From gloom to boom: Serbia’s residential

Written by Dejan Krajinović, Beobuild Core D.O.O, EECFA Serbia

Residential construction in Serbia is performing extremely well, and the long-awaited recovery is now well underway, with 2018 volumes again surpassing initial expectations. The situation on the market has been brewing for some time, with a strong investor confidence as well as very favorable financial conditions fueling expansion.

There has been a steady growth in construction activity for 4 years in a row now, but this trend has all the necessary conditions to sustain these levels and produce more growth in the coming years. Housing construction is flourishing, being already one of the best performing sectors in the overall building construction.

New projects are lining up, boosting permit numbers to record levels. Although it is expected for permits to hit the roof in 2020, the amount of permitted homes will certainly drive this growth cycle for several more years.

Top: Belgrade Waterfront/St.Regis Tower; Bottom left: Skyline complex; Bottom right: West65 tower – Source: : Beobuild Core D.O.O

Serbia’s residential market though is coming from a very low-end of its potential – hitting historical bottom after a long and very deep recession that ended in 2014. With such a small basis at the time, an upswing was expected in construction volumes, but the current strength and speed of the recovery seemed too optimistic.

Investment activity has accelerated, with the strong contribution of both domestic and foreign investors, creating a real boom in the construction of multi-unit buildings. Investors from around the world have already entered the market, particularly Belgrade’s starved luxurious segment and yielding high-end residential projects. The competition of large-scale projects by international and domestic investors is bringing a whole new level of market sophistication, with different services, features and amenities.

The most notable is the Belgrade Waterfront development, a large-scale re-urbanization of the banks of the Sava River in Central Belgrade, covering 80ha of prime construction land. This project is a joint venture of the Republic of Serbia and Abu Dhabi-based investment fund ‘Eagle Hills’, estimated to be worth more than EUR 3bln. The area once home to the city’s old railways station is now part of an ongoing residential boom, with 900 units already under construction and thousands more planned in the coming years. High-rise residential complexes dominate the master plan, including the construction of 42-storey landmark tower on the Sava quay. Preparatory works have already begun, and the main contractor will be announced by the end of this year. There are indications that Besix (Belgium) is the main candidate for the job which includes the construction of a skyscraper with exclusive 220 residential units and branded ‘St. Regis’ apartments.

The trend of high-rise residential construction is visible in other ongoing projects as well, particularly the Skyline Belgrade and West65 complexes, with 80m and 150m towers, respectably. Urban planning rules were loosened in order to improve the investment climate and investors rushed to monetize their exclusive locations with high-rise residential buildings. There are already a dozen residential towers planned or under construction in the premium and high-end segment. This will supply the market with a couple of thousands high-rise apartments, all landing the market in a relatively short time. Beside the aspiring class at home, one of the main target groups for project marketing is the large Serbian Diaspora as well.

Together with a booming premium market, there is another positive development looming on the horizon for the construction industry. With budgetary surpluses, the Government announced plans to restart housing programs for public servants in 2019 in order to subsidize the construction of more than 8000 affordable units in the next few years, primarily for public servants, military personnel and the police. Currently, this program is estimated to be worth more than EUR 250mln in total, but it can easily be expanded in the coming years. The intention is to provide preferential home prices (significantly lower than the market ones) as a fringe benefit and incentive. As this is not a social housing program, these projects should represent low density, quality family homes on relatively good locations. Furthermore, most projects in this program will be located in smaller towns around Serbia.

The resumption of the state housing programs seems to be a confirmation that the residential segment should sustain growth and add more volumes in the coming period. This will also provide a needful injection for smaller local construction companies, giving them opportunity to boost their business and references.

In 2018 home permits continued to grow against 2017, still holding their steam after 4 consecutive years of expansion. The yearly number of permitted homes increased from around 8890 in 2014 to an estimated over 21000 units in 2018. This just shows the scope of the change in the market and the potency of this growth cycle. It now seems certain this cycle will very soon break the peak levels of the pre-crisis years.

You may read more details in the current EECFA Forecast Report Serbia up to 2020. Sample report: 


Leave a Reply