Real Estate 2021

FO C U S O N

REAL ESTATE IN SERBIA 2021

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R E A L E S TAT E I N S E R B I A

by Nevena Kuveljić

WE WANT THE COMPLETE MODERNIZATION OF SERBIA As one of the systematically largest ministries of the Government of the Republic of Serbia, the Ministry of Construction has a great responsibility in building a modern Serbia and its economic future

I N T E RV I E W

TO M I S L AV M O M I ROV I Ć Minister of Construction, Transport and Infrastructure

“T

he construction sector worked non-stop and regardless of the pan d e m i c . We h a v e managed to maintain the operational level in the construction industry while successfully implementing large-scale capital projects. Only through joint work and cooperation of the entire region under the auspices of various regional initiatives can we bring our economies closer and attract large investments to our countries. The goal of the ministry I helm is to increase the work pace this year as well.”

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The recent analyses have shown that the ministry you head plays a crucial role in maintaining the country's macroeconomic stability. How would you rate the current situation?

— Construction, and especially large state investments in building infrastructure, are of crucial importance for maintaining the country’s macroeconomic stability. Ongoing projects are the most significant projects in the last fifty years and we aim to complete the modernization of Serbia, which will be equally developed as the EU members, which is something

At the moment, close to 1,000 kilometres of highways and expressways are being designed and built

that we strive to become.

I would like to highlight the period from January to June 2021, which best demonstrate the intensity of works, where a total of 11,515 building permits were issued on the territory of Serbia, a 25% increase compared to the same period last year and 22% compared to the first half of 2019.

As of June this year, we have over 80,000 active construction sites.

At the moment, close to 1,000 kilometres of highways and expressways are being designed and built. The value of investments in transport infrastructure is around 23 billion euro, which represents almost half of Serbia's gross domestic product. We are also investing half a billion euros in the development of water transport and water corridors. These are investments in ports and navigation safety, as well as in improving our rivers, so they can be navigable throughout the year. Based on the results so far and the projections for the period until the end of this year, I am absolutely satisfied with the situation in the sector I am in charge of.

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What do large-scale infrastructure projects mean to Serbia in terms of connecting the region with Serbia and vice versa?

— Major infrastructure projects we have launched, including the Moravian Corridor, the Kuzmin Sremska Rača highway section, the Miloš Veliki highway, the future section of Corridor 11 from Požega to Boljare, on the border with Montenegro and the high-speed Belgrade-Budapest railroad, are just some of the projects that are important not only for connecting towns in Serbia but for the entire road grid and regional connections in the Balkans. The development of the regional transport network and the traffic links between the Western Balkan countries and the European Union is one of our priorities. The integration under the Mini Schengen initiative, import and economic growth of the entire region are in our strategic interest.

The Government of the Republic of Serbia and the ministry I represent are committed to upholding a policy without barriers, where there is an unhindered flow of people

and goods between the regional countries. We can achieve this only by building road and railway corridors, but also by investing in waterways and the reconstruction of ports.

We expect that the construction sector will maintain stable growth by the yearend because that would automatically imply stable growth of Serbia's GDP

The Belgrade-Novi Sad high-speed railroad, the Belgrade bypass, the Ruma-Šabac-Loznica section, the Fruška Gora corridor, the socalled Highway of Peace stretching from Niš to Priština… These are just some of the ongoing projects and those that have been announced. Realistically speaking, which of those projects will be completed first?

— You have listed just some of the most important projects we are currently working on. I would also like to add the Moravian Corridor, the construction of a bridge over the Sava River and the start of construction works on the Sremska Rača-Kuzmin section of the Belgrade-Sarajevo highway, as well as the Valjevo-Lajkovac expressway connecting Valjevo and Kolubara district with the Miloš Veliki highway. We must not forget the

large investments in the water sector where we will allocate additional funds to the Port of Prahovo and expanding the capacity of the Port of Bogojevo. We have also reconstructed the Djerdap I ship lock and made it more efficient, and we are preparing to overhaul the Djerdap II ship lock too.

All these investments will completely change the state of water transport in Serbia and the region.

According to the projections and devised plans, the first projects that we will have been completed by the end of this year are the Preljina to Požega section and Miloš Veliki highway, the latter being exceptionally important for the whole of Western Serbia.

By the end of the year, we will have completed the largest and most valuable project in Southeast Europe - the Belgrade-Novi Sad high-speed railroad - as part of the railway corridor from Belgrade to Budapest, where the Belgrade-Novi Sad commute will last only 30 minutes. Passengers will be transported by the latest Swiss high-speed trains.

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After talking to my associates, I get surprised quite often by the number of ongoing infrastructure projects that we are currently implementing.

Has the pandemic affected the real estate sector and how will the construction of the subway impact the (de)centralization of Belgrade?

— The coronavirus pandemic has definitely left its mark on the real estate sector. In March and April 2020, during the state of emergency, there was a decline in the sale of apartments in Belgrade and Serbia due to the limited movement of people. In mid-2020, after the state of emergency was abolished, real estate sales began to grow, but primarily in the house sector. On the other hand, according to the data collated by the State Bureau of Statistics, not a single apartment was sold in 20 cities and municipalities in Serbia in the first six months since the beginning of the state of emergency.

Today, the data show that buying a property on the outskirts of Belgrade is the most popular, and a lot of people are now interested in building houses, so there are many inquiries for appropriate construction locations.

Regarding the construction of the subway in Belgrade, I think there is no reason to fear even greater centralization. By building highways throughout Serbia, investing in airports outside Belgrade, such as Constantine the Great airport in Niš and reconstructing railway corridors, we are creating an opportunity for all Serbian cities to attract new investors and have new factories. We are building everywhere, not only in Belgrade, and most of the apartments we have built, to provide housing for security forces, are not in Belgrade. By building roads and railways, we create new jobs locally and we are all aware of how important it is to preserve smaller urban areas elsewhere in Serbia. During

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Construction was the main driving force behind Serbia's GDP growth in the first quarter of 2021

the pandemic, we became aware of the advantages of living in the countryside. In order to further preserve rural households, we need to continue to build a quality road and railway infrastructure wisely.

How much does the construction sector contribute to the national GDP and what results do you expect to see by the year-end?

— Construction was the main driving force behind Serbia's GDP growth in the first quarter of 2021.

This sector not only supports a whole range of construction companies but also employs a large number of workers of various professions. Two-thirds of the 1.7% GDP growth in the first quarter is attrib-

uted to the construction sector. The year-on-year growth rate of construction in the mentioned period was around 20 percent, and in the next, second, quarter, that growth will be 38.3 percent. These are record-breaking results if compared to the neighbouring countries that are forced to wait for foreign financial aid or tourists to save their fiscal year. The economic future and the well-being of all people in Serbia largely depend on the construction of quality roads, railways and navigable water corridors. We expect that the construction sector will maintain stable growth by the year-end because that would automatically imply stable growth of Serbia's GDP.

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R E A L E S TAT E I N S E R B I A

CONSTRUCTION HAS BEEN GROWING STEADILY The construction sector has again recorded a 20% increase in the value of construction work in the first quarter of 2021 compared to the same period last year

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f we were to list the activities in the construction sector and other economic activities with which this industry is directly or indirectly related, all the magazine pages would not be enough to present them in the right way. Even if we just listed roads, the list would never end.

Today, the construction industry of Serbia consists of over 11,000 companies that employ over 100,000 workers. According to the data collated by the State Statistical Office (SSO), the value of construction works performed in 2018 on the territory of the Republic of Serbia increased by 13.9 percent, compared to 2017.

