Goran Vesić – We are Infrastructurally Connecting our Cities

The market always responds to increased demand with a larger offer

The arrival of a substantial number of Russians and Ukrainians in Serbia resulted in a higher real estate demand in Serbia. We spoke with Goran Vesić, Minister of Construction, Transport and Infrastructure in the Government of the Republic of Serbia, about the reason for higher real estate prices, the effect that construction of road infrastructure has on people’s lives and how the accelerated traffic development can contribute to the popularization of smaller towns.

It is noticeable that, after a long time and apart from Belgrade, other towns in Serbia have become popular in terms of migration like Novi Sad, Niš, Kragujevac and several other towns that are attracting a growing number of apartment buyers, which is also reflected in real estate prices in these towns. What is the main reason for this real estate boom in smaller Serbian cities?

The development of transport infrastructure, as a result of the construction of motorways, expressways and railroads, connects our cities. Today, it takes you 35 minutes to travel between Novi Sad and Belgrade thanks to a high-speed train, so it’s no wonder that 1.5 million passengers took this opportunity in the space of 11 months. Almost 2,500 passengers bought monthly tickets for the Soko high-speed train that commutes between Belgrade and Novi Sad. These are people who work in one city and live in another, which means that, apart from Belgrade, other cities are becoming attractive for life and work. Traffic links between cities benefit the development of tourism too. There is a tendency for tourists who come to Belgrade to stay in neighbouring cities. That’s why the hotel occupancy rate in Novi Sad and Pančevo is higher than in Belgrade. Tourists who spend a night in Novi Sad will visit tourist attractions in this city. This leads to a higher demand for apartments in cities that are connected to Belgrade by traffic, and hence higher real estate prices in them.

The construction of two subway lines, which will be completed in 2030, will make parts of the city that are not currently attractive for housing quite appealing

How important is the development of infrastructure for the popularity of smaller cities outside the Belgrade area?

The development of infrastructure leads to smaller towns in the vicinity of Belgrade becoming more popular for living and as weekend destinations. The COVID-19 epidemic and travel ban have led to many people discovering various places in the countryside that were suitable for vacations or have built or bought houses there. When the epidemic subsided, people kept their new habits, so Belgrade is now an almost empty city during weekends, as it used to be in July and August, as its residents have gotten used to going to the countryside on Saturdays and Sundays. It won’t be that long until the development of infrastructure will result in some of today’s suburban areas or surrounding towns becoming places of residence for people who work in Belgrade.

Based on the current infrastructural works and the planned completion of motorways and railways, which new popular areas for living and working outside Belgrade could emerge in the coming period?

The construction of two subway lines, which will be completed in 2030, will make parts of the city that are not currently attractive for housing quite appealing. Here, I am primarily referring to Mirijevo, which is the departure station for the first two lines, then Železnik and Žarkovo, as well as Banovo Brdo and Čukarička Padina. The second subway line will make parts of Zemun and Bežanijska Kosa more attractive too. Simultaneously with the construction of the subway, new suburban railway lines of the popular BG Voz, which should have over 500 departures daily, will be built. Next year, the first part of the new BG Voz lines from Zemun station to Nikola Tesla airport, via the national stadium and Surčin, will be built. This line will later be extended to include Obrenovac. In the meantime, the capacity of the BG Voz, i.e. the line to Barajevo and Lazarevac, as well as the line to Sopot and Mladenovac, will be expanded. The BG Voz’s line from Ovča to Pančevo will be extended too. When all these suburban municipalities are connected to the city centre, i.e. by the subway via the city railway and when they have 20-25 departures per day, then it will be possible to live in Lazarevac and work in Belgrade.

What do you think about the trend of building residential areas outside Belgrade’s urban core (like Avala, Kosmaj, Banovci and Fruška Gora)? Are people going to leave urban areas for the countryside in droves? 

This has already been happening since the COVID-19 epidemic when people discovered the countryside as cities were quarantined. Many who worked from home left the urban areas. This habit is still in practice so, in recent years, Belgrade empties on weekends, just like in the second half of July and the first half of August, i.e. during summer time. Now, people are more prone to going to the countryside on weekends and holidays. Many of them have moved so that the former weekend residences in the vicinity of Belgrade have become places where people now live full-time. With the accelerated development of the traffic infrastructure, the construction of the Belgrade bypass and the development of the city railway, many now suburban parts of the city, including Avala and Kosmaj, will become places to which people will flock to live.

We have to mention the problem of illegal construction and so-called developers’ urban planning where the public interest is neglected to the detriment of private capital. How can we solve problems like the one with the Sava Embankment, for example?

Illegal construction is not the same as developers’ urban planning, so the two terms should not be confused. Illegal construction is when you build without a permit and it is a criminal offence. I would like to see the abolition of one of the two relevant laws that are currently being implemented simultaneously – the Urban Planning and Construction Law and the Legalization Law because as long as we have a situation like this, part of real estate developers will resort to illegal construction instead of legal one. We’ll see what happens, that is if I get support for my initiative, because the lobby of illegal builders is very powerful. In our country, the term developers’ urban planning implies that someone who builds imposes their interest on the public. First of all, every real estate developer has to operate in line with their building permit which is issued based on urban plans adopted by the state, so that a developer cannot subordinate the public interest to the state. Only the state authorities can do that. And for this not to happen, we have an early and public review in the process of adopting the said plans, which involve the public. Of course, urban plans must protect the public interest, but the phrase “developers’ urban planning” often hides the intention not to build anything that is not possible. The case of the Sava Embankment is an issue for the Belgrade government to resolve.

Urban plans must protect the public interest, but the phrase “developers’ urban planning” often hides the intention not to build anything that is not possible

 Global prices of building materials have fallen and yet the prices of newly built apartments in Serbia are still high. Will this global trend come to Serbia or are real estate prices in our country stimulated by huge demand?

You are right when you say that the prices of real estate are dictated by the prices of building materials, but above all, by supply and demand. While the war in Ukraine lasts, we see a decrease in real estate investments due to real estate developers’ fear to invest, because the prices are constantly going up and housing loans becoming more expensive. The influx of refugees from Ukraine and Russia to Belgrade is large, so the demand for apartments has grown which caused a hike in prices in both Belgrade and Novi Sad. The market always responds to increased demand with a larger offer, so I believe that real estate prices will fall in the coming period.

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