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In recent years Serbia has welcomed many foreign experts, now well-recognised employees in a number of international companies which operate in Serbia. One of them is Erwan Le Bloas, a senior valuer in one of the leading real estate consultancies CB Richard Ellis.
Beobuild team had a pleasure to talk to him and see how he sees present situation on the property market in Serbia and how it compares to other Eastern European countries.
The first question that somehow crosses my mind is how come you have chosen Belgrade and how do you like it here so far?
Actually, I’ve come here with my family as we had an opportunity to choose among 5 countries in Eastern Europe to live and work. So, we first visited Kiev and then made a short trip to Belgrade which was more than enough – we fell in love with it at first sight. We were delighted with people and the hospitality, quality of life, cuisine, the charm of the Danube and the strong relationship people here have with the French. It is now 4 months that we live here and we truly enjoy it.
You have previously worked for CB Richard Ellis in Paris, so could you tell me more about your field of work there and how it relates to your present role in CB Richard Ellis Serbia?
I worked for CB Richard Ellis Paris for 4 years as certified real estate valuer and Valuation Team Manager, in charge of key account clients AXA (Leading Insurance Company), Deutsche Bank, Gecina and UFG (investment companies). Before joining CBRE I worked as an asset manager for 2 years. Most of my valuation work in CBRE was focused on office market, but I also worked a lot on valuations of hotels, warehouses, retail parks both in Paris and elsewhere.As per my present role in CBRE Serbia, I work as a senior consultant in Valuation & Development Advisory Department, engaged in valuation advisory, development consultancy, feasibility studies, highest and best use analysis, as our team here in Serbia covers all segments of the property market both in Serbia and Montenegro.
As somebody coming from a Western European country, what were your expectations regarding property market in Serbia and how do you see present market trends with regard to financial crisis?
Serbian property market is very mixed. There is an undersupply for everything concerning the retail and oversupply of office space. As concerns the housing market, prices are rather high as compared to European standards. With the crisis, as in all countries, investment almost stopped, which I hope will change starting from Spring 2010.
To what extent has French property market suffered from the crisis and what in your view should Serbian market expect with regard to price corrections and investment potential.
It is difficult to compare these two markets, as French market is fully developed, stable in all segments of the property market, except for the chronic undersupply of residential properties. France is very attractive to foreign investors, as fruitful market for long-term safe investments. However, France as other countries has been considerably affected by the crisis. The good thing is that supply on the French market is far more diversified than in London, for instance, where the banking sector occupies the main part of office market. However, investments declined significantly. Thus, in 2008, only EUR 12.5 b changed hands on French commercial property investment market (offices, warehouses, light industrial and retail premises). The fall appeared particularly significant when compared to the record levels in 2006 and 2007: over one year, it reached 55%. Although it was a severe shock, France stood up better than its two main European competitors, Great Britain (-64%) and Germany (-68%).
Likewise, Serbian property market faced almost complete absence of demand at the beginning of the year, which led to a decrease in prices generally and lowering of the rents to certain extent. Yet, it should show signs of upturn in early 2010, as banks are thinking of resuming project financing, which should give a new boost to office, retail and residential projects. Actually, some of the biggest investors who postponed their announced projects are now actively thinking of resuming them, and commencing the construction.
Speaking of Eastern European block, how does Serbia compare to the neighbouring countries that have already become EU member countries?
As concerns the impact of the crisis on the markets of Eastern Europe, it seems that Serbia suffers less than its neighbours, for different reasons. First, Serbia had had elections several months before the crisis began, and this means that the government had had enough time to implement unpopular policy measures for fighting against the crisis that followed. On the other hand, in some other countries in the region, due to the pending elections, governments were much more hesitant to implement necessary adjustments. Secondly, the government managed to strike a new balance, and as compared to the Baltic countries and Ukraine, where there is a collapse, Serbia is doing relatively well.
Which property market segments do you believe are underdeveloped in Serbia and thus bear significant investment potential?
In my opinion, Serbian market has important axis of development in retail (shopping centers) and hotel market. Namely, the retail ratio (number of sq m per 1.000 inhabitants) is one of the lowest in the region, and although in recent years the market has been enriched with new shopping centers, there is still great development potential.As per hotel market, the offer is not suitable for European standards and it is rather aging. Furthermore, I strongly believe in tourism potential in Serbia, which unfortunately is still not developed as Serbia lacks proper infrastructure to accommodate tourists and make them want to come again. All in all, I am confident in future development of Serbian market, as it have solid investment potential.