In 2019, the value of performed construction works increased by 35% relative to the previous year 2018. After an almost 10% decline in 2020, the value of construction work went up by almost 20% in the first quarter of 2021 compared to the same period last year. The construction sector’s share in the gross domestic product of the Republic of Serbia in 2018 was 4.5% (which is 0.4 percent more than in 2017), while in 2019, it stood at over five percent. According to the SSO, this trend continued in the first quarter of 2021 too, when the year-on-year growth of gross

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I N T E RV I E W

I VA NA VULETIĆ Secretary of the Construction Association at the Chamber of Commerce and Industry of Serbia

In the last ten years, the total length of new highways in Serbia has grown by more than 400km

value added was the highest in the construction sector of all economic sectors, standing at 19.6 percent compared to the same quarter of the previous year. In the period from January to April 2021, the total number of issued building permits went up 30.8% relative to the same period last year. The number of issued permits for construction of buildings increased by 40.1%, while the number of issued permits for construction of other types of facilities went up by 5.2%.

We can easily conclude from these figures that construction has been growing year on year.

GREAT IMPORTANCE OF ROAD INFRASTRUCTURE Since the Serbian authorities have announced more investments, especially in infrastructure, we expect these positive trends in construction to continue. For example, according to the report compiled by the Fiscal Council from October

2019, following the completion of Corridor 10 and part of Corridor 11, Serbia now has highways that are about 900km long in total.

According to the data collated by the State Statistical Office, in 2006, Serbia had a total of 374km of highways, while in the last ten years, this number has increased by more than400 km of newly built highways. The impact of road infrastructure construction on the country's economic growth is immeasurable considering many factors and areas, whether we are talking about road construction or exploitation during which Serbian machinery, workforce and building materials were used. Improved infrastructure also facilitates business operations.

PROPOSALS FOR BETTER BUSINESS The most common topics we encountered in conversations with construction companies are numer-

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ous proposals for improving and enhancing business. In order for the market to be even better regulated and to improve the business environment in terms of safety of developers and contractors in the coming period, we need to improve control measures to combat unfair competition, encourage domestic companies to do business together, both in the country and abroad, to analyze issues regarding VAT collection, bank guarantees, etc. Also, subsidies or certain financial allocations for the purchase of new machinery and equipment would be of great help to companies, which was also discussed at the meeting held with the representatives of the construction industry, at the Ministry of Construction, Transport and Investments. Benefits related to providing better terms and conditions for housing loans for the purchase of new apartments, which are given in many countries, were implemented in our country last year. Namely, the National Bank of Serbia adopted a set of measures, which reduced the mandatory downpayment for new apartments, as well as regulations that facilitated the purchase of apartments under construction.

This approach, in addition to benefits for real estate buyers, also facilitates the development of the construction industry in the new housing segment.

ENERGY EFFICIENCY Of course, energy efficiency is an inevitable topic in today's world. The announced subsidies for citizens for the replacement of doors and windows are also a way to help the construction industry, and at the same time, to raise awareness of the inevitability of this approach in construction. According to the line Ministry, after the implementation of the new model for issuing building permits (so-called CEOP), the number of issued building permits has multiplied. According to construction companies, the aforemen-

tioned results could be improved in the coming period by establishing full digitalization of this segment.

Today, the construction industry of Serbia consists of over 11,000 companies that employ over 100,000 workers

PROBLEM WITH THE WORKFORCE The shortage and outflow of skilled workforce is a problem that the construction industry in the entire region has been facing for a long time. In Serbia, this problem is easily noticeable, especially considering that increased investments in the construction sector in the previous period also increased the demand for construction workers.

According to the SSO, a total of 104,075 construction workers were registered in Serbia in the first nine months of 2019, which is 9.8% more relative to the first nine months of 2018. Also according to the SSO data related to the construction sector, in the fourth quarter of 2021, 161,136 construction workers were registered, which is a 7% increase compared to the same period last year. In addition to the lack of skilled labour, the construction worker market also faces the problem of an insufficient number of students enrolled in vocational construction schools.

By including as many companies as possible in the dual education

system, students would be prepared to work as construction interns immediately after graduation, and given the increased demand for the workforce, there is certainly enough work in construction for them. Also, construction companies proposed that, with the help of subsidies, they could form in-house training and retraining centres for construction workers.

In addition to all the above, both children and parents need to be better informed about the educational profiles and employment opportunities in construction, when enrolling in high schools.

THE SUPPORT OF THE CHAMBER OF COMMERCE AND INDUSTRY OF SERBIA Through our Association, we strive to represent the best interests of companies, starting from providing support and answers to current issues, through initiating initiatives for changing regulations and participating in working groups in the line ministries. In 2019, our Construction Association, together with the Drywall Construction Group, published the book "Drywall Construction, Standardized Descriptions of Works, Calculation Rules and Standards", which will help developers to more precisely create job offers, and to improve their construction work by applying the rules given in the book. Also, in order to digitize the construction industry, we launched an initiative presenting opportunities for the electronic management of construction records. In cooperation with NALED, and as a result of the project for implementation of benefits relating to registration of seasonal workers, we formed a working group that will draft the Law on Employment Due to the Increased Work Volume in Certain Business Segments at the Ministry of Labour, Veteran and Social Affairs. We are also continuing to promote growth in the construction sector by connecting relevant stakeholders.

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BELGRADE WATERFRONT: THE PRIVILEGE OF EXTRAORDINARY LIFESTYLE

Photo: Predrag Vučković

Housing loans are also available for nonresidents, who can provide themselves with a smart investment and living space in the most sought-after location in Belgrade CLICK ON ICON

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elgrade residents and visitors would agree that the capital of Serbia has an incredible charm that is not easy to precisely define. Trying to portray Belgrade with the most beautiful words, Momo Kapor said a long time ago that there are just a few things left in Belgrade that he has not seen elsewhere. "Maybe only three: its rivers, sky, and the people.

The spirit of Belgrade is born from these three ancient elements", wellknown Serbian author wrote.

Celebrating these three elements, Belgrade Waterfront brings a whole new concept of living to the Serbian capital. From the first blueprint, this project has been thoughtfully planned as a comprehensive city quarter that provides everything you need within just a few minutes’ walk from your doorstep or even less. Life within this complex provides the privilege of experiencing Belgrade from a different perspective.

If you opt for apartments in BW Aurora and BW Arcadia, these privileges can be yours as early as this autumn, when the buildings will be

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CO R P O R AT E

The crown achievement of this project is Kula Belgrade – a magnificent, 168 metres high architectural masterpiece

completed. Located in the proximity of Sava Park and Sava Promenada, these two residential buildings can boast modern design, functionality and extraordinary views of Belgrade’s sunsets. In addition, life within Belgrade Waterfront offers amenities such as an underground garage, an inner courtyard, and a maintenance service that makes sure every part of the complex is as tidy as possible. For the highest quality of life, residents have at their disposal a concierge service, which will book transportation, tickets for various events, or schedule a medical examination on your behalf. Residents also have a la carte services such as babysitting, walking pets or watering plants while away.

The crown achievement of this project is Kula Belgrade – a magnificent, 168 metres high architectural masterpiece. Kula Belgrade will be a home to the St. Regis hotel and branded residences. St. Regis is a

well-known name for the utmost luxury, so the residents can expect world-class services and experience that has never been seen before in this city, county nor region. The top of Kula is reserved for observation deck with breathtaking views of the Belgrade skyline.

For everyone who decides to live in the most attractive part of Belgrade, the good news is that you can buy your dream home for as little as EUR 2,950 per square metre, including VAT, while the monthly installment starts at 499 euros, thanks to loans specially designed for Belgrade Waterfront. For the purchase of an apartment within the Belgrade Waterfront, a bank loan can be requested at an early construction stage. In addition, non-residents can also apply for a housing loan for an apartment in Belgrade Waterfront and provide themselves with a smart investment and living space in the most sought-after location in Belgrade..

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REAL ESTATE AS A FORM OF INVESTMENT Real estate rental prices have been stable for a long time, with significant price growth recorded in Novi Sad and Belgrade

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n June 2021, a total of 14,121 contracts relating to the sale of real estate were concluded in Serbia, according to data from the State Geodetic Authority. Most of them covered the sale of apartments. Most real estate, about 80%, was bought for cash. According to statistics, the greatest demand is for oneand-a-half-bedroom and smaller two-bedroom apartments, up to 50 square metres in size. These apartments can be used for living purposes, but they are also a great investment.

