How did the Serbian real estate residential market do during the Covid pandemic?
in Blog

Covid acts as a multiplier for the international real estate market.

A global trend is clearly visible. High government debt, not only due to Covid spending programs, has plunged many countries into a debt crisis. Cheap money and the fear of inflation is driving people worldwide into assets - it is gold, shares and real estate. However, there was already a high demand for real estate before Covid. Many needs for attractive housing can now no longer be met, further fueling demand and prices are consequences. Regionally, a change in demand for properties with special location advantages has also been noticeable for some time. Especially the housing market in large and attractive capital cities is flourishing. However, countries with potential for economic development are increasingly coming into focus. The focus is on Eastern Europe and especially South-Eastern Europe.

Attractive capital cities are currently Warsaw, Prague, Bratislava, Budapest, Zagreb and Belgrade. It does not always make economic sense for the real estate industry to concentrate projects in centres, but it is happening nonetheless. Currently, despite price increases, there are still serious differences in prices per square metre, which range from 4,000 to 14,000 euros in Europe from the Czech Republic to Hungary to Germany.
This is especially true for prices of buildings intended for rental flats. These are intended for people who cannot afford to buy these flats. Basically, fewer and fewer people will be able to afford flats.

Another international trend will emerge as a result of Covid: buildings in sectors that suffered particularly under Covid with many bankruptcies, such as in the tourism industry, will increasingly be put to a new use. Many former hotels, for example, will be converted into residential buildings. On the other hand, there are many opportunities for the real estate industry in the purpose conversion of buildings.

New investors will also enter the scene. The interest of Chinese investors in real estate in emerging economies like Serbia is discernible, but so is the emergence and interest of new types of investors: Funds, foundations, family investors looking for projects in Southeast Europe, is quite evident.

Serbia with Belgrade is close to becoming a top region soon.

Serbia has great potential for real estate and this potential continues to grow. The demand for real estate is by far higher than the supply - a constant price increase is therefore to be expected. For attractive locations such as Belgrade city centre, prices already range from €2,300 up to even €8,000/sqm, such as for the Kula Belgrade Tower in Belgrade Waterfront. Out in Downtown, you can already find something for €2,000 per m². Prices outside Belgrade are around €700 per m² and still seem relatively cheap in comparison.

The housing market in Belgrade continues to be one of the most resilient real estate segments, despite Covid. In 2020, the number of flats with granted building permits in the Belgrade area increased by 30% compared to the previous year. However, in the first quarter of 2021, the comparative figures have almost halved compared to the same observation period in 2020, most likely due to the vulnerable epidemiological situation in Serbia at the beginning of 2021. But this should not indicate a negative trend. Looking at the current projects in the pipeline, there is practically no part of the city where new projects are not being built or announced.

The most developing area of construction activity remains the New Belgrade district, where the most attractive locations are around Airport City with several active projects such as Wellport West 65 The One, Zepterra Savada 3 New Minel and Elxir Gardens.

A positive trend for transactions is expected to continue in 2021.

Compared to other industrial sectors, the Serbian real estate industry should emerge stronger from the Corona crisis.