15. Jun 2023
Photo: Colliers Serbia

The worldwide commercial real estate market is still very unstable, given global inflation, which continues to decline but will remain high until 2024, and rising interest rates that pose a significant credit risk. However, despite global changes, which undoubtedly have an impact on business in Serbia, we saw a record influx of foreign investments, a record-low vacancy rate for office space, a record-high demand for more square footage in industrial zones, and a strong level of construction activity last year. Given all these parameters, we can assume that this year will be even better than the previous one for the commercial real estate sector, according to Irena Ilin, MRICS, REV, Head of Valuation at Colliers Serbia and the only appraiser in Serbia with a RICS certificate for commercial property survey. Wie discussed with Irena the commercial real estate market trends as well as the importance of professional real estate valuation, both for the needs of clients and for a clear overview of macroeconomic trends and financial stability.

Which parts of commercial real estate are showing the most activity in terms of increased demand, construction, and market value?

Logistics centers experienced a peak in demand and construction in Serbia during the pandemic, and that trend continues. Several projects of this type have been started and announced, such as the future VGP Park Belgrade in Dobanovci with a NLA of about 487,000 m2. After logistics facilities, office space is the most demanded. The vacancy rate of office space in the last few years has been extremely low; the current rate is less than 3%, which means that even the new 200,000 m2, which is expected to be additionally built this year, will not fully satisfy the high demand and needs of the market. When it comes to retail space, there is a noticeable trend toward developing retail parks in smaller cities, and the market in this sector should increase by about 50,000 m2 by the end of the year. Certainly, the greatest activity can be expected in the logistics and office space sectors, as we can also expect an increase in their market value, which is affected by higher rental prices due to the increase in construction prices.

The current office space vacancy rate is less than 3% / Photo: Pixabay

In terms of the development of commercial real estate, what distinguishes Serbia from the rest of the region, and for what kinds of commercial buildings can we say that we are perhaps particularly suitable?

Our geographical position makes us suitable for logistics centers, and we should capitalize on this advantage in light of shifting global conditions and the growing "nearshoring" trend. With the outbreak of war in Ukraine, many educated business people from Russia and Ukraine saw the possibility of continuing their business activities in Serbia. This certainly set us apart from the rest of the region and increased the demand for office space. As the current market demand shows, what we lack the most are premium-quality office spaces for companies with up to 10 employees and coworking centers.

We may be the perfect location for the development of industrial, technological, logistical, business, and retail parks, but what is obvious in the expansion is the construction of apart-hotels with an increasing supply of apartments that are bought as investments. Do you think this trend will continue to expand, and how profitable are these investments?

The trend of buying apartments as a type of investment has been present for years in our country. Until recently, the most sought-after locations were Belgrade and Novi Sad, and now the market is increasingly moving towards large tourist centers, such as Kopaonik, Zlatibor, Vrnjačka Banja, etc. Depending on the location, the return on investment can be expected within 8 to 12 years, which is very good. I believe that this trend will continue since we still have unused potential for such projects, such as Stara Planina or Tara, where this type of construction has not yet expanded. It is important to note that when planning projects of this type, care must be taken to ensure that they are in harmony with nature so as not to damage natural resources. Unfortunately, we have already failed a lot here, above all in Kopaonik and Zlatibor, where the lack of proper urban planning is evident.

The market lacks coworking centers / Foto: Freepik

Energy efficiency and green construction are almost becoming the standard when it comes to office buildings and industrial and logistics facilities, which foreign companies especially insist on, either as tenants or as investors. Do green certificates increase the value of buildings?

Large foreign companies, through the implementation of their corporate policies, have influenced the establishment of many standards in our country, including those regarding green construction. A relatively small number of buildings in our country have a green certificate, perhaps around 150, but it is encouraging that they are mostly commercial-type buildings and that large investors are aware of the importance of a new construction culture. Green certificates certainly raise the value of buildings, but to what extent depends on how "green" they are. If you have a building that uses renewable energy sources, has a rainwater collection system, implements innovative solutions that reduce energy and electricity consumption, saves water, has a green roof, has smart systems in the form of sensors that regulate aspects of comfort, and the like, you certainly have reasonable arguments to ask for a higher rental price. And when the object realizes a reasonably higher rental price, it also raises its market value.

