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At the onset of 2023, Serbia’s real estate market experienced a surge in both sales volume and prices. However, the latter half of the year witnessed a slowdown and stagnation across most cities. Predictions had suggested that a decline in sales volume would trigger price reductions, yet this anticipated shift has not materialized. As 2024 approaches, potential buyers are keenly interested in the potential movement of real estate prices.
Trends in apartment prices in Belgrade for November
Analyzing the trends in apartment prices specifically in Belgrade for November, the city continues its tradition of holding the top position in terms of average prices per square meter in Serbia. As per the Nekretnine.rs portal’s report, prices in November dipped by a maximum of one percent in some locations, while growth remained consistent. Vračar municipality leads in terms of price per square meter, experiencing a decrease of 0.09%, now resting at 3,334 euros per square meter. In the center of Belgrade, the price stands at 3,333 euros per square meter, following a reduction of 0.89%..
Notably, in Novi Beograd, recognized as one of the more expensive locations, the price per square meter saw a 0.44% increase in November, reaching 2,753 euros. Meanwhile, prices within the Voždovac municipality, comparatively lower, remained unchanged since October at 2,500 euros.
The movement of the real estate price per square meter in Belgrade, as outlined on the cenenekretnina.rs website, is detailed below.
Chart 1: Fluctuations in real estate prices per square meter in Belgrade, as reported on the website cenenekretnina.rs.
The chart below illustrates the volume of real estate turnover in Belgrade.
Chart 2: Fluctuations in the volume of real estate turnover in Belgrade, as reported on the website cenenekretnina.rs.
Trends in apartment prices in larger cities in Serbia in November
In Novi Sad, prices per square meter remain relatively uniform across central locations, averaging around 2,500 euros per square meter. Conversely, Kragujevac and Pančevo are identified as cities with notably lower price points per square meter compared to other larger cities.
According to the November report, the urban area of Kragujevac noted a 1.57% price increase, leading to an average price of 1,422 euros per square meter. Meanwhile, Pančevo observed a price hike of 0.29%, resulting in a square meter price of 1,370 euros.
Forecasts of agencies and investors for 2024
The specialized website for real estate advertising “4zida” conducted a survey among owners and employees of 85 agencies and 19 investors who build apartments in Serbia. As many as 59 percent of people from real estate agencies believe that prices will stagnate, and 37 percent believe that they will fall. In contrast, the majority of investors—94 percent—forecast price stability, with only 6 percent expecting a decline.
Both groups identify economic instability, both domestically and globally, as the primary challenge in their business. Additionally, factors such as credit conditions, inflation, and labor shortages in the construction sector are considered risk elements. Nevertheless, the majority of respondents believe their incomes will either remain steady compared to 2023 or see an increase.
Do cash buyers keep real estate prices in Serbia at a high level?
The majority of surveyed agencies highlighted three primary factors influencing their business: unfavorable loan conditions (62%), decreased real estate demand (51%), and geopolitical uncertainty. Clients also exhibited greater caution in their buying and selling processes (39%), with certain buyers delaying purchases in anticipation of price drops.
Investors similarly pinpointed unfavorable loan conditions as the most impactful factor on their business (74%), followed by rising construction material prices (37%), geopolitical instability (26%), and reduced demand for ‘first sale’ apartments (21%).
However, unlike other Southeast European markets reliant on credit buyers, Serbia witnesses as much as 70 percent of apartment purchases made in cash. Despite this trend, participants at the “Balkans Property Forum 2023” international conference held in Belgrade concluded that the price per square meter is still influenced by inflation, escalating construction material costs, and labor shortages.
Is now the right time to buy real estate in Serbia?
As highlighted by participants at the forum, positive news emerges with the European Central Bank currently pausing interest rate hikes. Forecasts indicate that in 2024, alongside declining inflation, interest rates are anticipated to decrease. Projections suggest this reduction will commence around September, consequently leading to lower interest rates on housing loans.
Nebojsa Nešovanović, Director and Manager of Appraisals at CBRE, offers an assessment stating that the upcoming period marks the bottom of the market cycle, presenting an advantageous time for real estate purchases. He emphasizes that during this phase, there exists ample room for negotiation with sellers. Although a significant price drop is not anticipated, there might be a reduction in trading volume, translating to fewer transactions. Nešovanović suggests that only in 2025 is an upsurge in demand and transactions expected. However, whether this will result in further price hikes hinges on the supply dynamics.
The impact of the war conflict in the Middle East on the real estate market in Serbia
After the pandemic and the conflict in Ukraine, which in the previous three years had a significant impact on the movement of prices on the real estate market, the new war in the Middle East represents a new challenge in this sector as well.
A considerable portion of agencies (51 percent) expressed uncertainty regarding the potential effects of the new Middle East conflict on Serbia’s real estate market. Among investors, approximately 74 percent are unable to make predictions about the impact of this conflict. Around 15 percent of agencies that foresee an impact from the new conflict suggest that crises and wars typically prompt customers to hesitate in their investments due to concerns about the future.
Regarding projections for apartment rental prices in Belgrade and other major Serbian cities in the coming year, a majority of agencies (64 percent) anticipate rental prices to remain stagnant. Meanwhile, 26 percent expect a decrease in rental prices, while 10 percent foresee an increase.
In terms of constructing industrial facilities, Serbia remains highly appealing to international investors due to its favorable terms offering construction opportunities for commercial, logistics, and industrial facilities.
Sources:
https://www.4zida.rs/blog/kakve-su-prognoze-agencija-i-investitora-za-2024/
