Real Estate in Serbia 2020 : Construction Driving Serbia's Development

REAL ESTATE IN SERBIA

2020 CONSTRUCTION : DRIVING SERBIA’S DEVELOPMENT

www.energogroup.rs office@energogroup.rs

Serbia 2020:  ZF Pančevo, Phase 2  Mei Ta Barič, Phase 5  Ušće Tower Two Belgrade  Kneza Miloša Residence Belgrade  Barry Callebaut SEE, Novi Sad  EFW Vinča

INTERVIEW

ZORANA MIHAJLOVIĆ PH.D., DEPUTY PRIME MINISTER OF SERBIA AND MINISTER OF CONSTRUCTION, TRANSPORT AND INFRASTRUCTURE

Construction Will Continue Driving Serbia's Development After The Pandemic

The completion of major infrastructure projects and the launch of new ones, as well as the creation of a favourable legal framework governing construction, have served in this sector imposing itself as the most important driver of GDP growth. The Government of Serbia and the Ministry of Construction, Transport and Infrastructure, together with construction companies, are doing all they can to ensure the biggest infrastructure construction sites in Serbia remain active even under the conditions of the Covid-19 pandemic, and to overcome this crisis with the least possible negative consequences for the economy

T

he previous year was undoubtedly one that recorded positive results in Serbia in the field of infrastructure, but it was also a year in which the construction sector confirmed itself as the branch that drives Serbia’s economic growth. Such a result did not come about by chance, but rather represents the result of implemented reforms and more effec-

4

April

tive public investments in infrastructure. The construction of 130 kilometres of highway was completed in 2019, of a total of 350 kilometres constructed since 2012. The construction of as many as three motorways was completed during the course of last year: the southern and eastern arms of Corridor 10 to the borders with North Macedonia and Bulgaria, while 120

kilometres of the Miloš the Great Highway was also opened to traffic.

If we add to this the fact that 2019 also saw the launch of construction of the Moravian Corridor, the Sremska Rača-Kuzmin highway section, and the highway and expressway Ruma-ŠabacLoznica, as well as the Požega to Preljina section of Miloš the Great Highway, and the continuation of construction of the hi-speed railway from Belgrade to Budapest, and then add to that the project to construct around 8,000 apartments for members of the security forces, construction of the Belgrade Waterfront development, commercial projects in the real estate sector, as well as new large infrastructure projects from the “Serbia 2025” investment plan, we can expect positive trends in the construction sector to continue in the coming years.

when that growth rate stood at 13.4%, but last year it actually doubled, amounting to 35 per cent, while in some quarters it even totalled more than 50 per cent. With these kinds of results, the construction sector has imposed itself as the branch of industry with the highest growth rates in the Serbian economy.

Also contributing to the growth of the con-

ning and construction, legislation, cadastral records, conversions, construction products – are reflected well in the growth of the number of active construction sites: there were approximately 1,500 construction sites active in Serbia five years ago, only for that number to total more than 56,000 in March 2020.

The number of building permits issued is

FASTEST-GROWING BRANCH OF INDUSTRY Everything that’s been done in the field of infrastructure, as well as the adoption of reformist laws in the field of construction, has yielded measurable and visible effects in the construction sector’s share of GDP, the value of implemented construction works, increases in

The State has now already created the conditions to build in Serbia, both through a favourable legal framework and through investments in infrastructure, which will continue through the new “Serbia 2025” investment programme, in which investments of €9 billion – of a total of €14 billion – are planned for transport infrastructure. There is and will be work, especially for domestic companies the number of active construction sites and the number of building permits issued.

The construction sector’s share of GDP totalled 3.2% in 2014, only to reach 5.7% by the end of 2019. The value of construction works implemented in 2019 is estimated to have totalled approximately 3.8 billion euros, which is more than double the value of 2013, when it amounted to approximately 1.6 billion.

High growth rates for construction in 2019 followed an otherwise very good year in 2018,

struction sector – alongside the construction of highways and the modernisation of railways – is the project to build housing for members of the security forces. More than 2,000 apartments are currently under construction in six cities Kragujevac, Kraljevo, Belgrade, Novi Sad, Niš and Sremska Mitrovica, while in Vranje the first residents have already been given the keys to their newly built apartments.

The positive effects of numerous laws adopted in the field of construction - on plan-

also increasing year on year. A total of 7,668 building permits were issued in 2014, only for that number to increase almost threefold by 2019, to 21,856 issued building permits.

