial real estate, retail facilities, office space, warehouses, logistics centers etc. If they plan to make a return on the investment as soon as possible, I recommend investments in the real estate which is already profitable or easily rentable. Those are mostly the existing properties which are making profit and have a long-term lease – Stankovic clarifies.

When it comes to foreign investors, Stankovic adds that they are currently the most interested in the development of residential facilities and office spaces, and outside of Belgrade, in the development in industrial real estate.

– Congress centers and hotels with such features have a good perspective – he points out.

He also believes that the pandemic has not had a major impact, considering the number of the transactions carried out:

– However, it seems to me that these are arrangements that have already been agreed and that the true consequences of the pandemic will become apparent only in September, and that is very hard to predict.

Increased activities in banks

Banks are also providing great support, being in charge of crediting these investments. Ivan Arandjelovic of ProCredit Bank emphasizes the financing of legal entities which have suitable residential projects, that is, which are in the business of constructing buildings and apartments:

– In the past period, our bank has supported a number of very successful investors, and not just in Belgrade either. These are classic investment credits, but also project financing, where the bank acts as a partner and actively participates in the construction of a certain facility.

When it comes to the citizens' interest in purchasing apartments, whether those that are being built or have already been built, eKapija's interviewee says that it is extremely high.

– Undoubtedly, this is also the result of the fact that the offer of very quality apartments in nearly all the larger cities in Serbia is very good and that new construction sites are opening in attractive locations each month – Arandjelovic believes.

He explains that, thanks to this, the bank gets a large number of inquiries by clients each week, not just for the purchase of apartments, but also for the construction of pre-fabricated houses, which has recently become a very interesting and demanded investment, for which ProCredit Bank has developed a unique financing model.

– For housing loans, the repayment periods go up to 20 years, but the clients are choosing shorter ones, of 15 to 17 years, increasingly often now – our interviewee says.

New situation imposes new trends in retail market

Considering that the shopping centers were among the first to close due to the government's measures, the activities in the retail market ground to a halt. The investors had to revise their lease arrangements with the tenants, and the situation was made additionally difficult by the measures they had to comply with in opening the shopping centers and outlets.

– The tenants in the main pedestrian zones in Belgrade have also recorded a certain drop in sales, considering that they largely depend on tourists, whose arrival has been made impossible and remains uncertain. The planned projects, however, haven't stopped and their completion deadlines have merely been extended. In late June, we are looking at the opening of the Beo Shopping Center in Zvezdara. With the new projects, we also expect new brands to arrive to the market. The situation will certainly impose some new trends in the retail market and influence the purchasing habits of the end-users, so we expect an increase in online purchases in the upcoming period – CBS International says.

They add that the office space market is one of the more stable segments of the real estate market at the moment, but that the current situation will certainly lead to new trends in doing business.

– Although a certain number of employees will continue working from home from time to time even after the lifting of the state of emergency, the demand for office space is not expected to drop in the upcoming period. The strong demand for office space over a long time period has led to a continuous drop of the degree of free office space, which is at 3.5% at the end of the first quarter of 2020, and only 2.9% for class A office space in New Belgrade. Also, in dozens of offices worldwide, Cushman & Wakefield has implemented a new concept of development of office space, called a “Six Feet Office”, which enables a safe return to the workplace. The guide includes six elements that need to be implemented in the office space so that the employees would be at sufficient distance from each other, adequately protecting their own health and the health of their colleagues. Considering all those aspects, companies will need more space in order to ensure the compliance with personal distance measures and safe work for their employees – they clarify.

When it comes to new trends, the company says that the modern age and the new technologies have refreshed the approaches to work.

– It used to be considered enough to provide a desk and a computer to the employees, and office space is now increasingly adapted to the people who use it every day, through numerous additional features, so as to encourage the sense of optimism, well-being and belonging, stimulate the engagement and improve the results – they point out.

Construction of project exclusively represented by CBS International expected in late 2020 and early 2021

CBS International cooperates with several investors in the planned residential facilities in the sense of market analysis and development consulting. In the past few years, the investors have recognized the need to use consulting services in developing projects, including consulting services regarding the structure of apartments, the mix of housing units, the quality of finishing works, side features and sales strategies, so as to position in the market as well as possible and achieve the optimal absorption of housing units.

– From the moment such a complex analysis starts to the realization of the project, it can take a whole year. All the planned projects that our company is involved in in terms of strategic consultations, are to continue even after the period of the state of emergency and the beginning of their realization is expected in late 2020 and early 2021 – says a leading real estate consultancy CBS International, a member of the Cushman & Wakefield Group.

Aleksandra Kekic

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