Why is a professional real estate valuation important, how challenging is it to estimate real estate value, and for what purposes is this service used?

The real estate market has a significant impact on macroeconomic trends and financial stability, and in this sense, systematic monitoring of market development and its prospects is very important, both for a comprehensive analysis of macroeconomic conditions and the perspective of the economy in general and for a professional assessment of the value of real estate for the needs of clients. The valuation is an integral part of the portfolio of services provided by Colliers Serbia because an objective assessment of the market value of a property significantly influences decisions that are in the best interest of the client, whether it is a new investment or a decision about whether the property should be sold or leased. The purchase and sale of a property is undoubtedly the most frequent reason for real estate valuations, but clients also request our assistance with these tasks for a variety of other reasons, including getting a mortgage, insurance, taxation, investment analysis, making business decisions, legal disputes, and bankruptcy cases. The second half of the year is always reserved for valuations for financial reports. Banks today have somewhat stricter conditions for issuing loans, especially when we look at loans with variable interest, because the value of the Euribor is at a historical maximum, so the number of requests for such assessments has decreased. Regardless of the reason, Colliers Serbia's team of certified appraisers performs their work conscientiously and responsibly according to the law and the principles of their profession, with the application of a clear methodology and compliance with RICS standards, adapted to the local market based on our comprehensive knowledge of local regulations and laws, standards, and market trends.

I must note that in our market, there are still a small number of transactions and insufficiently transparent data when it comes to selling or renting space, which is certainly challenging for appraisers.

Logistics centers experienced a peak during the pandemic, and that trend continues / Foto: Freepik

Commercial real estate is most often rented out and less often sold, but from time to time we have cases of larger acquisitions. Has any major transaction of this type recently been recorded in our market?

Recently, we have had several sales of large office buildings from the 70s and 80s of the 20th century. Delta bought the Sava Center in 2020; the reconstruction is underway, bringing a new congress center to Belgrade and Serbia, unique in the region. Somewhere at the same time, Marera bought the symbol of Belgrade, the Beogradjanka building, now the Belgrade Palace, and then the sale of the BIGZ building followed, with almost 40,000 m2 (GFA) of new office space planned. At the beginning of the year, another symbol of Belgrade, the Genex Tower, was sold, which should provide about 15,000 m2 of new office space in Belgrade.

Professional real estate valuation services are performed by licensed appraisers. How is a license acquired, including that flattering MRICS title you have, and why is the RICS certificate important in this business?

National licenses are issued by the Ministry of Finance. In order to get a license, you need at least three years of experience in real estate valuation, training in one of the accredited associations, and passing a test administered by the Ministry of Finance's expert commission, which is made up of representatives of the industry, certified appraisers, and the Ministry of Finance. RICS, short for the Royal Institution of Chartered Surveyors, an association founded in England as far back as 1868, sets guidelines derived from the best practice of appraisals. It is important that, as appraisers, we are familiar with and always up-to-date with the practices and standards set by markets that are much more developed than ours. That is, it is important that we apply best practices and high ethical standards to our reports. Our national standards also draw on International Valuation Standards and the RICS Red Book. To obtain the MRICS title, you need a relevant degree, a proven professional qualification, or ten years of relevant experience.


Irena Ilin graduated from the Faculty of Civil Engineering at the University of Belgrade. She started her professional career in 2000 at Energoprojekt. After that, she worked at ProCredit Bank, first as a valuation consultant and, from 2006, as head of the investment department. In May 2011, she joined the team at Hypo Alpe Adria Bank as head of the real estate valuation department. Since March 2016, she has been working at HETA Asset Resolution as the director of the asset management and sales department, with great success. In 2021, she founded her own company, Valuation Advisory, and since the beginning of 2023, she has been head of valuation at Colliers Serbia. She owns license numbers 310 and 410 issued by the Serbian Chamber of Engineers. In September 2014, she became a Recognized European Valuer (REV) through the TEGoVA member association. In 2015, she has earned a RICS certificate for commercial real estate valuation and is the only holder of this certificate in Serbia. In 2017, she also earned a certificate for business valuation from ACCA. Since 2017, she has had a national license for real estate valuation. In 2020, she earned the title of MRICS.

By: Jovana Nikolić

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