Special edition newsletter
Real Estate & Construction - Market-changing investments
Expected annual growth of the GVA of construction in Serbia by around 11% -
Comparing the three states of the region, we can see differences in the average price per square meter for buying an apartment in the second quarter of this year. It is at a similar level in Serbia and Montenegro - 215,481 dinars (1,842 EUR), i.e. 1,821 EUR, while in Bosnia and Herzegovina it is 2,851 KM (1,426 EUR).
Speaking of building permits, 7,540 were issued in Serbia in the second quarter, in Bosnia and Herzegovina the number of building permits issued in August 2024 compared to the average number of building permits issued in 2023 is 8.2% higher, while in Montenegro issued 55 building permits and work reports.
Real estate is still a common choice for investment, and a more detailed overview of the situation in all three markets follows.
SERBIA
According to the data of the Republic Statistical Office (RZS), in the publication devoted to trends, it was stated that in the first half of this year, the main drivers of construction activity were works on traffic infrastructure and pipelines, communication and electrical lines. There are also works on the construction of gas pipelines, substations, communal infrastructure, and water purification plants.
In the first quarter of 2024, construction activity, compared to the same period of the previous year, increased by 22% in current prices, while in constant prices the increase was 18.3%. Observed according to the type of construction, the value of performed works on buildings recorded an increase of 8.3%, and on other construction works (roads, pipelines, complex industrial buildings, etc.) an increase of 23.3%, in constant prices.
In the second quarter, those percentages were 14.9% in current prices, while in constant prices the increase was 10.2%. The value of the works performed on buildings recorded a decrease (-1.4%), and on other construction (roads, pipelines, complex industrial buildings, etc.) an increase of 16.6%, in constant prices.
First quarter of 2024
Observed by region, in the first quarter of 2024, the highest growth rate, in relation to the same period of the previous year, was recorded in the region of Southern and Eastern Serbia and amounts to 25.5%, in constant prices. The increase is observed in the construction of traffic infrastructure, primarily the high-speed road Pozarevac-Golubac, and in complex industrial buildings (construction works on the wind farm and within the copper mine complex in Bor).
In the region of Vojvodina, the growth rate of construction activity in this quarter, compared to the same period of the previous year, is 22.9%, in constant prices. The construction of the Hungarian-Serbian railway (Novi Sad-Subotica section), as well as the construction of the Fruska Gora Corridor (Novi Sad-Ruma section), made the most significant contribution to the growth of construction activity. In Novi Sad, the construction of several residential and commercial complexes is underway, so the value of the buildings has increased.
In the Belgrade region, the value of construction works in constant prices increased by 17% in comparison to the first quarter of 2023. The increase in value was mostly influenced by the construction of residential buildings, traffic infrastructure construction and complex industrial buildings. In addition to Belgrade on the water and several larger residential and business complexes (Depot, Vozdove kapije, Wellport, Viva Residences, Zelena avenija), more important construction sites are the Inclusion Center, the new bus station, preparatory works for the Euro center, as well as the construction of the plateau for the depot Belgrade Metro.
In the region of Sumadija and Western Serbia, an increase in construction activity of 11.3%, in constant prices, was recorded. The work carried out on non-residential buildings was slightly less intense than in the first quarter of the previous year, while the work intensity increased on all other types of buildings. Very intensive works on the construction of the Moravian Corridor and the Preljina-Pozega highway continued in this quarter. The implementation of the project for the construction of communal infrastructure (Mionica and Knic), followed by gasification in the territory of the municipality of Raska and works on the installation of telecommunications lines, is underway.
Second quarter of 2024
The highest rate of growth was realized in Vojvodina, where the value of the construction works was increased by 21% in constant prices. The most significant contribution to the growth of construction activity, as in the first quarter, was made by the construction of the railway and the Fruska Gora Corridor.
In the region of Southern and Eastern Serbia, the value of construction works increased by 11.6%, in constant prices. The increase was realized during the construction of the high-speed road Pozarevac-Golubac. Also, the construction of hospital centers in Novi Pazar, Prokuplje and Leskovac, as well as several production-storage complexes, is underway, which has had an impact on the increase in activity on non-residential buildings. Among the more important projects in this region, the Clean Serbia project (construction of communal and sewage infrastructure in Vranje and Svrljig), the construction and reconstruction of Konstantin the Great Airport in Nis and the reconstruction of the Nis-Dimitrovgrad railway stand out.