Although the demand for these apartments is high, there are still enough of them on the market. Of the slightly more than 37,000 apartments for sale in older buildings, as cited on the 4zida.rs website, 34% are apartments up to 50 square metres in size. Real estate developers are also keen to build as many apartments of this size because that the demand for them is strong.

According to the data published on the website 4zida.rs, Belgrade has just over 2,000 apartments for sale which size ranges from 40 to 50 square metres. It is interesting to note that their prices range from 15,000 euros, which is an average price for 40-square-me-

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COM M E N T

By

JA S M I NA GAV R I L OV I Ć D RA Ž I Ć 4zida.rs

Investing in real estate, in addition to providing a dose of security, is also a good source of income

tre apartments located in Padinska Skela or Brajevo, parts of suburban municipalities, to 245,000 euros, which is how much a twoand-a-half-bedroom apartment of 45 square metres on Kosančićev Venac costs.

If we look at the individual municipalities in Belgrade, the most affordable apartments are located in Čukarica, Rakovica, Palilula and certain parts of Zvezdara and Zemun. Here, apartments, ranging in size from 40 to 50 square metres, can be bought for an average of 50,000 euros. We can also find attractive 40- to -50-square-metre-apartments in Stari Grad, Vračar or Novi Beograd, which cost at least 60,000 euros.

AVERAGE REAL ESTATE RENTAL PRICE Belgrade, but also other larger cities, has great potential when it

comes to renting real estate. The highest prices are certainly in the capital, according to data from the real estate advertising site 4zida.rs . If we observe Belgrade as a whole, the average price of renting apartments are the following - one-bedroom 277 euros, two-bedroom 402 euros, three-bedroom 586 euros and four-bedroom 1032 euros per month. In Novi Sad, the average rental price is 193 euros per month for a one-bedroom apartment, 298 euros for a two-bedroom apartment, 429 euros for a three-bedroom apartment, and 718 euros for a four-bedroom apartment.

Niš, although being a university city and the centre of the southern part of Serbia, has significantly lower real estate rental prices, almost twice as low as Belgrade.

Thus, the average rental price for a one-bedroom apartment is 181 euros per month, 248 euros for a

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two-bedroom apartment, 354 euros for a three-bedroom apartment, and 519 euros for a four-bedroom apartment, the data published on 4zida.rs show.

THE RENTAL PRICE TREND Real estate rental prices have been stable for a long time, with significant price growth recorded in Novi Sad and Belgrade. During 2020, rental prices in larger cities fell to a lesser extent, but this trend lasted only a few months as a result of the coronavirus pandemic. Namely, due to our and other countries closing their borders, a large number of apartments were listed on the market, which were usually rented out to tourists for a short stay. As it was impossible to rent these apartments to tourists in the short term, their owners rented them out every month, which resulted in an increased number of properties for rent on the market.

Also, a large number of students returned to their hometowns during the quarantine months, and they either cancelled the apartments

they rented every month or the owners of apartments lowered the price of their monthly rent.

However, these changes in the rental market were short-term, and once the rental situation stabilized, the prices continued to grow in larger cities.

It is interesting to note that the prices of real estate, especially those for rent, are also growing in cities where the state has made some capital investments. We can see that better on the example of the real estate market in Kruševac and Zrenjanin. After the company entrusted with the construction of the Moravian Corridor arrived in Kruševac and after it employed a large number of people in a short period, it was almost impossible to find a property for rent in this city. A similar situation happened in Zrenjanin. After a foreign investor started building a large factory here and after the announcement that the road between Zrenjanin, Belgrade and Novi Sad will be improved, the prices of real estate for sale and rent in Zrenjanin almost doubled.

It is interesting to note that the prices of real estate, especially those for rent, are also growing in cities where the state has made some capital investments

INVESTING IN REAL ESTATE Real estate is a good way to invest. Most people, who want to be actively involved in renting, buy real estate in the city where they live, mostly for practical reasons. According to the profitability or purchase calculator on the site 4zida.rs, we can see that if we buy a property, which costs 65,000 euros, with a help of a 20-year-housing loan, where our monthly mortgage instalment would be around 278 euros, and the total loan would amount to 52,000 euros, the property in question would pay itself off in 15 years, providing we rent it out for 350 euros a month. Since, in this case, the monthly rent is higher than the monthly mortgage instalment, we could set the generate money aside or repay the loan earlier.

Investing in real estate, in addition to providing a dose of security, is also a good source of income.

Depending on personal desires and financial capacity, it is good to assess whether and to what extent we can commit ourselves to real estate, and depending on that, to choose ways of investing.

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R E A L E S TAT E I N S E R B I A

A YOUNG AND VERY SUCCESSFUL COMPANY

We are a relatively young company engaged in the development, management, and maintenance of commercial and industrial real estate, spanning more than 560,000 sqm for more than 300 clients CLICK ON ICON

CO R P O R AT E

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arera Property Management is a real estate investment company engaged in the acquisition, development, rental and management of commercial properties.

Although they are a young company, they have achieved success very early on. We talked with the company's General Manager, Danilo Pušonja, about how the coronavirus pandemic affected the real estate market, but also the company's results.

You were appointed General Manager of Marera Property Management late last year. How much has the COVID-induced crisis affected the sector in which you operate?

— Despite the COVID crisis, the activity on the commercial real estate market has been stable throughout the last year, with an even more substantial growth potential this year. In particular, the investment volumes in Serbia in 2020 exceeded those in 2019. For the construction activity, 2020 has been the most active year thus far in terms of modern commercial real estate delivery. Last year was further marked by an unprecedented 100,000 sqm of new office

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spaces delivered to the Belgrade market, with the total stock now amounting to almost 1 million sqm.

Moreover, we have witnessed an influx of new projects in the retail segment. Certainly, the industrial real estate segment is a commercial segment in Serbia that has flourished the most since the start of the COVID crisis. An additional 240,000 sqm was delivered to the market throughout 2020, with warehouses driving the development in Belgrade, and investors’ interest in manufacturing and logistics facilities continues to grow.

At Marera Property Management, last year was marked by rapid portfolio growth and operational success. We are a relatively young company engaged in the development, management, and maintenance of commercial and industrial real estate, spanning more than 560,000 sqm for more than 300 clients. The most renowned projects that we have developed, and are currently working on in the commercial real estate segment include the reconstruction of the Belgrade landmarks such as the Kalemegdan Business Centre, Palata Beograd (popularly known as Beogradjanka), and the

DA N I L O P UŠ O N JA General Manager of Marera Property Management doo

Our sister company, Marera Properties, is the fourth key player and the biggest office provider in the city centre

BIGZ building.

Additionally, in August of last year, we acquired 70% of GP Nikolic, a construction company that specializes in structural engineering and has decades of experience in infrastructural, commercial, and residential projects. Less than a year later, in July 2021, we acquired the full ownership of this company and have integrated it into our group under the name Marera Construction, a new division that allows us to additionally solidify our market position and become the only company in Serbia that has a fully integrated 360-degree-platform for development and management of commercial properties.

How would you rate the real estate sector in the first half of 2021? Did it experience a shift compared to last year?

— Currently, all market indicators are pointing to more positive developments. The investment volumes are expected to grow, and the industrial segment continues to forerun the biggest interest from investors. Regarding the office segment, it remains unsaturated in Belgrade, with the current office

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stock still being very limited. This is where we see a market opportunity, given that we have already positioned our sister company, Marera Properties, as the fourth key player and the biggest office provider in the city centre.

You have abundant experience working in the FMCG sector. What are the most important benefits you bring to the segment in which you currently work?

— Prior to joining Marera Property Management, I was the general manager and sales director at Apatin Brewery, a part of Molson Coors Beverage Company. Having spent a number of years in the FMCG sector, working in different countries in the region, as well as Russia, a transition of any sort is by no means unfamiliar to me.

