Real Estate Buyers in Serbia: Apartments as an Investment and Leading Cash Buyer

Real estate remains an enduring value, but due to high prices per square meter and increasingly expensive loans, in recent months many have struggled to decide to take on long-term debt to put a roof over their heads.

Square meter prices have still not responded to the apparent drop in demand, so they remain expensive. With euroboro rising, which has the effect of increasing monthly payments, more people are buying apartments as an investment. The ratio is now 60 to 40 in favor of investment buyers, and there are still more buyers who are buying properties for cash.

The cash buyers are still from the IT industry,''entrepreneurs, owners who sell their own apartments and invest in real estate, as well as those who inherit apartments and then decide to buy a new one.

In the second quarter of this year, 30,548 properties were sold in Serbia. Although data from the State Geodetic Institution for the second quarter of this year shows a slight decrease in demand, the real estate market is still well above pre-pandemic levels, with a value of 1.7 billion euros 70 percent higher than in 2019. According to the State Statistical Office, the area of new apartments sold last year was 57 square meters.

Evaluator MilicвЂokovic says the profile of a typical apartment buyer varies in''depending on whether he or she is buying real estate for living or as an investment.

Those looking for an apartment for personal needs are usually a married couple with one child between 30 and 40 years old, and they choose a property in a new building of about 50-60 square meters and take a loan for it. In 70 percent of cases, one of them works in the civil service and the other works in a private company or has his own business. Cash is paid mainly by older people who have sold their large apartment to buy two smaller ones, one of which is intended for younger family members, or those who want to save and invest in real estate.

Younger people buy on credit, at the last minute, no later than age 45, because banks are later''harder or no loans are approved at all. When that young person, or young married couple, buys real estate on credit, their sellers are usually cash buyers. These sellers then become cash buyers, middle-aged and older people, 40 to 80 years old and older. About 60 percent or two-thirds of young people decide to buy their first apartment in a new building from a builder, while the reverse is true among older people, with two-thirds opting for an older building. There is a conflict of generations and opinions here about what is a good choice.

Milos Mitic, executive director of City Expert, said for Euronews''professions, they are entrepreneurs, people from the IT industry, the digital sector and anything related to new technologies,' Mitic said.

Mitic notes that investment buyers still want to preserve the value of their money from inflation. "We have a lot of Russian citizens who are currently buying, these are mostly also cash purchases, they are buying apartments, primarily in Belgrade and Novi Sad. How long they will stay, whether it is a temporary investment, that is also questionable, because many of them immediately rent out that apartment," Mitic said.

When it comes to the origin of the buyers, Ђokovic says you can't say that the typical buyer is a Belgrade resident, because only one in three buyers''already living in the capital. "We have done an analysis that shows that a little over 10 percent of buyers come from the diaspora, the same number come from countries in the region, such as Bosnia and Herzegovina, Croatia and Montenegro, and about the same percentage are people from Kosovo. About 30 percent come from other regions of Serbia, and about 30 percent from Belgrade. In a small percentage, about 5 percent, are foreigners who buy for investment, are concerned about their profit, and it does not matter to them whether they buy in Belgrade or Tirana, they choose the place where they get the most benefit," explains MilicвЂokovic for 4zida.

He notes that there are no definite rules regarding professions and adds that there has been an expressed interest of IT professionals, but the last few months the crisis''has affected this sector as well. "There are small business people who are investing in real estate to avoid income tax. Real estate is an enduring value and people of all profiles are investing in it," says the appraiser.

He notes that buyers on credit are finding it increasingly difficult to "outbid" and get a loan. First, because the high prices per square meter "pile up" and the size of the down payment, and now even 20,000 euros is not enough for a contribution of 20 percent, and then because of increasingly difficult credit conditions and high interest rates. "Today it is difficult to buy a family apartment for 100,000 euros, and even this amount is difficult to achieve for most families. It is difficult for them to prepare a down payment, and they must have an income of at least 155,000 dinars, tho''there are about 1,400 euros for the bank to approve a loan for them,' says MilicвЂokovic.