7

After witnessing decline, the prices of residential properties in Serbia are expected to stabilise in the second half of 2011.
According to Colliers International, at present a discrepancy in prices among similar projects in similar locations still exists but expects this to change: "Colliers expects greater transparency and sophistication on the market to emerge in future so prices are more closely correlated to location, size and the quality of a given project."
A drop in prices across all areas of Serbia's real estate market is currently evident. In luxury locations where apartments were priced at EUR 5,000 per square metre, prices are now around EUR 3,000 per square meter. The fall is partially explained by the government's decision to subsidise mortgages for new apartments as well as by the apartments that the government itself is constructing in a few locations across Belgrade. Prices of government constructed apartments are set by law to help the construction industry in times of crisis - they range from EUR 1,250 per square metres up to EUR 1, 290 per square metre, including VAT. Although the construction is of low quality, it is generating huge interest amongst the local population, forcing other investors to also lower their prices and make most of the subsidised mortgages offered to buyers.

Commercial expansion

The commercial market is also picking up. Despite a construction slowdown in the Belgrade office market during 2010, the total stock of office space has increased by 76,100 square metres, totalling 658,419 square metres at the end of 2010. With prices falling, interest in increasing.
"Numerous companies started their search for new business premises in 2010, encouraged by somewhat lower rental levels", Colliers International states.
"These tenants came from a range of business sectors including finance and insurance, engineering, architecture and construction, IT, media and publishing, and retailing. Among the companies seeking space were Findomestic Bank, KBC Securities, Meridian Balkans, SunGard, Reuters, Benetton, and others."
Local and foreign government institutions and embassies were also active players in the market, Colliers International adds.
Cautious outlook
Although there have been some positive developments in 2011, Serbia's real estate advisors remain cautious.
"The last year has proven to be challenging for all of us," says Maja Sahbaz, general manager at Colliers International Serbia. "Although the messages we receive from banks, investors as well as the government are encouraging, 2011 will continue to be a year of caution but a slow and definite recovery.
"As a result of all this change, the one thing we can say is that the market is a lot more sophisticated than it was two to three years ago. Some difficult lessons were learned, and among them the most important one would be that the market has shifted towards tenants and buyers."