MORE WORK FOR DOMESTIC CONSTRUCTION FIRMS The State has now already created the conditions to build in Serbia, both through a favourable legal framework and through investments in infrastructure, which will continue through the new “Serbia 2025” investment programme, in which investments of €9 billion – of a total of €14 billion – are planned for transport infrastructure. There is and will be work, especially for domestic companies, which need to increasingly associate mutually and further strengthen their capacities, as there is also work for the world’s best companies, from China, Russia, the U.S., the EU, Turkey and Azerbaijan, which bring the very latest knowhow and technologies to Serbia while working on large infrastructure projects.

April

5

the whole economy continue. At this juncture, it is estimated that losses in transport amount to around 120 million euros, including all types of traffic, with the greatest losses being experienced in air transport. It is estimated that transportation losses will amount to around 600 million euros by the end of the year.

The Ministry of Construction, Transport and Infrastructure issued a recommendation for all investors to do everything possible to maintain the level of activity on construction sites in the implementation of infrastructure projects, the construction, renewal and reconstruction of roads and railways, in the field of housing construction, municipal infrastructure and other works, while it is obligatory for all investors to provide workers with all necessary protection When it comes to private investors, including in the real estate sector, in addition to general political and economic stability, their interest in investing in Serbia is further enhanced by the country’s ratings on the Ease of Doing Business Index for 2019, especially in the area of building permits, where Serbia today ranks ninth in the world, after being ranked 176th in 2014.

Alongside the reform of building permits, for which Serbia is already recognised worldwide, other reforms are underway in the field of construction. One of the most significant is the reform of cadastral records, under the scope of which it has been made possible to register a property in one place, with a public notary, instead of touring the counters of several institutions.

The end goal of this reform is for the cadastral record to function fully electronically.

The reform of spatial planning, e-prostor [e-space], should enable the introduction of an electronic data exchange system between holders of public jurisdictions in the process of preparing planning documents. This practically means that the process of a unified procedure, like the kind we have with building permits, will be applied in the process of drafting planning documents. The end goal is to consolidate, within the framework of e-prostor, information from the real estate cadastral records and planning documents, in order for this information to be made publicly available, also in electronic form, in such a way that information can be obtained

6

April

Even during the state of emergency we will maintain regular communication with all investors on the largest infrastructure projects in the country, in order for us to successfully traverse this difficult time together, and we will be ready and open to hear all their problems, as well as their proposals for measures and suggestions for each cadastral plot regarding the possibilities and limitations of construction, i.e. restrictions against construction in the case of protected areas under certain protection regimes or land not earmarked for construction.

SHARED BATTLE WITH THE CONSEQUENCES OF THE COVID-19 PANDEMIC The construction sector in Serbia is nonetheless not immune to global shocks, such as the Corona virus, which has disrupted plans for the functioning of all countries where it has appeared. The Serbian Government responded in a timely manner to the problems caused by the Corona virus epidemic in Serbia, in order for us to preserve the health of workers, but also to ensure that the largest infrastructure construction sites in Serbia remain active and that the implementation of major infrastructure projects that are significant to Serbia’s GDP and

against the Corona virus, in accordance with the decisions of the Government of Serbia.

Even during the state of emergency we will maintain regular communication with all investors on the largest infrastructure projects in the country, in order for us to successfully traverse this difficult time together, and we will be ready and open to hear all their problems, as well as their proposals for measures and suggestions, which both the Government and the Ministry will consider most seriously.

Just as we achieved significant results for Serbia in the field of infrastructure and construction by working together in the previous period, I believe that we will also overcome this current crisis by working together, and that we will enable the construction sector to remain – both during the time of the Covid-19 pandemic and after it passes – the branch of industry that is the main driver of the development and growth of the Serbian economy. ■

MIA ZEČEVIĆ, NOVASTON CEO BUSINESS

We're Expanding In The Sectors Of Office Spaces And Logistics From the very inception of the company, all the way to the creation of the Novaston platform with five companies, at Novaston Asset Management they have insisted on quality and expertise in the professional management and maintenance of business facilities.

It was that way at the beginning and remains the case today, when Novaston is conquering new markets

A

s CEO Mia Zečević explains, in order to be competitive at all times and to provide a personalised approach, creativity and innovation to every client on each of the demanding markets in which the company operates, all Novaston employees constantly advance through professional courses and training.

• Your company has grown into a platform with a team of 60 employees based in Serbia and Croatia.

On what major projects are you currently engaged?

- We started with the Novaston Asset Management firm and five employees, while today our platform includes in its framework Novaston Project Management, Novaston Facility Management, Novaston Marketing Consultancy and Novaston Croatia.

Over the past two years, our company has been a significant part of the development of the retail segment. Our experts participated in the opening of large shopping centres – Promenada in Novi Sad and Ada Mall in Belgrade – and we’ve provided project management and publishing mediation services, as well as marketing.