What I perceive as an opportunity for professional development is the fact that Marera is the fastest-growing, or at the very least one of the fastest-growing companies in the Serbian market, with clearly defined and highly feasible ambitious plans. My contribution, along with a fresh, out-of-the-box business approach, is based on a decade and a half long experience in managing positions and extensive experience in people management. After many years of profes-

sional development, I still advocate that people skills are the main trait of a good manager.

The company you manage provides a wide range of asset, facility and construction management services. What are the company’s development plans?

— We are well diversified across four business segments - asset holder, integrated property management, construction project management, and flexible office space leasing. We are the only company in the Serbian market that offers the full scope of in-house services in asset and property management. Our team of experts devises tailor-made investment strategies and develops strong portfolios that create long-term results and bring sustainable value to investors. With the application of all proven legal and administrative practices, our tenant management team guarantees continuous sourcing of new tenants and outstanding customer relations with the existing ones.

It seems that the pandemic is coming to an end. What do you think will be the main directions of development of the real estate sector in the coming period?

— As a result-driven and strategical-

ly oriented company, we carefully evaluate all market opportunities and assess the risk of programmes and plans. Based on this, I think that the current positive market outlook will continue and lead to further progress and new opportunities across all commercial real estate segments. Challenges are a reflection of the overall economic development, namely, the understanding and the financial potential of local companies for the implementation of full-scale facility management (FM) services. Currently, there is a void in comprehending the benefits of integrating the FM services in the core business practices. When observing the developed Western economies, we can see that the companies that incorporate full-scale FM services in their core operations have a positive impact on their business results. Regarding the Serbian market, we currently perceive this as the biggest challenge, but simultaneously as an immense growth opportunity. We will certainly continue to employ the best practices in our company in order to stay on the right track of becoming the market leader in this segment and by carefully analyzing and seizing opportunities, we will continue to reinforce our market position.

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HOW DID THE CORONAVIRUS PANDEMIC AFFECT THE REAL ESTATE MARKET? Real estate market is one of the better indicators of a country's economy, where, to get a broader picture, we must not only look at the real estate market in capital or larger cities, but in almost all places

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n Serbia, the picture of the real estate market is different in Belgrade, Niš and Kragujevac, for instance, but also in larger tourist centers like Zlatibor and Kopaonik, compared to smaller towns.

So, when we talk about the records that are set year-onyear on the Serbian real estate market, we actually mean the real estate market in larger cities. Record-breaking numbers in these cities are primarily related to the growth of real estate prices, the amount individual properties were sold for and also to the total amount of money exchanging hands on the

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A N A LY T I CS

By

JA S M I NA GAV R I L OV I Ć D RA Ž I Ć 4zida.rs

real estate market, which, regardless of the pandemic, has been growing on an annual basis.

It is also interesting to note that the number of issued building permits, especially those for the construction of residential buildings, is also another indicator that illustrates the Serbian real estate market. This number has also recorded a significant growth, especially in the first half of 2021.

CONSTRUCTION ACTIVITY IN SERBIA HAS NEVER BEEN THIS STRONG If we take, for example, the year 2020 and compare it to 2019, there

was a significant increase in the number of sales of construction land. In 2020, 18.13% of the total number of realized sales contracts for all real estate related to the purchase and sale of construction land. In 2019, that percentage was 14.38%, according to the data of the State Geodetic Authority. Based on this, we can see that, as far as the sale of construction land is concerned, growth was also recorded in 2020 despite the pandemic which created a lot of uncertainty on the real estate market with it.

Not only the number of purchased construction land plots grew, but also the number of sub-

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Newly built apartments

Average advertised price

Average selling price

Belgrade

2,329 euros/sqm

1,981 euros/sqm

Novi Sad

1,575 euros/sqm

1,302 euros/sqm

Niš

1,481 euros/sqm

982 euros/sqm

Subotica

1,087 euros/sqm

1,011 euros/sqm

Kragujevac

1,074 euros/sqm

823 euros/sqm

Older apartments

Average advertised price

Average selling price

Belgrade

1,801 euros/sqm

1,459 euros/sqm

Novi Sad

1,516 euros/sqm

1,255 euros/sqm

Niš

980 euros/sqm

831 euros/sqm

Kragujevac

839 euros/sqm

772 euros/sqm

Subotica

759 euros/sqm

604 euros/sqm

Novi Beograd

1,838

1,900

Zemun

1,550

1,550

Palilula

1,315

1,422

Čukarica

1,506

1,471

Rakovica

1,090

1,205

mitted applications for building permits, especially for residential buildings. If we compare April 2019 to April 2021, we can see that the number of applications for newly built apartments almost doubled (data collated by the State Geodetic Authority).

A larger number of newly built facilities, in addition to bigger supply, which is still lower than the demand, will directly affect the prices of properties, not only of new construction, but also of old construction.

HOW NEW CONSTRUCTION DICTATES THE PRICE OF OLD CONSTRUCTION In the last few years, we have noticed a trend whereby newly built facilities, especially those that are part of larger residential complexes or around which other facilities are being built (e.g. shopping malls, office buildings, etc.), have significantly boosted the price of old buildings in nearby neighbourhoods. This is best seen in the example of the Belgrade municipality of Savski Venac, which surpassed the central Belgrade municipality of Stari Grad in terms of the price per square metre of apartments in both old and new buildings, after the apartments in the Belgrade Waterfront development

(in Savski Venac) went up for sale.

The average advertised price of an apartment in a new building in the municipality of Novi Beograd is 2,329 euros/sqm, and the average sale price is 1,981 euros/sqm, according to data collated by the real estate website 4zida.rs . This means that new apartments are sold on average for about 15% lower price than the advertised one. According to real estate development companies, the largest number of buyers of new apartments decides to buy in the initial, so-called "gray phase" of construction, because, in this way, the price is significantly lower

In the coming period, we can expect an increase in prices and the growth of total turnover on the Serbian real estate market

and they have the right to decide about certain elements that will feature in their new home.

If we observe data for individual municipalities, we can notice that new apartments in the municipality of Savski Venac have the highest price, with the average selling price standing at 3,033 euros/sqm, according to data from the State Geodetic Authority and 4zida.rs.

In the municipality of Stari Grad, the average selling price of new apartments is 2,626 euros/sqm.

It is interesting to note that Novi Beograd, with the average selling price of new apartments of 2,205 euros/sqm) has surpassed the municipality of Vračar (2,188 euros/ sqm) in recent months, mostly thanks to the large residential and business complexes that were built there. Compared to the prices in the central city municipalities, new apartments in the municipalities of Rakovica and Čukarica have the lowest price.

The average selling price of apartments in new buildings in other major cities in Serbia ranges from 1,302 euros/sqm in Novi Sad, 1,011 euros/sqm in Subotica, 982 euros/sqm in Niš and 823 euros/ sqm in Kragujevac. It is interesting to note that real estate developers in Subotica are the least ready to lower the

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Geodetic Authority’s data, is 1,459 euros/sqm. Based on this, we can see that the selling prices of real estate are about 20% lower than the advertised ones.

In other larger cities in Serbia, such as Novi Sad, Niš and Subotica, the difference between the advertised and selling price of apartments in old buildings also ranges from 15 to 20 percent, with the smallest gap recorded in Niš and the highest in Subotica.

price of their apartments, while in Niš, the difference between the advertised and selling price of a newly built apartment is as much as 30%. These figures tell us a lot about the range of the offer of new apartments in some cities.

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WHAT ABOUT PRICES OF OLDER APARTMENTS? If we look at Belgrade as a whole, the average advertised price of apartments in old buildings stands at 1,801 euros/sqm, and the average selling price, according to the State

The number of issued building permits is also another indicator that illustrates the Serbian real estate market

WHAT TO EXPECT NEXT ON THE REAL ESTATE MARKET? If we could conclude anything about the real estate market based on the data from 2020 and the first few months of 2021, the real estate market in Serbia, especially in larger cities, is extremely flexible. In June 2021, a total of 14,121 real estate purchase and sale agreements were concluded in Serbia, and this represents an increase of 16% compared to June 2020, and a 46.5% increase relative to June 2019. After the pandemic’s strong impact, the real estate market continued its rapid growth.

