All started in 2007
I have to write this, as I just cannot believe what is going on with the property market in Novi Sad, Vojvodina, and Serbia in the last few months. It all started in September 2007 when we had three foreign investors contacting us to find a land in Novi Sad on which to build commercial and residential real estate. That was really good news after the slow summer days. Then, October and November brought twelve more investors from abroad looking for real estate on which to build shopping malls, factories, trading outlets, high-rise commercial buildings and residential buildings (one was even interested in buying a whole section of the old town), and so on.
Great, isn’t it? Yes! It is great for city development, the expansion of businesses, the expansion of tourism, and more employment opportunities, to name just a few. However, I asked myself. What is going on, that they (the investors) know that we don’t know?
Not only are investors knocking on our door every week, there is another issue we are concerned with. Prices of apartments have increased 20 to 30 percent in the last three months. What is more surprising is that there is a lack of one- and two-bedroom apartments for sale, and studio apartments cannot be found anywhere in Novi Sad!
My research yielded even more alarming information: Everyone is waiting for prices to increase even more, and they have stopped sales of available properties! So, what is going on? Following more research, more talking with the people in real estate businesses, monitoring information from TV, newspapers and magazines, and talking with some administrators and politicians, the conclusion is this:
There is a high demand on available properties in Novi Sad, the whole Vojvodina Province, Belgrade, and the other larger cities in Serbia.
Why? Is it politics? Are we going to enter the European Union very soon? Is it because of the break-up of the former Jugoslav republic and the emergence of the many separate nation-states in the Balkans? Is it because the labor force in Serbia is the most well-trained and works for the lowest wages in Europe? Maybe Serbia is in an advantageous position as the cross-roads to Eastern Europe and Russia.
Or, is it something else not mentioned above…
I didn’t mention that banks are competing with loans for apartment buyers, didn’t touch the issue of current salaries (that are the same, or even lower on average than three months ago), unemployment rate, other price increases… If you know the answer, please tell me what is going on? Even though I really like foreign investors coming to our country, I cannot understand that sudden demand in such a short time, and when these prices swell will stop?
For past seven years we have witnessed ups and downs of real estate market in Novi Sad. I will give below an example of apartment prices per square meter in new building constructions only.
– March 2007: 800 EUR m²
– October 2007: 900 EUR m²
– March 2008: 1000 EUR m²
– October 2008: 1200 EUR m²
– March 2009: 1300 EUR m²
– October 2009: 1400 EUR m²
– March 2010: 1500 EUR m²
– October 2010: 1500 EUR m²
– March 2011: 1400 EUR m²
– October 2011: 1400 EUR m²
– March 2012: 1300 EUR m²
– October 2012: 1300 EUR m²
– March 2013: 1000 EUR m²
– October 2013: 900 EUR m²
– March 2014: 900 EUR m²
– October 2014: 900 EUR m²
It is obvious how prices were increasing until March 2010, and interesting how prices slowly dropped in 2011 and 2012. From construction boom in 2008, when Novi Sad was one of the biggest construction sites in Europe with over 50 construction sites every year until 2011, in 2013 we witnessed only 3-4 construction sites in city.
Property boom lasted for 2-3 years. People were afraid prices will rise even more, therefore they got bank loans, and spent savings to buy property in Novi Sad. Today, most of apartments are for rent or for sale, as the cost of living increased by 50-60% comparing to 2007. Banks have already taken over 22% of apartments from people who couldn’t keep with ever rising interest rates. Folks above 50 years have lost their jobs, and young people are having trouble finding employment…
In 2009 I was interviewed by local radio station with main question: What do I think about price increase in real estate market, and what are price expectations in the feature? First reply was: “It is insane!” followed by explanation why I believe it will not last for long. Unfortunately, property market today is on lowest point ever. Yes, in boom years Novi Sad got a few shopping malls and storage facilities, but none of industrial buildings which will employ and empower people.