Large-scale luxury residential developments in the SEE region are rare as there is no tradition in this real estate segment. There have been some smaller projects or redevelopments of individual luxury units or penthouses and villas but no large-scale projects until recently. The market is developing though. Although local investors are the primary drivers, international investment flows in recent years have provided additional capital inflow. Industry 4.0 and substantial capital accumulation provides for new elites which drive the demand in luxury residential real estate segment also in SEE.
What defines a luxury residential project? Which are the key ingredients for a successful project?
Luxury residential developments are projects which enhance all the right key ingredients of luxury living. Those are developments with prime location preferably in pedestrian zone of the city or a river bank, quality finishing with spacious rooms and terraces and specialized in-house amenities such as fitness, smart home features, pools, green space and pet-friendly amenities and in-building retailers and high-end services. What is most important is that a quality luxury residential is as a quality high-end gourmet experience. The devil is in details and none of the key ingredients should be left out.
Recent luxury developments in the region are defining standards and opening the stage for the segment development. Let us look at some of the recent show cases of luxury residential in the region:
The largest development in the region is definitely the Belgrade Waterfront project valued at 3 billion euros. Project construction started in 2015 and altogether the projects comprise of planned 7,000 residential units next to a large luxury shopping mall Galerija. Since the project started and the more it is being developed the higher are the prices of apartments. Currently the prices range between 3,000 and 5,500 € (plus VAT of 10%).
Kneza Branimira, Zagreb
In Zagreb there have been some luxury residential developments in the past, prior to 2008 crises, such as Ban center where prices have reached 5,000 €/m2 (plust VAT of 25%). Currently one of the largest developers in Croatia VMD Group has started with Kneza Branimira luxury residential project. Even prior construction all the units have been presold at prices between 3,000 and 5,000 €/m2 (plust VAT of 25%).
In the future the same developer as for Belgrade Waterfront project, Eagle Hills from Dubai is planning a development of another mega project in Zagreb called Zagreb Manhattan or Zagreb Waterfront. Foreseen is 1.1 million m2 of mixed- use development and up to 200 floors residential and office buildings.
Palais & Villa Schellenburg, Ljubljana
Ljubljana so far has not had the same initiative on the table, but trends are obvious. Except from the development Kapitelj more 15 years ago Ljubljana has not seen a large-scale luxury residential development project for a very, very long time. Schellenburg project developed by the same developer has been announced recently with already ongoing construction works. Apartments are already being presold at the average prices of 6,000 €/m2 (plus VAT of 9.5 or 22% above 150 m2/unit).
These projects are setting luxury residential development trends. Looking also at the nearby markets such as Prague and large cities of Poland where luxury residential segment is already much stronger we can expect more of a similar developments in the near future. There are more and more wealthy local and international individuals in the region looking for luxury residential which drives the demand. Developers on the other hand need to be diligent enough to integrate and deliver the right residential “gourmet experience” with all the key components required by such high-end clients.