In the region of Sumadija and Western Serbia, an increase in construction activity of 7.3% was recorded compared to the same period of the previous year, in constant prices. Also in this quarter, very intensive works on the construction of the Moravian Corridor, the Preljina-Pozega highway and the Sabac-Loznica expressway continued. In several municipalities of this region, the implementation of the Clean Serbia project, which relates to the construction of communal (sewage) infrastructure and infrastructure for solid waste disposal, is underway.
In the Belgrade region, the total value of construction works in constant prices increased by 1% compared to the second quarter of 2023. Despite the large number of construction sites in Belgrade where residential and commercial buildings are being built, the construction of buildings in this quarter is slightly less intense than in the second quarter of the previous year.
- Namely, in the second quarter of 2023, which is used as the basis for calculating the index, extremely high construction activity on residential and non-residential buildings was recorded, so a slight decline in building construction activity in this quarter is, as it were, expected - RZS states.
The number of construction permits
A total of 7,540 construction permits were issued in the second quarter of 2024. The largest number of those permits (6,136) refers to the execution of works on buildings, and the rest (1,404) to works related to traffic infrastructure, pipelines and complex industrial buildings. The total number of permits issued in the second quarter increased by 8.4% in comparison to the same period last year. The total estimated value of the works, according to the issued permits, in the second quarter is 253,723 million dinars, which represents a decrease of 5.9% compared to the same quarter of the previous year.
A total of 5,705 building permits were issued in the first quarter, and the largest number (4,628) also refers to buildings. The total estimated value of the works, according to the issued permits, in the first quarter amounts to 209,759 million dinars, which represents a decrease of 2.1% compared to the same quarter of the previous year.
Apartment prices
The average price of newly built apartments in Serbia in the first half of 2024 amounted to 215,481 dinars, which represents an increase of 0.8% compared to the first half of 2023, according to the data of the RZS.
Apartment prices in the observed period ranged from 61,013 dinars per square meter in Bujanovac to 520,616 dinars in the Belgrade municipality of Savski venac.
Observed according to municipalities, the highest prices of newly built apartments were recorded in Belgrade municipalities, where the average price in the city`s settlements decreased by 2.3% compared to the first half of 2023 and amounted to 307,297 dinars per square meter. In addition to the Belgrade municipalities, Novi Sad, Uzice, Cajetina, Vrnjacka Banja, the Nis municipalities of Medijana and Crveni krst stood out due to their high prices.
The average surface area of newly built apartments sold was 54 m².
RGZ index of apartment prices in the second quarter of 2024 is 164.56, which represents an increase in apartment prices of 4.68% compared to the same period of last year. Compared to the first quarter of 2024, apartment prices in Serbia recorded a slight growth of 1.26%.
- This increase in prices compared to last year and moderate three-month growth indicate that the real estate market remains stable and without major fluctuations, which is a positive sign for the economy and investors - it was stated in the announcement of the Republic Geodetic Institute.
During the second quarter of 2024, there was an increase in the demand for apartments, with 11,532 contracts for the sale of apartments recorded (that is, 7.5% more than in the same period last year), with a total value of EUR 978 million (7.3% more than last year). The prices of apartments in old buildings, at the level of Serbia, increased by 4.41%, while new buildings, i.e. purchases from investors, had a higher year-on-year growth of 5.15%.
Looking at regions in Serbia, certain differences in trends in the housing market are noticeable. When it comes to the number of sales and turnover value, Southern and Eastern Serbia recorded a significant growth in apartment sales of 16.7% and the value of sales by 37%. In Vojvodina, the number of apartment sales increased by 14.03%, and the value of sales increased by 35.7% compared to the same period last year. The region of Sumadija and western Serbia also recorded growth, with a 9.70% increase in apartment sales and a 22.22% increase in sales value. In Belgrade, there is a slight decrease in the sale of apartments by 0.57%, and the value of sales by 5.61%.
