There is no alternative to investing except in real estate and all new residential buildings have been sold when they were still in the development phase.
“Our government has chosen a policy of expansion as far as the construction sector, in general, is concerned, and I think that was a fantastic decision which, through multiplication, lifted the whole economy and generated maximum effect in times of crisis.”
How did the health crisis caused by the coronavirus, which has been going on for a year now, affect the real estate market globally and in Serbia?
According to the relevant market analysis, real estate in Serbia is at the highest level at the moment, and there are various theories as to why this is the case. I am inclined to believe that the real estate market has currently become a capital market because of COVID. This means that due to the pandemic, currency risk is increasing, interest rates are close to zero, regional stock exchanges are inactive and the population has no alternative in terms of investing but to buy real estate. The return on investment may not that high but the bulk of capital is secured for the future.
As for Belgrade, we can see a sudden expansion, a process I call ‘Athenization’, where half of the population of the Republic of Serbia will live in Belgrade, especially if capital infrastructure projects such as the subway, new bridges, tunnels and activation of the left bank of the Danube are completed. Simply put, the amenities that Belgrade offers are far greater than in the rest of the country, except maybe for Novi Sad. The real estate market in the world is stagnant, especially in terms of commercial buildings, and everyone is waiting to see which direction the crisis will take.
The return on investment may not that high but the bulk of capital is secured for the future.
Many companies are in jeopardy in this situation, people are losing their jobs, and yet there is an increase in real estate turnover. There are even examples of rising real estate prices. Why is this so and who induces demand?
Last year, real estate turnover amounted to just over 2 billion euro, of which 33% were mortgage loans. As I have already said, there is no alternative to investing except in real estate and all new residential buildings have been sold when they were still in the development phase.
It is clear that the market is realistic in terms of supply absorption and that residential quarters are not ghost towns but have real residents. It’s been a long time since construction activity was so strong and simply put, there is a huge demand. As long as demand is higher than the offer, prices will rise, while the average Serbian buyer has become demanding and spoiled. They want better service, better quality and better neighbours.
The pandemic has led many people to start working from home. Some wanted to relocate from the city to a rural area, while some are looking for co-working spaces. How did all this affect the type of market supply and demand?
The Serbian construction sector is not so agile that it can quickly reorient to the current demand for suburban settlements and co-working spaces. It still takes several years to develop the location, but investors and developers are resourceful enough to try to meet the requirements of customers, who are always right. There are several such examples on the Avala and in Viline Vode.
Demand for quality office space is still strong and we are yet to see the long-term effect of the crisis on the workplace philosophy. Personally, I don’t like working from home, I think that my efficiency is higher in the office, but there are examples that are different to mine.
Based on your experience, and according to current indicators, what will real estate trends and development be like in the coming period?
I believe that the market has not reached its maximum and I expect a slight growth in the next quarter. I also believe that, thanks to a good government policy of supporting the construction sector, the development will continue.