Real Estate Market in Serbia (part 1)

(June 18 2009)
Real Estate in Novi SadBy Rina MihajlovicThe economic crisis has hit all parts of the world with Serbia being no exception. The government decided to cut wages and raise taxes to fill the deficit gap by borrowing from the IMF and domestic banks. The real estate market has not been affected as drastically .Still, it does show signs of crisis. Sales are decreased and the prices of apartments are falling. The economic crisis, increased morgage and processing fees, difficulty in obtaining housing loans matched with an increase in interest rates on loans along with stressful psychological effects. All influenced a decrease in a demand for real estate.
Analysis of the real estate market in the past years had showed that there was a strong demand and purchasing power and due to that there was a constant growth of prices for real estate. Apartments were being sold long before the buildings were even erected.
Nowadays, the real estate market in Novi Sad is experiencing a fall in both price and demand. The market is flooded with apartments that haven’t been sold.
Zoran Jovanovic from the eminent real estate agency Premier in Novi Sad told for Serbia Today that comparing to last year’s prices a fall of 30-50 percent was experienced this year. The price of per square meter fell to 1350e for new residential developments in secondary zone and to 1000e for old ones. The most desired locations such as Grbavica and around the Court are still holding a slighty higher price around 1650e per square meter. In Telep and Novo Naselje the prices go as low as 1000e and 900e per square meter.
Rental prices didn’t change much ,as you can find a studio for 150e, one bedroom apartment from 200e-250e and two bedroom apartments for approximately 300-400euro. The only period when prices may fall is now in June when school finishes and many students leave, thus creating larger supply than demand. As such, owners decrease the rent not to end up without tenants, leaving themselves with utility bills which increased drastically over the year. On the other hand the prices of houses are still unreasonably high.
Mr. Jovanovic doesn’t think the crisis had effect on real estate market but rather other factors had, such as psychological, political and individual interests. He hopes the market will see more liveliness and that the prices will not fall drastically but enough to come to it's valued price at 1000e per square meter.
Real Estate in Sombor regionBy Ljuljana SamardzicThrough the conversation with “Lider” agency’s spokesman, we tried to find out present state in Sombor’s real estate market. This agency is located in Sombor and covers Sombor and Novi Sad region, as well as Montenegro and Croatia.
Situation in Sombor’s real estate market has changed immensely due to economic crises. According to Mirjana Dragas, the owner and director of “Lider” agency, since economic crises begun, trading decreased 60-70%. Agency claims that the only thing to blame is domestic and foreign bank’s misbehavior. That is to say, banks led potential buyers to credit inability because of insubstantial interests for mortgage loans which rose up to 12.5% from previous maximal 5.20%.
Apartments built 25-30 years ago still cost between 500-600 EUR/m2, which depends on apartment’s condition, location and history. On the other hand, new apartments, no matter if they are under construction or finished and ready for moving in, price stays the same - between 750-850 EUR/m2.
Commercial properties in Sombor area, which implicates town center and Pariska Street, still cost 1000-1500 EUR/m2 .
Regarding the houses, there is constant demand for houses located in IA zone - town’s center ring. Newer houses, up to 20 years old and up to 200m2 with complete infrastructure, in first and second zone may be purchased for very low prices, up to 50.000 euros.
There is absolutely no demands in nearby places such as Apatin, Prigrevica, Stapar and alike. However, old houses with big garden in suburbs located 5km from the town center may be bought for 5000 to 10000 euros.
Constant demand is only and solely for agricultural lands, no matter if they are located in urban region or not. One jutro in building region (1ha=1.7 jutro) is worth up to 5000EUR, and price depends on land’s location and category. On the other hand, land located in industrial zone or beside main roads reaches up to 30 EUR/m2.
The biggest buyers are Italians, Hungarians and Croatians, but lately Russians as well, who are looking for old ranches in Backa County with huge gardens.
Based on all these facts, more agility and more fairness in future bank policy is expected in order to make this market more vivid than it is now. People in Sombor welcome investors in hope that they will set in motion town’s economy.