Real Estate of Affairs in Serbia
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Loading... - Melania Cubrilo
- 16 Feb 2023
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Global economic movements have led the real estate and construction sectors across CEE to face several issues: supply chain problems, rising construction material prices, and labor shortages, to name but a few, have made it difficult for real estate and construction projects to be completed with the same efficiency as before.
Bojovic Draskovic Popovic & Partners Partner Marija Bojovic, SOG Law Firm Partner Milos Gledovic, and Andrejic & Partners Partner Aleksandar Andrejic look at the extent to which these issues are reflected in the Serbian real estate market.
Non-Issues?
“Shortages in the supply of labor force and supply chain interruptions related to construction materials have been constant in the past several years and are still ongoing,” Gledovic begins. “This resulted in hikes in prices and the import of labor force, a new phenomenon for Serbia, which has traditionally exported labor to western countries.” Yet, he stresses that these issues made no “significant impact on the level of work, and the construction companies are still managing to deliver.”
Resonating Gledovic, Andrejic adds that “the real estate market recorded a jump in the prices of almost all immovable properties. The reason for this growth and development of the real estate market is the imbalance between supply and demand, as well as the extremely favorable housing loans which were available until recently,” he explains. However, Andrejic does add that there has been a drop of about 9 to 10% in the number of issued construction permits. “This is attributed to investor caution, having in mind the global situation,” he notes.
Agreeing with this sentiment, Bojovic says that “geopolitical events have ramifications for all market trends in general and especially for the construction and energy sectors.” Consequently, she says “the construction sector in the Republic of Serbia, after years of stable growth, has started to record a slight decline in the last quarter.”
Still, even with a slight dent, the real estate market in Serbia seems to be performing admirably – at least for now. “The report of the Republic Geodetic Institute states that, in the first six months of 2022, the real estate market reached as much as EUR 3.6 billion,” Andrejic reports. This is a “quarter more than last year. The biggest part of that growth is due to a rise in real estate prices. Considering the increase in the price of construction materials and the interest rates for housing loans, it is expected that the market will slow down and, due to higher interest rates on housing loans, the prices would drop in the following period,” he explains.
Signs of this (possible) decline are already showing, according to Bojovic, who shares that there was a decline of 7.6% in the gross added value in the construction sector. “This was an alarm for all the stakeholders to be proactive and agree on a package of necessary measures to be adopted by the government, which would serve as a stimulus to avoid this sector’s further growth to be threatened,” she explains. Read More…
