Despite the corona virus pandemic, the demand for and purchase of apartments in Serbia is not decreasing. Proportionally to the increase in the demand for apartments, the prices of housing space also grew, to the extent that Belgrade is ranked among the most expensive cities in Europe in that category.

According to the information available on the Numbeo website, which is considered to be the world's largest database on the cost of living and quality of life, Belgrade is on the fourth place on the list of the most expensive cities in Europe in terms of real estate prices in relation to the level of income.

The ratio of real estate prices and the average income of Belgraders is a staggering 19.77. The capital of Serbia is thus behind Moscow (or 21.12), which is in first place, Paris (20.97) and Split (19.77), and ahead of Vladivostok (18.63), Gdansk (18.31) and Milan (17.85).

If we take into account that real estate worth around 4.2 billion euros was sold in Serbia last year, which is more than the average for the previous three years, we get the impression that the real estate market remained immune to the crisis.

For example, on the site, the prices of apartments in the city center range from 2,000 euros per square meter and up, depending on the structure, number of floors and square footage, while on the outskirts the prices range between 1,000 and 1,400 euros.

The most expensive square meter of residential space in Serbia in 2020 was sold in Belgrade on the water and cost an incredible 9,600 euros.

Increased demand

The Construction Directorate of Serbia says that the demand is currently higher than the supply, which affects the growth of prices. There was a short delay due to the corona in the realization in March and April last year, but the market stabilized very quickly and returned to the level before the epidemic, they say in GDS.

Sales started to grow in the second half of May, and since then there has been a constant growth in sales and customer interest.

Low interest rates on housing loans and fear of the collapse of foreign currency savings

Experts point to several factors that boost demand for apartments in the capital.

The Vice President of the Construction Chamber of Serbia, Goran Rodić, points to the fact that a large number of citizens who want to save foreign currency savings, have invested it in real estate.

- The main reason for this demand for apartments is the desire of people to get rid of their foreign currency savings, for which there is almost no interest. The uncertainty of the exchange rate of the euro and the dollar, and the fear that the savings may disappear, are pushing the citizens to invest in real estate, Rodić says for "Blic Biznis".

An additional factor, which encourages the investment of foreign currency savings of citizens in real estate, is the bad position of people on the labor market, adds Rodić.

- Due to the crisis, there are fewer and fewer people with permanent employment, and banks do not issue loans to citizens without permanent employment, so they turn to investing their savings, concludes Rodić.

Milić Đoković, a real estate expert, has a similar opinion. He sees the cause of the rise in prices in the lack of safe investment opportunities for citizens and low interest rates on housing loans.

- Real estate prices jump due to rising capital prices. Loans and money are currently cheap, interest rates on loans range between 2.5 and 3 percent, and the situation is such that people have nowhere to safely invest except in real estate. Suburban settlements are more favorable to "ordinary", average citizens who cannot afford to buy apartments in attractive locations in the city, Djokovic says for "Blic Biznis".

He adds that average citizens have decent salaries, but that it certainly pays them much more to invest in real estate in suburban settlements, because they get more square meters in some other municipalities in Belgrade, at the same price.

- The infrastructure in those settlements is being built slowly. New sewerage, electricity and roads are being built. If these works give the expected results, and if everything goes decently and normally, it is completely okay to buy, Djokovic concludes.

New infrastructure

Another reason for the rise in real estate prices is the large number of infrastructure works in Belgrade, both in the city center and on the outskirts.

A Belgrade real estate agency also confirms that the infrastructure works are a flywheel for investors. They point out that the attractive fact for new investors is that, unlike attractive locations in the city, there is not so much competition in the suburbs and it is easier to start a business.

According to investors and builders, the increase in the price of thermal insulation materials can be one of the key factors that will affect the demand and the growth of the price per square meter.