We were also engaged in the opening of the STOP SHOP retail park in Sremska Mitrovica, while NMC and NPM participated in the rebranding of former Shoppy outlets in Subotica, Borča and Smederevo.

• You have announced the coming expansion of your operations in the sectors of business premises and logistics. In this sense, when will

Belgrade be able to approach regional capitals?

- Yes, viewed strategically, our goal in the period ahead is to focus our activities on the business premises and logistics sectors. Our team of experienced experts has already positioned itself with the offer of a complete service in the field of real estate sales and management (with an emphasis on modern retail centres), ongoing and investment maintenance, projects for constructing and furnishing modern office space. The development of the business premises sector in Serbia is progressing very dynamically, with leasing prices at a record level, although real estate sales are rarely realised. The offer of modern office space totals approximately 800,000m2 - Class A. The vacancy rate is below five per cent, while we expect that rate to be at the level of 6-9% in the coming period, due to the

facilities have been constructed in Serbia since 2000.

Company CTP Invest is today building logistics and manufacturing facilities at several locations, while it is currently in the construction phase of the largest industrial park in Serbia - CTPark Belgrade North.

• You have also positioned yourself firmly on the Croatian market. Do you have plans for BosniaHerzegovina, Montenegro and the territory of Kosovo?

- Last year was crucial for our positioning on the Croatian market. And there we are also a strategic partner in expanding the portfolio of the STOP SHOP retail park of Austrian company IMMOFINANZ, which is one of our most important clients. We also cooperate with NEPI Rockcastle, the investors who purchased the Arena Centre and Arena Park, then

We are the exclusive partner of IKEA in the development of the Belgrade Retail Park project, covering an area of 36,000m2, the opening of which is planned for 2021 expansion of this type of real estate, as well as for leasing rates in first-class projects to be reduced.

Otherwise, the business premises market in our country is still lagging slightly behind compared to the countries of the region.

When it comes to the logistics sector, around a million square metres of industrial and logistics

also the SES Group, with their King Cross Jankomir project, as well as other international and local partners in Croatia. Our plans also include further development through the implementation of several projects in Bosnia-Herzegovina, Montenegro and on the territory of Kosovo, but it is still too early to talk about that. ■

April

7

NEWS

SEEBBE CONSTRUCTION FAIR POSTPONED UNTIL JUNE

CLINICAL CENTRE OF VOJVODINA COMPLETING THE CLINIC FOR INFECTIOUS DISEASES

The International Building Trade Fair 46th SEEBBE has been postponed due to a coronavirus pandemic to prevent further widespread of disease. This flagship event in the construction industry in the region of South-East Europe, entitled "Dreams of Basics", was to be held from 22 to 25 April 2020 in Halls 1, 1A, 2, 3, 3A, 4 and at open space of the Belgrade Fair, but has now been postponed for 10-13 June 2020.

The Clinical Centre of Vojvodina has announced a public procurement for the preparation of project-technical documentation for the adaptation and upgrading of the Clinic for Infectious Diseases in Novi Sad. It is a project of reconstruction and improvement of two clinic facilities. The project envisages the extension of one floor on the building with the previous removal of the existing floor of the attic with the usable surface, design of elevators, treatment of facade walls, replacement of external joinery and shutters...

THE CHINESE BROKE THEIR OWN RECORD IN CONSTRUCTION DUE TO COVID-19 Authorities in the Chinese city of Wuhan have built a hospital with 1,000 beds to treat coronavirus patients. Wuhan Mayor Zhou Xiangwang allowed the country’s army usage of the Hushenshan Hospital with 1,400 medical workers. According to Chinese media, the new hospital is prefabricated and built in just six days.

According to CNN, this is not the first time that hospitals have been built in China in a short period of time, in 2003, when the SARS epidemic broke out, a hospital was built in six days and seven nights.

THE WORLD IS FACING A LABOUR SHORTAGE The construction sector is facing an increasing shortage of skilled workers year after year, and this trend is currently threatening to become alarming. That is why the workforce today is demanded, competitive and very expensive. To fill the gap in the market, women are slowly getting involved in the game, although they currently make up only 9.9 per cent of workers in the construction industry. The lack of qualified staff is expected to be compensated by Generation Z, born between 1995 and 2010. Despite their efforts to pursue occupations that offer greater social prestige, the level of salaries in the construction sector is likely to make them change their minds.

8

April

NEWS

CONSTRUCTION TRENDS FOR 2020 Despite the rapid development of technology, innovations in the building materials industry and the architectural creativity, trends in construction are slow to change, as this industry shows a kind of resistance to excessive innovation. Currently, it is not known what of the planned 10 trends, which we list here, will actually come to fruition by the end of this year, which we will, unfortunately, remember by the pandemic of the coronavirus and not by the revolutionary achievements.

