New investments push price of residential space up - High demand, but low supply of quality apartments in Belgrade

Did sales of flats in Belgrade stop? There is both demand and offer but somehow it seems they do not match. Real estate consultants in 2013 see demand increase but they warn about poor offer of quality flats, especially in the center of the capital.

- There is demans but there is a poor offer of quality flats. If a buyer opts for a certain location and floor, it is not likely he will soon find and appropriate flat. Potential buyers have to give up on either location, striuc area or a floor they want - Nedeljko Malinovic, director of Legata, dealing with real estate, says in his interview for eKapija.

Our collocutor thinks the major problem of a bad offer of residential real estate is unfinished 25.000 flats at the territory of Serbia.

Mina Kalezic, Sales and Marketing Manager at CBS International points out at demand increase at the residential real estate market which started in the second half last year.

- Trend of rehabilitated trust of buyers continued in 2013. They perceive this moment as the right one to buy. Offer to adequate extent follows real demand but the thing that definitely lacks are quality projects in the city center where sales of flats in old buildings drastically increased compared to new buildings because of the lack of newly-built buildings and increase in demand for this part of the city – Kalezic explains in her interview for eKapija.

Collocutor of eKapije reminds that smaller residential facilities with 30 to maximum 50 units are built in the central city locations while complexes with more than 100 flats are built in Vozdovac and Novi Beograd.

Kalezic says that the largest number of requests refers to flats “which offer the biggest number of rooms on an optimal number of square meters and thus are more functional in space for a growing family”.

Director of Legat says that most wanted are flats between 30 and 60 square meters and that in September and October, one-room and two-room flats are wanted since students are coming to Belgrade.

When it comes to the most wanted locations, according to our collocutors’ experience, buyers are mostly ionetersted in Zvezdara and Konjarnik where flats are not so expensive and are near the city. Also, Vracar, Dedinje and Novi Beograd are popular as always.

T.S. has been trying to find a flat in wider area of the city center, newly built, for a couple of months and is ready to pay EUR 90.000.

- All the flats I saw, and I focused on Dorcol and Vracar, are dissatisfactory in quality so I started looking for old buildings although I will have to set aside additional funds for renovation.

Prices of flats in Belgrade

According to recently published data of the Republic Statistical Bureau, prices of newly-built flats in Serbia in the first half of 2013 fell for 5,7% compared to average prices in the second half of 2012. Prices in Belgrade have not risen in 2013 and compared to 2008 there was a fall in prices of some 22% on the average.

The average square meter price in the central, city locations in newly-built buildings averages EUR 2.200 - 2.500 when it comes to high quality finishing works projects while for the mid category it is necessary to set aside EUR 1.700 - 2.200 EUR per square meter.

When it comes to the outskirts of the city, prices range between EUR 900 and 1200 per square meter, depending on distance to the center.

Marko Andrejic who wanted to buy a flat of up to EUR 45.000 had to look for it at locations a bot far away from the center.

- I thought I will be able to buy a one-room or a one and a half room flat, i.e. in parts of the city where the square meter price totals EUR 1.200-1.300. I was considering only newly-built flats because I opted for subsidized loan. I was first considering the Stepa Stepanovic settlement but tere were no flats of adequate size so I started looking Karaburma or Mirijevo where you can find a flat for EUR 1000 per square meter. There is a small number of newly-built flats in Karabrma and I was considering Sejkina and Dragoslava Srejovica street in Mirijevo. A square meter in decent flats here are some EUR 1.200 per square meter. They are just badly oriented in the spatial sense, meaning they lack parking, light or they have a window looking at the wall. I was also considering Visnjicka banja where a square meter costs EUR 1.100 but it is a bit far away and still without any additional facilities nearby and I also asked around for Alpha City, Belville and alike, but that is beyond my payment capabilities since the square meter totals EUR 1500 up – Andrejic is speaking about his experience.

This client opted for a flat in Vojvode Vlahovica street, above the last station of bus 26, where, as he says, the main disadvantage is location but he is satisfied with the distribution of rooms, price per square meter of 1100 and a view.

Political situation affects demand for residential real estate

According to real estate consultants, subsidized loans did not influence demand for flats.

- Our experience shows that a good product at reasonable price and in times of crisis finds a buyer so price is for sure one of the parameters. On the other hand, more relaxed terms to some extent for obtaining residential loans and lower interest rates have not necessary been generator of new demand. Stabilization of economical opportunities and living standard growth in the upcoming period would be a determining factor for higher demand for residential space - Kalezic mentions.

The collocutor of eKapija estimates that the flat price in the future period will depend on a number of factors, primarily on the living standard increase, new hires, terms for residential loans as well as on future offer quality.

Director of Legat thinks if prices would decrease if an offer would be bigger. Malinovic says there is a large number of unsold flats which have been maintained their price level since 2008 which is too high now.

- If lot of cash arrives to the country and the implementation of big investments start, real estate prices should increase. Apart from that, stabile political situation influences real estate turnover.

Suzana Obradovic