31. Oct 2023
Photo: CBS International

Upcoming trends and the future development of the real estate sector were the key topics of a conference organized by the leading real estate consultancy in Serbia, CBS International, part of the Cushman & Wakefield Group.

The event called „Shaping the Future of Real Estate“ brought together numerous corporate clients and companies that shape the world of real estate and influence its development in Serbia.

The conference consisted of two panels. The first panel focused on the specifics of the real estate sector that connect different types of businesses and was moderated by Nenad Suzić, Head of Valuation and Development Advisory at CBS International. Panelists in this section included Igor Stebernak, Advisor to the Executive Board of NLB Komercijalna Banka, Aleksandra Čupić, Head of Real Estate Department at Erste Bank, Milica Golubović, Vice President for Marketing and Real Estate at Delhaize Serbia, Aćim Leon Pantelić, CEO of WeShare, as well as Saša Popović, Co-Founder and CEO of Vega IT. The idea behind this panel was to present the bankers/financiers point of view and lessees - representatives of the IT industry and retail property chain, as the significant drivers of the market growth so far.

(Photo: CBS International)

The first panel discussed the corelation between financing costs, the role of banks, and changes in interest rates. In the past decade, interest rates were close to 0%, but this extremely favorable financing was an unusual trend. Now, even though reference interest rates return to the range of 2-4% which is considered normal, financing became more expensive than in the previous period and requires market adaptation. However, what stood out was that in Serbia, despite increased financing costs, there is still significant investor interest in real estate, unlike the situation in the region. On the other hand, when it comes to reducing the operating costs of companies, the principles of the "green agenda" are highly supported, primarily through loans aimed at reducing long-term costs through the use of renewable energy sources.

Due to extremely favorable financing, a lot of money has been invested in start-up companies in recent years, leading to the creation of a large "bubble" in the IT sector. However, as financing becomes more expensive, i.e., the increase in interest rates has made technology investment more rational. Nevertheless, given that the IT sector is essential to many industries, a major crisis is not expected in this business area.

Although the IT world pioneered the hybrid work model, especially remote work, this community is increasingly realizing the shortcomings of such a work model, and a significant number of people are expected to return to the offices in the next 2-3 years.

When discussing about modern concepts of real estate, primarily office space, co-working spaces are an unavoidable topic. This concept is currently expanding, and in addition to the IT industry, it is becoming the office space for many companies considered to belong to more conservative industries, thanks to flexible lease terms, location choices, fully equipped spaces, while meeting the true needs of tenant companies' work dynamics.

Supermarkets, as significant representatives of retail space lessees, will continue to adapt to new trends, primarily focusing on reducing size from hypermarkets to smaller formats, as well as providing additional content that is becoming increasingly important in the modern consumer experience. The focus is also on positioning warehouse space in well-connected locations to support the growth of online shopping, which has had double-digit growth in recent years and is expected to continue in future.

The second panel provided insights from the leading investors in commercial property market on future trends in this industry. The discussion on this topic included Pinar Yalçınkaya, CEO of MPC Properties, Angelina Nekić, CEO of Delta Real Estate and Vice President of Delta Holding, as well as Petar Kolognat, Business Development Director at CTP Serbia. This thematically attractive panel was moderated by Goran Živković, Managing Director of CBS International. It was emphasized that the Serbian commercial real estate market, specifically office space, retail, and the industrial segment have significant growth potential. Demand for such spaces remains stable and is created by companies with long-term growth and expansion strategies in our market. Investors respond to these tenant demands with a diversified portfolio of modern properties that meet the real needs of the market.

On another note, current global circumstances, supply chain crises, and the rising costs of construction materials have not bypassed Serbia either, which represent significant challenges for the investors. However, as the Serbian market is relatively young, and the vacancy rate is very low, landlords have managed to achieve record results in the past period.

Less favorable worldwide events from the pandemic to the present have also shown that companies from Western Europe do not prefer to have their product warehouses and subcontractors at very distant locations. Thus, the industrial real estate market in Serbia is becoming increasingly important. Chinese companies, as significant manufacturers and partners of other companies for various final product components, see Serbia as an ideal market close to their European partners and the safest investment point in Europe.

(Photo: CBS International)

All speakers in the second panel agreed on the importance of real implementation of ESG standards in the real estate sector, in addition to intensive discussion about it. However, it is a slower process than expected, as the construction methods conforming to ESG standards are more expensive compared to commercial buildings constructed so far. The implementation of ESG standards in construction should reduce the operating costs of tenant companies in the long run, but it will increase rental levels due to higher construction costs for such buildings, making it the first challenge that landlords will face. Nevertheless, ESG standards go far beyond construction methods and their impact on the environment. They are largely about how a company affects the community in which it operates, and the real estate industry is a pioneer of ESG principles implementation into its business.

There was also talk about the importance of the Expo 2027 event, which will have a very positive impact on various service industries in the city, and an expansion of all real estate sectors is expected - residential, retail, and hotel. In addition, the development of previously underdeveloped parts of Belgrade is expected, and an improvement in Serbia's overall image in the world is inevitable, according to the panelists.

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