Balkans Property Forum 2024" Held in Belgrade: Significant Investment Activities in Hotel and Residential Construction Expected in 2025

PREDICTIONS FOR 2025

According to Dr. Gabor Regos, Chief Economist of the Hungarian asset management company Granit Asset Management, predictions for the Southeast European real estate market in 2025 suggest significant growth, particularly in the Balkan region. Foreign investments are expected in the hotel and residential construction sectors, while logistics will depend on the competitiveness of European industries.

– The growth of Serbia's real estate market will be boosted by the EXPO 2027 exhibition, as this three-month event will require the construction of new infrastructure, hotels, and residential buildings. In short, these are projects essential for tourism development and structures that can be utilized post-exhibition, – Gabor emphasized, adding that housing prices will still be dictated by location and labor. Urban areas are more expensive than rural ones, and attracting labor to larger cities is challenging. – Apartments will continue to be purchased in cash and then rented out. This trend will persist, but investors will need to heed market demands and develop more affordable housing options suitable for buyers using credit, Gabor noted. He also stressed that national banks have helped stabilize inflation in the U.S. and the EU, but efforts in that direction must continue. Stable political conditions are critical for a significant surge in investments.

Maja Šahbaz Marojević from EY highlighted that investors prioritize stability and predictability, valuing both geopolitical and economic stability equally.

– Interest in hotel investments is no surprise, given the lack of quality options not only in Belgrade but also in other major Serbian cities. Residential construction has long been a "safe haven" for investors, and this trend will continue. However, the question arises whether the price increases are sustainable, Marojević pointed out.

Gabriela Rejes Vidrio, Head of the Real Estate Project Financing Sector at NLB Komercijalna Banka, confirmed that foreign investors are "lining up" to invest in the Serbian market. She noted that foreign investors now have more banking options and are no longer forced to "take or leave" the first offer they receive.

In recent years, Serbia has positioned itself as a highly attractive market for investments in industrial real estate (logistics and production), and this trend continues. The sector is accompanied by rapid road infrastructure development, and conference discussions highlighted substantial growth opportunities in the construction of data centers.

– Digitalization is advancing, and the amount of data is growing dramatically, making data center construction a "new gold mine" for investors. As for the region, dynamics will depend on whether major investors remain "cautious," investing in developed markets, or seek higher returns in local markets, where costs are lower but bureaucracy leaves room for corruption, – said Mario Kijanović of SOG.

According to Petar Kolognat, Business Development Director at CTP, Serbia's attractiveness in industrial real estate lies in its excellent geostrategic position, access to EU markets, and available workforce.

– CTP operates in 10 European countries, and in many of them, it's challenging to find quality land. Serbia has ample land, which is one reason we are so active in this market. Industrial zones in Belgrade and Novi Sad are well-developed, and we are developing industrial parks in Kragujevac, Jagodina, and Niš to remain competitive in offering manufacturing spaces (rental factories) in locations with sufficient labor. In Sombor, we purchased over 20 hectares to make other parts of the country attractive. Foreign investors, especially from the automotive industry, are particularly interested in smaller towns, – Kolognat said.

Vasilije Jauković from EBRD emphasized that Serbia is a very favorable market for investments in commercial real estate, with banks increasingly financing office building construction.

– Serbia, unlike some other European countries, is a highly promising market for commercial real estate investments in the coming years. In 2025, we will see projects we've been working on for some time. These involve the private sector, large institutional investors, and cooperation with the Serbian government on the second phase of developing science parks, – Jauković noted.

Although the labor market has shifted post-COVID, remote work is not here to stay. This was the conclusion of a panel dedicated to office space, which also emphasized the continued growth of hybrid work models that will shape future office designs.

Experts believe office spaces will be tailored to the nature of the work conducted. Investors will increasingly focus on making buildings adaptable over time, which will benefit tenants while increasing costs for space owners.

– In Belgrade, there is continuous growth in office buildings, which are also energy-efficient. The market is stable, with no major changes expected, – said Danijela Nedeljković Stojakov from BDO Serbia. She noted that remote work has opened up more "open space" office environments designed to meet tenant needs, providing comfortable workspaces where employees can be productive and grow their businesses.

– Investment activities in the hotel sector are significantly higher than before because people love to travel, and this habit has not changed, – said George Bobvos, Business Development Director at DDG Group. He sees the greatest weakness in the lack of branded apartments, five-star hotels, resorts extending the tourism season, and the challenge of maintaining higher occupancy rates in four-star and above hotels. However, the market is moving in this direction.

– Regarding Serbia, the upcoming EXPO 2027 presents an excellent investment opportunity, as more hotels will be needed. However, it is important to plan for sustainable development and consider how to utilize these capacities after the event, – emphasized David Jenkins, Vice President of Business Development for Eastern Europe at Radisson Hotel Group. He also announced the construction of another hotel under their brand in Niš.