A New Constitution and Property in Serbia

Serbia has put the finishing touches to its new constitution ready for the referendum relating to the adoption of the constitution that will take place later this month and which is expected to result in general elections in either December 2006 or the spring 2007.  In finalizing the constitution Serbia has created a negative EU and UN storm, it has upset the IMF and despite claims by the International Economic Relations Minister Milan Parivodic that the constitution will ease the path for foreign direct investment into Serbia in fields such as property, there is much to suggest that potential real estate investors should take a wait and see approach to Serbian property for the short term at least.

The new constitution has been branded ‘inflammatory’ and as ‘heralding a return to the Milosevic era’ by some because the opening of the charter refers to Kosovo as “a constituent part of Serbia’s territory” whereas in reality the UN are currently handling the status talks between Serbia and Kosovo and international opinion is such that Kosovo will gain some form of independence.  Naturally enough this opening part of the constitution has upset the UN, and the European Union has urged Serbia not to delay or block a settlement relating to Kosovo. 

The EU has reprimanded Serbia further, it has advised the nation that it has to dramatically improve its international attitude if it is to benefit from a resumption of negotiations relating to the formation of an association agreement that were frozen last May.  Key to the resumption of talks and the progress of Serbia towards EU acceptance is a change in the nation’s attitude towards alleged perpetrators of war crimes that Serbia is believed to be shielding - however no such attitude change seems to be forthcoming yet.

As a result of the ensuing referendum and expected general elections Serbia has put on hold indefinitely the privatization of the state run oil company NIS.  The successful privatization was a condition set by the IMF if Serbia wanted the International Monetary Fund’s ongoing support of its bid to become a market economy and so naturally enough this is another way that Serbia has shot itself in the foot with the new constitution.

Serbia claims that the privatization will be back on track after the general elections but no date has yet been set for the elections and so many are concerned about the nation’s actions and what they could mean for the future transition of Serbia away from communism and international isolation.

Speaking recently the Serbian International Economic Relations Minister Milan Parivodic advised a meeting of foreign investors that the constitution will pave the way for the passing of the Law of Restitution by the end of the year and that this will ultimately pave the way for greater foreign direct investment commitment to Serbia particularly in the field of property investment. 

The law should remove Serbia’s state monopoly over control of key building ground and open up the market to competition, this could create a great opportunity particularly in Belgrade for the development of commercial and residential property in Serbia but because politically everything is so up in the air in Serbia and international relations are rather tenuous at the moment it would take a brave investor to commit to Serbian property right now.

Special Reports: Property News for Serbia

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Serbia is an interesting long term prospect for a property investor with growth in domestic purchasing power essential for profitability.

Serbia Property Investment Guide
Serbia offers property investors long term capital appreciation potential as well as short term rental yield growth