VISUALISATION OF OBJECTS It is expected that billions of dollars will be invested in the development of applications for project visualization, as much savings could be made in with the help of the application. For builders and developers, AR facilitates the use of wearable technology as well as 360-degree video to enable 3D visualization of future projects in their real-world environment, automated building measurement, rapid and accurate simulation of architectural and structural changes, and effective hazard simulation for safety assessment.

GREATER USE OF DRONES IN CONSTRUCTION In just one year, the number of drones has increased by 239 per cent. This technology is primarily used to quickly map large areas over long distances, to read air currents and to produce heat maps. The drone also serves to perform dangerous work, and therefore reduce the number of accidents at work, the number of fatalities. As a result, its use reduces the number of compensation claims. Drones can also reduce the number of thefts from construction sites that cost $ 300 million to $ 1 billion worth of equipment each year in the world.

BUILDING INFORMATION MODELLING (BIM) The development of information technology helps industry leaders stand out with greater efficiency. BIM allows users to generate computer representations of buildings and utilities. The ease of managing these models and sharing the data can provide superior part prefabrication, resulting in timely and accurate completion.

April

9

NEWS

MODULAR AND PREFABRICATED CONSTRUCTION Modular and prefabricated construction is experiencing rapid development over the last few years. It is projected to grow at 6.9 per cent annually, reaching $ 157 billion by 2023 due to a lack of skilled labour.

New technology has also made these prefabricated and modular buildings larger. An example is the recent opening of the 21-story CitizenM Bowery Hotel in New York. The 100,000-square-foot hotel has 300 modular rooms.

INTRODUCTION OF CONSTRUCTION MANAGEMENT SOFTWARE Construction management software is used to maintain efficiency, productivity and logistics. Having great construction management software is a vital component to staying competitive, building a valuable business and mastering operational efficiency. The best building management software solutions in 2020 include Procore, CoConstruct, Buildertrend, ProjectSight, RedTeam, Projul, PlanGrid, Sage 300...

GREATER REPRESENTATION OF GREEN BUILDING STANDARDS Green building has become the expected standard for buyers and tenants of residential and commercial properties. Unfortunately, many sustainable and environmentally friendly facilities are considered a luxury as they are initially more expensive, despite long-term savings, but this is expected to change significantly in the next few years.

10

April

INCREASED USE OF ROBOTS TO IMPROVE SAFETY In most cases, robots are entrusted with simple jobs, while human with a “thinking” jobs. For example, robots at construction sites can detect unfavourable working conditions. They can also detect high or extremely low temperatures, as well as strong winds, which should signal danger to workers and equipment. These “signals” from robots, workers are evacuated, and expensive equipment is removed from the construction site.

OBO BETTERMANN BUSINESS

Lightning Protection When creating lightning protection, various standards must be taken into account

T

he most important European standards by which components for lightning protection are designed and manufactured by OBO Bettermann are the corresponding European standards, which are valid in Serbia: · IEC 62305-1:2006 Lightning protection—part 1: Basic principles · IEC 62305-1:2006 Lightning protection— part 2: Risk management · IEC 62305-1:2006 Lightning protection— part 3: Protection of objects and people · IEC 62305-1:2006 Lightning protection— part 4: Protection of electrical and electronic systems within structures The lightning protection offered by OBO complies fully with these standards. The task of a lightning protection system is to intercept all atmospheric discharges that could get into

the building. Discharges must be intercepted at the point of impact, must be diverted to the ground and electricity must be absorbed in the ground. The idea is to prevent thermal, mechanical or electrical effects that cause damage to objects that should be protected or pose a danger to humans through contact or step voltages in buildings.

As for the materials that are recommended for making external lightning protection lines, these are hot-dip galvanized steel, stainless steel, copper and aluminium.

Our recommendation is to use aluminium lightning protection for several reasons : · Best price · Round cross-section of conductors allowing easy manipulation · Can be combined with almost all other materials In Menden, OBO Bettermann headquarters

was established in 1995” BET” (technology centre for testing electromagnetic compatibility and lightning protection), which operates as an independent institute and is engaged in the development and testing of elements of an external lightning protection system, grounding materials, elements for potential equalization and surge arresters. When it comes to external lightning protection, their function is tested in accordance with DIN EN 50164-1, Requirements for connection components “. Only such a proven and tested components have found their place in the production program of OBO Bettermann.

Given that” BET” is an independent institute, these services are provided to anyone who wants to test the equipment in the field of a lightning protection or to test it for electromagnetic compatibility. ■

April

11