A large number of issued building permits, especially for residential buildings, indicates that even more will be built in larger cities, and that new construction will almost certainly dictate the price of old construction. Hence, in the coming period, we can expect an increase in prices and the growth of total turnover on the Serbian real estate market.

Sales of older apartments

Q1 of 2021 (in € per sqm)

Q2 of 2021 (in € per sqm)

Stari Grad

2,625

2,625

Savski Venac

2,789

2,556

Vračar

2,361

2,394

Zvezdara

1,725

1,777

Voždovac

1,667

1,754

Novi Beograd

1,838

1,900

Zemun

1,550

1,550

Palilula

1,315

1,422

Čukarica

1,506

1,471

Rakovica

1,090

1,205

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ZEPTER AS A GUARANTEE OF TOP QUALITY Đorđe Rašić, a member of the Zepter Group Executive Board, talks about the company's successes, its innovative projects, plans and highlights all the advantages of the Zepterme complex in Vrnjačka Banja, which will give its tenants a unique experience of enjoyment and relaxation CLICK ON ICON

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epter International was founded in 1986 by one of our most reputable businessmen, Philip Zepter, whose name has long been synonymous with worldwide success. As a visionary who refuses to accept obstacles, he has brought his company to the very top but still has innovative ideas and goals.

For over three and a half decades, the Zepter Group has not stopped growing, developing and opening a new door to the future with each new step. Thus, guided by its philosophy – “For a better and healthier life“ - Zepter Real Estate was founded in 2008. We talked with Đorđe Rašić, the company's executive board member, about the company's business, realized projects and also plans, particularly the exclusive Zepterme complex in Vrnjačka Banja, of which the company is quite proud due to its unique concept and unparalleled quality.

Why have your clients chosen Zepter Real Estate?

— Zepter has been around for three decades, operates in over 60 countries around the world and has an enviable reputation thanks to in-

Đ O R Đ E RA Š I Ć A member of the Zepter Group Executive Board

Zepterme stands out with its top quality and exceptional materials used in construction

novative products and magnificent facilities. In Serbia, Zepter Real Estate is part of the Zepter Group and is developing one of the largest residential, sales, office and industrial portfolios in our country, which currently consists of over 380,000 square meters of space and 1,000,000 square metres of development projects. Therefore, we have earned the trust of our clients, to whom we pay our full attention.

Which of your projects in Serbia would you like to single out?

— We are especially proud of the Zepterme complex in Vrnjačka Banja, which construction will be completed in May 2022.

Spanning 30,000 square meters, it will include contemporary and fully equipped hotel apartments, which is a new and unique concept in our market, and as it is located on the Promenade in Vrnjačka Banja, the apartment owners will be able to enjoy all the attractions of this beautiful tourist destination.

What makes the Zepterme complex stand out?

— Zepterme stands out with its top quality and exceptional ma-

terials used in construction. Our customers get an apartment and everything that they need for daily life and relaxation in one go. The novelty is that the beds in Zepterme will come equipped with the Quanomed mattresses made of 100% natural latex and lined with cashmere and silver, which guarantees a deep rest. Furthermore, each unit will have a separate air conditioner unit, while the complex will also have a heliport on its roof.

Who are luxury Zepterme apartments intended for?

— I like to say that they are intended for everyone. Our motto is – „In favour of life, rest and enjoyment“. Their owners will be able to use the spa centre, spanning over 2,000 square metres at very affordable prices. There is also a shopping centre with 22 shops on the ground floor.

What is your next step in Serbia?

— Given the fact that spa and mountain tourism is constantly developing, the next steps will certainly be taken in that direction. The next important project will be a hotel on the main square in Banja Luka that will cover 21,000 square metres.

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A COMPANY THAT KNOWS NO BARRIERS Only strong companies could properly handle last year. We succeeded in that. We had three active construction sites and completed all three facilities before the set deadlines

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elta Real Estate is a company that knows no obstacles. The greater the challenges, the more unique and innovative Delta Real Estate's solutions are. During the coronavirus pandemic, they had three active construction sites with all three construction projects implemented before the set deadlines. The company's every move is done wisely and bravely. They have been leasing real estate when all other companies were not even thinking about expansion. Since Delta Real Estate Group is one of the leading regional companies, we spoke with its design director, Ivana Letić about the company's successes and unique solutions.

Delta Planet Niš opened on April 22 and has since become a real city attraction. How challenging was it to work on this project?

— It was very challenging. On the one hand, Delta Planet Niš's location is exceptional as it is situated in the area close to the town centre which is densely populated and which carries the fantastic potential for any public building and especially for a shopping mall that prospers in such an environment.

On the other hand, the land plot on which Delta Planet Niš was built has a very unusual shape with rather dificult access and visibility to the main roads. The idea to have the

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I VA NA L E T I Ć Design Director at Delta Real Estate d.o.o.

Working hard on new large-scale, complex projects implemented

by Delta Real Estate will surely bring new value to the real estate sector

building accented from the background was achieved by constructing an unusual 12-metre-overhang above the main entrance and an authentic facade, which was inspired

by Serbian kilims and a tangram which is Delta's symbol. We finished the entire project during the coronavirus pandemic. Our team achieved an incredible feat and we officially opened before the set deadline.

You have also made the entire conceptual design for the project in Banja Luka. What were the biggest challenges there?

— The biggest challenge in Banja Luka was the speed with which everything had to be designed and built. The concept for Banja Luka was done in 2-3 weeks, while the entire project obtained permits in 3 months, which is an incredible undertaking for the 65,000sqm facility. Regardless of such a quick pace, thanks to the architectural solutions, we have managed to overcome the most unfavourable feature for buildings of this type, i.e. a long, low and monotonous facade. We found the solution through playing with form and materialization that reflect differently in the sun, which created additional dimension of the building.

The interior of this building features a unique floor - epoxy terrazzo - which after two years since the opening, is still one-of-a-kind in the region and beyond.

How innovative are Delta Planet facilities in Niš and Banja Luka?

— In the broadest sense, both interiors are extremely modern and dynamic, resting on the basic idea of interpreting movement and perpetual motion, and having continuous fluid lines that have no beginning and no end, which encourages visitors to explore and discover the space. Throughout public space are so-called Instaworthy places/ zones, ideal for photographing, which meet the needs of younger audiences. Foodcourt and break zones are a more layered variety of spaces where people can work on their laptops, charge their phones or just have coffee and relax. Apart from architecture, there are also our marketing sectors organising various events in the building itself, which boosts attendance and interest of visitors.

New large-scale, complex projects implemented by Delta Real Estate will surely bring new value to the real estate sector.

How do you assess and decide on locations for such large and very demanding buildings?

— There are many factors to consider and a number of experts from our company, coming from different sectors, are involved in making these decisions. In terms of architecture, there must be a strong urban context and the proximity of complementary purposes such

R E A L E S TAT E I N S E R B I A

as housing and business. Both locations - Delta Planet Banja Luka and Niš – are places where people socialize, finish all daily errands and then have fun and relax.

Does each project have its own peculiarities?

— Absolutely! But no matter where our projects are implemented, top-notch design is a must even when analyses say otherwise. Delta Planet shopping malls are designed and built to have features of shopping malls in far larger cities. One of our American consultants said to us in Banja Luka: "My colleagues cannot believe that such a high level design and quality shopping mall exists in a town of this size and the Balkans." Above all, we treat every city and country that we bring our projects to with great respect. Our three basic criteria are international architecture practice level od design, implementation of something characteristic for place where we are coming and finally to integrate a part of our own identity in it. Sometimes that is the hardest thing to do in ,,your town,,.The Indigo Hotel in Knez Mihajlova Street is the best example of this, where we were eager to find a design expression that speaks of Belgrade differently from all other hotels in the city while meeting the strict aesthetic criteria of the IHG Group.

es for you personally this year?