When it comes to apartment prices, in comparison to the second quarter of 2023, prices increased in the region of Vojvodina by 4.49%, in the City of Belgrade by 3.98%, in Šumadija and western Serbia by 5.05%, and as in the previous few quarter, the strongest price growth was recorded in the region of Southern and Eastern Serbia and amounted to 7.40%.
- When comparing the housing price index in Serbia with indices in European countries, Serbia had a moderate and stable price increase - it is added.
BOSNIA & HERZEGOVINA
Production indices in construction in Bosnia and Herzegovina, second quarter of 2024
The total seasonally adjusted construction production in Bosnia and Herzegovina in the second quarter of 2024 compared to the first quarter of 2024 recorded a growth of 0.05%. Observed according to the type of construction facilities, in the same period there was a growth of 0.1% in high-rise buildings, and a decrease of 0.02% in low-rise buildings.
According to the Agency for Statistics of B&H, the total calendar-adjusted production in construction in Bosnia and Herzegovina in the second quarter of 2024 compared to the second quarter of 2023 recorded a growth of 1.8%. Observed according to the type of construction facilities, in the same period there was a decrease of 1.1% in high-rise buildings, and an increase of 4.2% in low-rise buildings.
Prices of new apartments sold in the second quarter
The average price of new apartments sold per square meter in the second quarter of 2024 is 2,851 KM (1,426 EUR). In comparison with the average price of new apartments sold per square meter in 2023, the average price is higher by 10%, and compared to the second quarter of 2023, it is higher by 9.5%.
The number of new apartments sold in the second quarter of 2024 compared to the second quarter of 2023 is higher by 9.2%. In relation to the average number of new apartments sold in 2023, it is 8.1% lower.
The surface area of new apartments sold in the second quarter of 2024 compared to the second quarter of 2023 is higher by 8.8% and compared to the average area of new apartments sold in 2023 it is lower by 6.6%.
Construction permits issued in Bosnia and Herzegovina - August 2024
The number of construction permits issued in August 2024 compared to the average number of construction permits issued in 2023 increased by 8.2%, and compared to August 2023, it remained unchanged.
The number of apartments planned for construction in August 2024 compared to the number of apartments planned for construction in 2023 increased by 0.7%, and compared to August 2023 it increased by 4.2%.
Residential construction in Bosnia and Herzegovina - the second quarter of 2024
In the second quarter of 2024, the number of completed apartments is 535, which represents a nominal increase of 38.6% compared to the same period in 2023.
The number of unfinished apartments at the end of the second quarter of 2024 is 5,775 and represents an increase of 18.8% compared to the same period last year.
As Darko Djikanovic, a market analyst at Adriatic Advisors, recently told our portal, despite the decline in real estate investment, this figure of 237.25 million is still relatively high, especially if you take into account that 2023 was a record year for real estate investment.
- The decline in investment in 2024 is partly expected, because the market is stabilizing after record growth in the previous period, which is the result of several factors, among others, the high influx of foreigners that influenced the market boom - Djikanovic believes.
As he stated, the investments of foreigners in real estate exceeded the annual investment level from the years before the pandemic in the first seven months of this year alone.
The largest number of investments, when we talk about this segment, came from Serbia - EUR 39.7 million. Turkish citizens invested a little over 32 million EUR in real estate, Germans 20.57 million, Russians about 18.9 million, and Americans 18.84 million EUR.
Number of transactions has fallen, but prices continue to rise
If we talk about prices, Monstat data show that the average price per square meter in new construction in the second quarter was EUR 1,821. A square meter in Podgorica cost EUR 1,763, in the coastal region EUR 2,107, and in the central region EUR 960. In the northern region, no sales of newly built apartments were recorded. When it comes to market prices, Monstat stated that the average price per square meter in new construction was also EUR 1,821, and there were no sales in the joint construction segment.
This is what the official statistics tell us, but what is the situation on the ground? Đikanović states that, although precise data on the number of apartment purchase and sale transactions are not available, based on market indicators, including insight from the field and data from official statistics, it seems that the number of transactions has decreased compared to 2023. Despite this, the market remains active, and no significant price corrections have been recorded for now - on the contrary, they continue to grow.
