Do you get depressed when you hear stories about people buying properties in Prague or Budapest or Riga a decade ago for sums that sound like pocket change these days? Do you look at the prices in most of the Eastern European cities and think that you’ve left it too late already? That you missed the boat?
Well maybe not. There is still a chance that you can see the same type of future growth that buyers in cities like Prague and Budapest have seen over the past decade. However, as buyers in those cities were seen to be taking quite a major risk back in those days, so this is not an investment for the faint-hearted.
Yes, we are talking about Belgrade in Serbia.
Go back 20 years and Belgrade was the booming capital of the booming country of Yugoslavia, one of the most important and most productive cities in Eastern Europe.
All this changed, however, in 1991 when Serbian nationalism led to the dissolution of Yugoslavia and the terrible ethnic-cleansing of Bosnia and then Kosovo. During this period, Serbia became a pariah state – dismissed from the United Nations, subject to trade embargoes, bombed by NATO. Serbia was public enemy number one, with Serbians making excellent villains in Bond movies.
Since Slobodan Milosevic was ousted in the elections of 2000, however, there has started to be some improvement in Serbia’s situation, with the country being allowed back into the United Nations the following year. There still remains a lot of work to be done in the country to restore its economy and infrastructure after a decade of problems, however, with the country having a standard of living lower than just about any other country in Europe. With the economy having been in such a mess, it will be no surprise to learn that EU accession
isn’t going to be happening any time soon, although talks are taking place (some people are talking of EU entry around 2012-2015). This should be helped by elections in January 2007 that returned a generally pro-Western coalition.
All in all, it’s not looking that bright at the moment for Serbia. Want some more bad news? Property prices were more or less stagnant in 2006. Knight Frank don’t give any forecasts for 2007. They’re probably too scared to send anyone there to find out!
So if you are looking for a nice safe get rich quick scheme, stop reading now. Avoid Serbia like the plague. However, if you are a speculator and are building up a decent sized portfolio across a number of different countries and are looking for longterm growth, Belgrade could be of interest. Certainly commercial developers are starting to tall about opening modern shopping malls there, so they are obviously confident that things are going to get better soon.
Why do we think that Belgrade offers potential? First of all, prices are still reasonably low there. Admittedly not as low as in Sofia, but lower that just about anywhere else in Europe. When (hopefully not ‘if’) Belgrade gets back to somewhere near its former glories, the prices have a lot of lost ground to make up. Another positive factor is that mortgages are available in Serbia. The interest rates are pretty high, but the 30 year duration is among the best available anywhere.
The high interest rates mean that not so many of the locals are able to afford mortgages. As a result, most of them are going to have to rent property, which means that rental yields here are very good. As the Serbian economy starts to catch up, a lot of foreign multinationals are likely to enter the territory over the next few years and their foreign employees are going to need somewhere to live. There is not so much new property development happening here at the moment, so this should mean that yields stay high for a long while to come.
Oh, and they won this year’s Eurovision Song Contest as well, which should raise the country’s profile a little.
In summary, Serbia is one of the riskiest territories that we cover on Propertastic! at the moment. Only you can balance the risk versus the reward. With prices not really increasing much at the moment, it’s probably worth waiting a while to see if the market starts moving rather than leaping in right now. But it’s definitely a market that’s worth keeping an eye on.
Additional Background Information
The above contains our thoughts on the current state of the market. But, like any type of investment, there are no guarantees as prices are always influenced by a huge number of different variables.
You can keep abreast of developments in the market by checking out the articles in our News section where we’ve trawled the Internet for every story connected with property in Serbia so you don’t have to. By checking the news reports regularly and thinking through the consequences of each piece of news, you should be able to get a good idea as to how quickly or slowly property prices in the market are going to rise in the near future.
The information in this section only tells half the story, however as only a small proportion of Serbian property news is translated in English, which means that the locals are getting a lot more useful information than foreigners are.
Investing in the wrong markets could make the difference between making tens of thousands and losing tens of thousands over the next few years. If you’re seriously considering investing in Serbia, then you should think of subscribing to our Premium Service so that you can get all the breaking news from the market at the same time the Serbians are hearing it.
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