— Working hard on new largescale, complex projects implemented by Delta Real Estate that will surely bring new value to the real estate sector. That is expected considering that Delta Real Estate is the company that brought to this

market first shopping mall, the first modern apartment block and IHG hotels. In terms of this year's challenges, I have to single out the Sava Centre, as a building of exceptional importance for Delta as well as for the city of Belgrade and beyond.

This building needs serious and complex reconstruction. The concept, which we developed in consultation with experts from the congress and conference sector and the Institute for the Protection of Monuments, strikes a balance between existing and new. The Sava Centre’s conference-centred purpose will re-position the Centre on the regional map in the most contemporary way, as will its commercial and business activities which, in the past, have proven to be an inevitable and integral part of the success and sustainability of this facility. We will keep the distinctive exterior, while the interior will combine existing elements and solutions that have proven to be timeless, and new forms, with the necessary innovations in terms of safety, comfort, technology, offer and visual experience. With the support of city institutions, we expect to start working on the Sava Centre this year.

Could you assess the sector in which you operate during the first half of 2021? Has there been a shift compared to last year?

— Yes, there has, even though the beginning of this year was marked by great work restrictions. Only strong companies could properly handle last year. We succeeded in that. We had three active construction sites and completed all three facilities before the set deadlines. We have been leasing spaces when major part of market stopped expansion.

What will be the biggest challeng-

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R E A L E S TAT E I N S E R B I A

A N A LY T I CS

WHAT DID THE CORONAVIRUS BRING TO THE REAL ESTATE MARKET? The year 2020 was marked by a state of emergency, remote work and learning, and unprecedented restrictions in the work and movement of people. The good news is that it's all behind us. But the crisis has affected the behaviour of real estate market participants

W

hat has changed and what has the crisis brought on? What are the new behaviours and what has happened to the real estate market trends? The previous year was mostly known for a drastic drop in demand for short stay apartments which is only logical given the limited movement of people which caused a decline in this segment.

A slightly smaller decline was felt in the classic rental segment.

Some landlords sympathized with

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their tenants and the financial difficulties they had due to the pandemic so they skipped collecting monthly rents for a while. What certainly marked last year was the unusually good sale of apartments, both in the old and in the new buildings, as well as the huge demand for houses and land plots.

Bearing all of the aforementioned in mind, we can conclude that the construction and real estate sector has held up well, i.e. it is still holding up well. While in other sectors there has been a

The rental market fared somewhat worse, first when it comes to business premises, and then in apartments

significant decline in activity, according to experts, in 2020, this sector recorded a 4.8% decline.

SUPPORT FOR THE PURCHASE OF APARTMENTS Shortly after the beginning of the pandemic, with the declaration of a state of emergency, the real estate market came to a halt in terms of sales and rentals. Prices were stable, but the offers of apartments for sale and rent dropped drastically because people's movement was restricted, and people's fear of the new situation was predominant.

The market completely revived with the first easing of measures.

In order to support the purchase of apartments, the National Bank of Serbia has made a number of recommendations for the purchase of apartments in new buildings, and one of them is for banks to accept the 10% downpayment instead of the standard 20%. The state authorities also helped those individuals who already had housing loans by granting moratoriums on the payment of existing loans.

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Conditions for payment of housing loans were more relaxed, primarily through banks granting a longer repayment period.

Banks were allowed to offer relief in the form of extending the repayment period of housing loans for a maximum of five years this year as well. There is also a measure regarding the purchase of apartments in new buildings, whereby banks will approve mortgages for apartments that have been completed up to 60%.

DEMAND FOR COTTAGES Another thing that marked last year was the increased demand for cottages and houses. Considering the isolation, disabled travel and movement and remote work home, houses were in high demand, whether for rent or sale. Land plots, cottages, tiny houses…. It didn’t matter, as long as the house was located just outside the city. The demand for houses and cottages has increased, both for rent and for sale, as well as for land plots. It is interesting to note that the huge jump in demand did not cause a rise in prices to the same extent, but there has been a price correction, especially for houses in the vicinity of Belgrade and Novi Sad, where demand was the highest. This trend is still going on but is less intense.

Still, the demand remains high.

RENTING APARTMENTS The rental market fared somewhat worse, first when it comes to business premises, and then in apartments. Students returned to their hometowns because, during the isolation, they could attend the classes online and there were no tourists, so the demand for apartments was low. However, as it turned out, prices did not fall, i.e. they fell minimally in the segment of more expensive apartments because it took longer time for such a property to find a tenant, while, for example, before the epidemic, a luxury apartment in Novi Beograd were rented out as soon as they

were advertised. Due to the epidemiological situation, apartment owners were more careful in choosing the tenants. As it turned out, the coronavirus-induced crisis had the biggest impact on people who rented apartments for short stays.

The situation improved during the summer thanks to the tourists from Serbia because most of them did not spend their summers abroad due to the pandemic.

What certainly marked last year was the unusually good sale of apartments, both in the old and in the new buildings, as well as the huge demand for houses and land plots

REAL ESTATE KEEPING ITS PRICE At the beginning of the coronavirus-induced crisis, the average citizen, who had not yet become a homeowner, was thinking that, due to the state of emergency, real estate prices would finally start falling. Although this sounds logical, the practice has inexorably shown that the real estate sector is extremely durable and rigid, hence, there has been no drop in prices. Supply is still small compared to demand.

According to the SZS report, the average price of newly built apartments in the Republic of Serbia in the second half of 2020 amounted to 166,211 dinars or 1,408 euro per square metre. The prices of apartments in the observed period

ranged from 55,893 dinars (474 euro) per month in Smederevska Palanka to 399,587 dinars (3,390 euro) in Belgrade municipality of Savski Venac.

Observed by municipalities, the highest prices of newly built apartments were recorded in Belgrade municipalities, where the average price in urban areas was 236,689 dinars (2,005 euro per square metre). In addition to the Belgrade municipalities, Čajetina and Vrnjačka Banja, towns popular with tourists, stood out with their high prices, as did the towns of Novi Sad, Kragujevac and Indjija, and two municipalities in Niš (Mediana and Palilula). The average size of a newly built apartment, sold in the second half of 2020, was 55 sqm.

INVESTMENTS IN THE CONSTRUCTION SECTOR The proof that the pandemic did not disrupt the construction sector can also be found in the number of registered apartments for construction. Last year, more than 116,000 applications for building permits were submitted in Serbia, an 8% increase relative to 2019.

According to the data collated by the National Alliance for Local and Economic Development (NALED), Kragujevac is among the most successful cities in Serbia in terms of issuing building permits in 2020, the Radio-Television of Kragujevac (RTK) reported. According to NALED’s data, apart from Kragujevac, Sremska Mitrovica, Novi Sad, Sombor and Šabac were also the most successful cities in issuing building permits in 2020.

The same analysis shows that the pandemic did not stop construction in Serbia, and that, in 2020, eight percent more applications for building permits were submitted than in 2019. The situation did not change significantly compared to two years ago, nor when it comes to the value of new construction works. The difference between 2021 and 2019 is in construction locations.

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RETAIL PARKS - THE FIRST OPTION DURING THE PANDEMIC

The Novaston Platform continues to develop the retail park concept – the first retail park in Pirot to be opened soon

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n September, Pirot will get the first retail park - the PULS Shopping Park - and thus join the group of cities in Serbia that provide shoppers with a special shopping experience in open-air shopping malls. This is one of the very few shopping malls that is being developed by a domestic company - AB MARKET PIROT, which was formed by PD Agomarket from Kragujevac and PD Borjana from Pirot. The Novaston platform, which comprises Novaston Asset Management, Novaston Project Management and Novaston Marketing Consultancy, participates in the entire process from project design to realization and promotion. The GIA Company from Belgrade is the main contractor while the facility was designed by North Engineering, based in Subotica.

