Expert’s View on why your Home should be an Investment
Whether you are buying a new home for your family, or just looking for a solid and safe investment, purchasing a property can and should be an enjoyment. However, it does represent one of the biggest decisions, whereas the variety of choices and complexity of the actual sales and purchase process calls for an expert guide.
If you are buying an apartment for yourself and family, the primary choice to be made is whether you should choose a newly built building, or take into consideration a secondary market as well. The first decision to be made reflects a shortlist of locations you consider preferable. In case you prefer new and recently built properties, some of the areas that are most popular among the buyers are a broader area of the city center, New Belgrade, and traditionally well-valued residential areas such as Vračar, Voždovac, Zvezdara, as well as elite neighbourhoods of Senjak and Dedinje.
Most dominant choice of the buyers are newly built large-scale complexes offering more than just an apartment, a lifestyle concept, either as an open complex or a close-gated community with its private park, sports courts, kids’ playgrounds, pets corner, central reception, maintenance and numerous family-friendly amenities on the ground floor, or more luxuriously with a swimming pool, spa, gym. Such properties are sold during the construction, and usually presume phased construction with a possibility to influence a final layout of your apartment with interior modifications or to choose some of the finishing works.
Large-scale complexes apart from offering a whole new lifestyle for the whole family preserve the value of your property in years to come. Namely, each phase of the construction brings slightly higher prices thereto the buyers who smartly choose one of the first phases of a project can expect to gain on the property value once the whole complex is fully finished. Furthermore, the rental market recognizes much better projects with a concept, therefore the apartments bought for rental purposes achieve premium market rents and represent the first choice of international professionals or diplomats living and working in Belgrade.
“The research undertaken by CBS International showed that, at the moment there are no significant changes in the sales prices for newly-built units”
Secondary market properties may, on the other hand, pride itself on a great micro-location in the areas where the availability of land lots for new developments is rather scarce and limited. Nonetheless, the challenging factor may be an absence of a parking space, a lift, or too old and neglected entrance, façade of the building which greatly diminishes the overall value of the property and is not something you can change. Also lack of any amenities or property management services, a need for renovation which though seemingly minor may in practice exceed the initial expectations of a buyer.
On the other hand, newly built large-scale projects of renowned international and domestic investors usually have a project financing bank, which gives additional safety to a buyer and allows for housing loan options even in the earliest phases of the construction.
Furthermore, the investors of large-scale projects are dedicating more and more time to initial development advisory process which is a key to project marketability, thoroughly analyzing the needs and expectations of specific target groups for the given micro-location in terms of the preferred apartment structures, optimal sizes of an apartment versus a number of bedrooms which is much dependent on the micro-location, functionality of the apartment interior in terms of the sizes of the individual rooms, room width, envisaged number of bathrooms, size of the terrace, as well as the expected level of finishing works, choice of the equipment, optimal cooling and heating systems in regard to the location and expected preferences of the target buyers. Both international and domestic investors are trying with each new project to offer something new, some new unique selling point that will differentiate their project in the eyes of the buyers.
In light of the still unstable situation caused by a pandemic, real estate remains to be one of the safest investments in our market. However, although for the past couple of years Belgrade residential market has been booming, we expect a certain impact in the near-term due to the altered circumstances with a pandemic, having in mind that some buyers may choose to delay purchase decisions. A leading real estate consultancy CBS International, part of the Cushman & Wakefield Group, has recently conducted comprehensive research of Belgrade residential market, which included the analysis of around 300 residential projects in various construction phases in all central Belgrade municipalities. In addition, the secondary market was also analyzed.
The research undertaken by CBS International showed that at the moment there are no significant changes in the sales prices for newly-built units. Namely, large-scale investors are keeping the same sales prices which were established prior to the commencement of this situation, offering a regular discount. A slight price decline is visible in case of smaller, financially more vulnerable local investors, usually without project financing, who develop the projects of up to 50 units and are forced to speed up the sales process by offering lower prices. When it comes to the secondary market, the downward trend in the prices is visible in less than 5% of offered apartments.
“In the light of the still unstable situation caused by a pandemic, real estate remains to be one of the safest investments in our market”
Buyer sentiment is expected to be more cautious, especially for housing-loan dependent buyers, until the situation improves. In addition, traditionally strong demand for apartment purchase in Belgrade has also been coming from the Serbs living abroad, whereas this group is now experiencing difficulties in travelling, postponing their arrival for when it becomes easier. On the other hand, there were no measures limiting construction works in Serbia and most construction sites remained active, with preventative measures being taken. Due to the permitting processes slowdown and other obstacles, some scheduled completions could witness a slight delay.
What is very positive is that new phases of the large-scale projects that have already been established in the market are starting construction, while the plans of the investors regarding new developments continue to unfold, some of them planning to start till year close.
Based on a day-to-day communication with the buyers, CBS hand-on experience shows that the demand is picking up since mid-May, and since there are no impediments in terms of the administrative side of the sales & purchase process, i.e. all supporting institutions are working normally like notaries, banks, cadaster, buyers are seeing the present moment in the market as favourable and safe to invest, especially in case of the projects where the actual move in date is rather close.
Market recovering
As of May, the market started to recover, and more activity was noted in terms of the demand. When analyzing the demand in H1, 6,840 residential units were sold in Belgrade in the first six months of 2020 (Jan 1- Jun 30), which represents a decrease of 22% only in comparison with the same period in 2019 (when 8,800 apartments were sold), thanks to a stronger activity as of mid-May.