- So, for example, the average price of a one-room apartment in Podgorica reached EUR 2,000 per square meter, while in 2023 it was around EUR 1,650, and in 2021 it was EUR 1,200 per square meter. This represents a growth of 67% within three years - says eKapija`s interlocutor.
Prices are much higher on the coast, and the most expensive cities are Tivat, Kotor and Budva.
- In Tivat, the average price per square meter of a one-room apartment is EUR 3,750 per square meter, in Kotor it is EUR 3,000, while in Budva it is EUR 2,900 per square meter. Somewhat lower average prices are in Herceg Novi (2,500 EUR), Bar (2,200 EUR) and Ulcinj (1,600 EUR) - he points out.
Additionally, within these cities, he says, we have micro-locations where prices are much higher than the averages shown, while luxury resorts are successfully reaching some new records.
Niko Lakovic, partner and executive director at Montenegro Sotheby`s Realty, says that in the luxury segment, according to some projections and realized transactions, prices have risen by about 20%.
- Prices are very stable and tend to rise. For example, within the Luštica Bay complex, prices for signature projects and for villas and residences range from 10,000 to 12,000 EUR per square meter. Prices for apartments in Porto Montenegro range between EUR 9,000 and EUR 10,000, while in the new Synchro one project they will be from EUR 13,000 and up. These will be unique residences that will have a beach in front of the facilities and a 5 plus star category. For standard units in the Portonovi complex, it is necessary to allocate between 9,000 and 10,000 per square meter, while the prices for premium facilities and villas go above 10,000 EUR - he stated.
Most sought-after locations
When it comes to the most sought-after locations, Darko Đikanović says that the capital city of Podgorica, as the center of most events, records the greatest activity and attracts the greatest interest of the local population as well as foreign citizens who have moved here.
- Of course, the coast attracts the most attention from foreigners, and the most attractive destinations remain Tivat, Kotor and Budva. Apart from the ones mentioned, we also have notable activities on the market in other coastal cities, and there are also some very interesting projects underway, both from the tourism and luxury real estate sectors, which will have a great impact on the local markets - he says.
Forecasts for the next period
When it comes to forecasts for the next period, Djikanovic stated that in the short term there may be a correction of prices, while in the long term it is ungrateful to predict price movements, because many factors, including global economic and political events, can affect the market and reverse the current tendencies.
He also says that, considering that real estate prices continue to rise while the number of transactions decreases, buyers will have a greater negotiating position in the coming period than in previous years when sellers had a dominant role.
- This should be reflected especially in the segment of low and medium value real estate, which will contribute to more balanced conditions on the market - he points out.
In the luxury real estate segment, he says, he does not expect prices to fall.
This is confirmed by Lakovic, stating that the Montenegrin market remains stable, and that additional growth is expected in the future.
- Montenegro`s approach to the European Union, as well as the development of new projects that are being announced, will bring new value to the real estate market in Montenegro - Lakovic said.
Number of construction permits decreased, value of works increased
If we look back at the construction activity in Montenegro, according to Monstat data, 55 building permits and work notifications were issued in the second quarter, where 36 refer to natural persons and 19 to legal entities. The data also show that, according to the issued work reports, the construction of 148 apartments, with a total area of 11,087 m², is planned.
If we compare with the previous quarter, we will notice that construction activity has significantly decreased, because 44 fewer permits were issued. There is also a significant difference in the planned square footage, as well as the number of apartments. Thus, in the first quarter, permits were issued for 398 apartments with a total area of 28,765 m2. If we look back at the second quarter of last year, we will notice that 68 permits were issued then, with the planned construction of 582 apartments with a total area of 37,685 m2.
The value of construction works in the second quarter of this year amounted to EUR 158.03 million and was 2.8% higher compared to the same period last year, while compared to the first quarter of this year it increased by 2.3%. Monstat data also shows that the effective hours spent on construction sites increased by 1.2% compared to the second quarter of 2023, while they are 0.8% higher compared to the first quarter of this year.
Aleksandra Kekić, Slobodana Šubara, Dragana Obradović
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"Real Estate & Construction - Market-changing investments"