"The PULSE SHOPPING PARK Pirot will have a shopping area spanning close to 8,000 square meters and more than 100 parking spaces. There will be plenty of domestic and international brands on offer here while one of the biggest supermarket chains, Lidl, is near the retail park. Our leasing team worked hard on renting the premises and as a result, we have managed to bring well-known national and international brands to

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The Novaston Platform is already widely recognized as a leader in the development and management of shopping centres and retail parks

Pirot. After the official opening, we be in charge of keeping track of the operations of the retail park’s tenants, meeting their needs and coordinating activities with them daily, which will certainly be a challenge for all of us, given that each city, in this case, Pirot, is different," said Olga Vlahović, leasing manager at Novaston.

“Our entire technical team was in charge of project management from the very beginning and development, starting with finding a conceptual solution, proposing technical solutions, defining implementation models, and the demarcation of the shell&core scope and fit-out work phases, to defining the implementation schedule, communicating with relevant institutions, providing professional supervision and obtaining a use permit. At the same time, we have been coordinating activities with the tenants, which included the formation of an initial base for contracting and drafting projects, coordination between tenants and the team in charge of designing and building the facility and organizing the handover of the premises", explains Jelena Jolović, project manager at Novaston.

The new open-air shopping centre in Pirot shows yet again that the retail sector has shown great flexibility and resilience despite

being one of the first economic sectors to be affected by the pandemic. In our country, these open-air shopping centres have been adhering to the epidemiological measures most of the time, unlike the indoor shopping malls which had to close their doors or implement greater restrictions for shoppers. The main characteristics of business flexibility during the pandemic were quick responses to the requirements of tenants as the main partners in the operations of the investment real estate sector and meeting specific goals for maintaining long-term business operations.

"Our platform is already widely recognized as a leader in the development and management of shopping centres and retail parks. We are currently in the middle of developing yet another retail park in the vicinity of Belgrade called the Ava Shopping Park, located next to Ikea. The process of concluding long-term lease agreements is nearly done and construction works have begun. We expect the Ava Shopping Park to open next year. As expected, this shopping destination will be very popular, while the retail concepts of Ikea Store and Shopping Park will benefit from their business synergy," says the CEO of the Novaston Platform, Mia Zečević.

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NEW PROJECT FOR THE NEW ERA The Jadran construction company, based in Belgrade, has been entrusted construction of a new Justice Palace in Novi Sad. The project is funded by the Delegation of the European Union to the Republic of Serbia

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panning over 9,000 square meters, six floors and two underground levels, functional space with new courtrooms and offices - this is what the new Justice Palace in Novi Sad will look like, which construction will start in a few days. The new facility will welcome about 250 employees in two years' time. It was the Jadran construction company from Belgrade that won the trust of the developer - the Delegation of the European Union to the Republic of Serbia – and was chosen as the main contractor.

This company has been operating in Serbia with great success for seven decades and is one of the oldest construction companies in the country. Once known for its finishing works in construction and anti-corrosion protection, Jadran has positioned itself on the market as a general contractor, managing projects from the contracting phase to the finish. „The constant expansion of our portfolio of services is an important part of our long-term strategy and exponential growth, and in order to achieve this goal, we have

constantly improved both professionally and technically. Of course, the pandemic is behind us, during which the safety of our employees was our priority, but at the same time, we remained consistent with implementing our development strategy. The opportunity to be the main contractor on the construction of the new Justice Palace is the reward for our hard work because this project marks a new era in our company's operations,“ says Nikola Malbaša, General Manager of Jadran.

The construction of this facility is part of the IPA 2017 project, commissioned by the European Union, which is represented by the Delegation of the European Union to the Republic of Serbia. The Ministry of Justice will use the facility. „The net size of the building is close to 9,000 square metres, while the net size of the ground floor is 626 square metres. The facility will also have two underground levels with 53 parking spaces. In order to successfully respond to all challenges, about 150 of our colleagues, engineers of all professions, fitters and craftsmen of various profiles will work on the

Under the slogan "Building the future, preserving tradition", the company continues to grow and work on capital projects

project,“ explains Sanja Pauković, head of the Justice Palace construction project.

T h e J a d r a n co n s t r u c t i o n company Jadran has implemented a total of 15,000 projects during seven decades of doing business in Serbia, but also in Russia, Egypt, Kuwait, Algeria, etc. Under the slogan "Building the future, preserving tradition", the company continues to grow and work on capital projects. The construction of the Nikola Tesla elementary school in the Belgrade neighbourhood of Leštane, which can accommodate more than 1,000 students, is one of the company's most important projects. „The finishing works on the construction of a business facility in downtown Belgrade are underway, as well as on the construction of a new gym at the Anton Skala Elementary School in Belgrade. We are very proud that this project, which envisages overhaul and adaptation of 24 facilities on the territory of Serbia, was done in cooperation with the Delegation of the European Union to the Republic of Serbia,“ concludes Nikola Malbaša, General Manager of Jadran.

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DRASTIC INCREASE IN APARTMENT PRICES IN BELGRADE

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verall, observing the entire city of Belgrade, research shows that the prices of apartments for sale jumped by about 21.1%.

The price range in the Serbian capital is quite wide. For instance, the prices of new apartments range from EUR 1,500 to 8,000 per square metre. There are still properties which price corresponds to the general economic situation, but there are also many buyers who are able to buy ex-

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pensive apartments.

The change in prices of real estate is quite noticeable in almost all parts of Belgrade and properties have become more expensive, particularly in Zemun, Zvezdara and Voždovac, as well as on the outskirts of Belgrade such as Grocka, Sopot, Surčin and Mladenovac.

In regard to the most attractive city municipalities in terms of real estate, such as Stari Grad, Savski Venac, Vračar, Voždovac

The changes brought about by the global pandemic over the past year and a half have not bypassed the dynamic real estate market in Serbia. Still, the drastic rise in real estate prices in Belgrade came as a big surprise and Novi Beograd, a square metre of residential properties in these areas is still far more expensive on the outskirts of Belgrade, so the average price per square metre of an apartment in these municipalities ranges from EUR 1,750 to EUR 2,680.5. On the other hand, if you are searching for real estate that is more affordable, the prices of apartments in Barajevo, Mladenovac, Obrenovac , Lazarevac and Grocka range from EUR 543.48 to EUR 950 per square metre.

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INVESTING IN REAL ESTATE IS THE ONLY SAFE INVESTMENT E RV I N PA ŠA N OV I Ć Director of Adventis Real Estate

In the last 10 years, we transformed Adventis REM into a recognizable brand, synonymous with expeditious, quality and lucrative service to our clients' and our satisfaction

T

his year, the Adventis Real Estate Company is celebrating a significant jubilee - a decade of a successful business. We spoke with the director of Adventis RE and one of the most renowned property and capital evaluation, investment banking, real estate brokerage and real estate experts, Ervin Pašanović, about the company's ten-yearlong development path, changes in the real estate market during that time and what awaits the real estate sector in the future.

This year, your company is celebrating its 10th anniversary. What changed in Advetnis Real Estate Management and on real estate market in the last 10 years?

— When we came up with the idea to open a company in Serbia that will deal with real estate in the broadest sense, we had no idea about changes that would happen in the next ten years. Legal security in real estate transactions and renting was at an absolute minimum.

There were very few trained corporate agents, real estate agencies did their business mostly in apartments, and for most real estate brokers this was a second job and they had no responsibility towards clients and the state. We decided to set new standards, got the franchise of the world's largest real estate chain, developed a property and capital valuation department and trained a lot of now top professionals.

The first two years were extremely difficult, crisis-ridden, when transactions fell to their lowest ebb. We used that period to organize ourselves professionally and help pass a set of laws and bylaws that improved the entire profession in every sense. First, through the Real Estate Cluster of Serbia,

we participated in the adoption of the Law on Real Estate Brokers, which resulted in a high level of professionalism and legal security for all parties in real estate.

Through the Association of Appraisers of Serbia, we participated in the adoption of the law on appraisers, so along with the law on notaries public, networking of the Libra real estate transactions programme for real estate transactions and digitization of cadastre services, we helped this profession to increase the number of transactions even during the COVID-19 pandemic. In the last 10 years, we transformed Adventis REM into a recognizable brand, synonymous with expeditious, quality and lucrative service to our clients and our satisfaction.

There is a huge difference between signing a contract and providing a service today compared to 10 years ago. Agents act corporately, clients are educated and spoiled and services are top-notch. It is wonderful to be a part of the real estate market in every sense. In the next ten years, we expect the growth to be as strong as it is today.

good neighbourhood, parking lots, restaurants, schools, kindergartens, ambulances, playgrounds, shops, all in one apartment complex. The sustainable community bloc system has proven to be the most popular and the best. That is why the concept of Novi Beograd was exhibited at New York's MOMA a couple of years ago.

The current real estate prices are the highest in the last 30 years and the demand is constant. Belgrade is a brand new city now.

How would you rate the current situation in the real estate market in Serbia and the world?

— The real estate market in Serbia is one of the strongest in this part of the world. After reading many analyzes, my conclusions are that the real estate market has become a capital market and that it has been empirically shown that investing in real estate is the only safe investment. I would say that today's Belgrade is similar to Athens, slowly reaching a population of 2 million, developing subway lines and the like.

Customers are looking for top service, a

You are a real estate market leader and the recipient of the Captain Miša Anastasijević Award for being the best. How did you manage to reach and maintain that position?

— We proudly maintain our top position by constantly improving ourselves and the company. We follow trends, actively participate in improving conditions in the real estate market and strive to improve the entire industry. We try to make the impossible possible. This whole philosophy and business approach are embodied in our slogan – „Moving immovables!“.

You are a member of domestic and international professional associations. Tell us something about your international engagement. What does it entail?

— I am a member of many professional associations, from the Real Estate Cluster, the Association of Appraisers of Serbia, AmCham to the Union of Employers, the Chamber of Commerce, the National Association of Realtors, etc. My international engagement implies exchanging experiences and giving lectures to promote our country and the market by bringing in new investments and facilitating further development.

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REAL ESTATE MARKET IN THE YEAR OF PANDEMIC When we talk about the real estate market in the light of last year's events and the pandemic’s impact, it turned out that the market is still not so sensitive to external influences. Despite the oscillations in the first half of 2020, recovery started in all segments as early as June, and intensified activities continued until the end of the year.

MARKET

T

he residential real estate market recovered after a temporary stagnation in March and April last year, and the volume of transactions reached the level from late 2019. The situation was similar in the case of retail real estate, where shopping malls were more affected by restrictive measures, while on the other hand, activities in retail parks, thanks to a different concept and architectural solutions of the facilities themselves, were as usual.

The opening of new shopping centres and the arrival of new brands is a positive indicator of

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the further development of this market segment. In terms of office space, last year marked the completion of the construction of 10 office buildings, which increased the supply by an additional 100,000 square metres, and due to increased demand, construction of buildings spanning almost 250,000 square metres is expected by the end of 2022.

On the other hand, the offer of modern industrial space last year exceeded 2,000,000 square metres, which makes this segment one of the fastest-growing on the real estate market in Serbia, which rendered it completely immune

The further perspective of the M&A market in Serbia will depend on certain global and local trends

while staying in the focus of developers during the pandemic.

In the first half of 2020, M&A activities in Serbia almost died out, both due to the physical inability of potential buyers and sellers to negotiate and carry out transactions and due to the global economic uncertainty that existed at the time.

Also, in some transactions that have already been agreed, certain prerequisites were re-negotiated and amendments to the initially signed contracts carried out.

In the second half of 2020, M&A activity picked up and new trends emerged as a result of new circumstances. Overall, some major devia-

R E A L E S TAT E I N S E R B I A

tions were not observed in industries that were resistant to the challenges posed by the COVID-19 pandemic (or that recorded growth last year, e.g. online sales, IT / ICT sector, pharmaceutical industry, etc.). This is still an M&A market where sellers dictate terms and where valuations are still relatively high.

On the other hand, in industries, which financial performance declined relative to previous years or which, due to the COVID-19 pandemic, are about to face challenges related to business sustainability, we detect slightly lower valuations, payments in several instalments and other sales conditions that are unfavourable to sellers.

WHAT ARE FUTURE PROJECTIONS? Although a millionth square metre of office space was built in late 2020, this market segment is still underdeveloped compared to the regional one, because Belgrade's offer is 50% lower than the total offer of office space in Zagreb which has office space spanning 1.5 million square metres and the population of one million. Also, the offer is less than a third of what

The opening of new shopping centres and the arrival of new brands is a positive indicator of the further development of this market segment

Budapest, Prague or Bucharest has because those cities have more than 3 million square metres of modern office space on offer. Our market has great potential for investors and, perhaps, we are ahead of the region in that respect, which is evidenced by the fact that, in addition to the two newly built shopping centres last year, Belgrade still has significantly fewer square metres of modern shopping space per 1,000 inhabitants compared to Zagreb which, considering its significantly smaller population, has new shopping centres which are almost double in size cumulatively compared to Belgrade’s.

When it comes to the housing segment of the market, both domestic and international developers are still intensely focusing on, with an undiminished intensity of construction even during the past year. This is supported by the fact that the demand increased in the first quarter and the number of sold apartments is as much as 15.2% higher compared to the same period last year.

The further perspective of the M&A market in Serbia will depend on certain global and local trends.

An increase in transaction activity is expected, which has reached a certain momentum since the beginning of the current year and especially in the segment of small and medium-sized transactions. As for economic areas, the IT and food industries will continue to be in the focus. Also, there is a lot of interest in the energy sector, and the expectations are that consolidation will continue in the banking and insurance sector.

Regarding the local framework, there are two key challenges: - Willingness and capacity of local companies to adequately prepare for the M&A process (either as buyer and seller), and - Further connecting and economic consolidation of the Western Balkans, as the current economic fragmentation of small local economies is not conducive to a larger volume of M&A activities involving major global players.

If these two key challenges are successfully addressed, the assumption is that M&A activities in Serbia will grow significantly in the next few years.

Izvor: TPA Srbija www.tpa-group.rs/sr

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PRICES OF REAL ESTATE IN SERBIA PER SQUARE METRE Apartments in Novi Sad have never been more expensive, while the price per square metre of real estate in Zlatibor has increased by 20 percent. The real estate situation in Kragujevac, Čačak and Novi Pazar has not changed much

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A

fter Belgrade, real estate is the most expensive in Novi Sad. There are currently about 10,000 active construction sites in Novi Sad, the real estate market is booming like never before, and the price of real estate per square metre has never been so high.

A large number of apartments are being sold while still under construction because they are slightly cheaper. On average, the price of a square metre in Novi Sad ranges from 2,000 euros in exclusive locations in the city centre to 1,200 euros on the outskirts of Novi Sad, brimming with apartment blocks.

In the Zlatibor district, prices of new

apartments went up by about 20 percent, and the prices of houses in rural areas have also gone up, so a house with a garden in the Užice area can be bought for 7,000 to 15,000 euro, depending on the condition.

On Zlatibor, the price per square metre of living space ranges from 1,300 euros to more than 2,000 euros for apartments in apartment blocks.

The price of new apartments in Užice range from 900 to 1,200 euros per square metre, while older apartments are sold from 500 to 800 euros per square metre.

In Čačak, residential buildings are being built left and right, with studios and one-bed-

room apartments being the most expensive. The price of smaller apartments in new buildings ranges from 900 to 950 euros per square metre and two-bedroom apartments between 800 and 1,100 euros per square metre. Older apartments are sold for 700 euros per square metre.

In Kragujevac, the most expensive square meter is 1,200 euros in the first zone, and the average price of a new apartment in the town centre ranges from 1,000 to 1,100 euros.

In Novi Pazar, depending on the location, the prices of new apartments range from 800 to 1,100 euros per square metre.

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CO R P O R AT E

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