Serbia: Situation Too Sensitive for Property Investment

The political situation in Serbia is considered too sensitive for property investment decisions to be made at the current time - despite the fact that Serbia has made strong and significant economic advancements to date and has great plans for 2007 and beyond regarding easing the entire property buying process for foreigners and making the overall investment climate even more attractive.

So what has brought about this investor reticence, how long is it likely to last and what positive factors could potentially change overall investor sentiment in 2007 and restart the investment property market in Serbia?  This article examines the current situation and future potential factors likely to affect the property market both positively and negatively. 

It’s an unfortunate fact that Serbia has long suffered from a poor reputation that it earned during the Milosevic era, and even though he was arrested in 2001 Serbia has failed to entirely cast off negative global perceptions of the nation and its people and re-brand itself as an emerging economy with plenty of potential for economic advancement offering international investors a chance to get in on a rapidly expanding nation.

The poor perception of Serbia wins out in spite of its achievements…and in terms of its achievements did you know that Belgrade is the Financial Times’ City of the future for Southern Europe/ South-East Central Europe at the moment, that FDI into Serbia more than doubled last year compared to 2005 when it actually outstripped 2004’s FDI levels by 63%, that 2.5 billion US dollars has already been committed in FDI in 2007, that exports rose in the first 10 months of 2006 by over 40% compared to the same period in 2005, that the likes of Microsoft have established a global development centre in Belgrade, that Bernie Ecclestone considers 2007 to be the year for him to invest in Serbia and that the Serbian government has an active Foreign Investment Incentive Strategy promoting Serbia as a good place to invest?

No – and therein lies a central problem restricting the property investment potential in Serbia.  The Serbian government has not managed to raise international awareness relating to any of the extremely positive efforts that it has made to enhance the economic standing of its people and the political stability of its country.  Instead it has again deeply damaged its reputation with its new constitution which refers to Kosovo as “a constituent part of Serbia’s territory” whereas the rest of the world accepts that the UN is currently handling status talks between Serbia and Kosovo and while nothing has been firmly resolved, the wider world would like to see Kosovo gain some form of independence from Serbia.

At the moment the Serbian people are about to go to the polls; an early election has been brought about as a result of the referendum relating to the adoption of the aforementioned constitution, and so any investment decision relating to property in Serbia is most certainly on hold pending the outcome of the elections and the forthcoming expected announcement by UN Mediator Martti Ahtisaari relating to Kosovo’s future.  So much hangs in the balance right now that it would be unwise to make a move because no one knows whether Serbia will turn towards continued advancement and away from future disputes over Kosovo or whether it is prepared to return to war to get what it wants in terms of land boundaries for example.

There are no two ways about it – if Serbia can continue on the path forwards towards developing one of the most rapidly advancing economies in Europe and concentrate on achieving macroeconomic stability and raising the profile of the nation and positively changing international perceptions of Serbia, it will be an incredibly exciting market to invest in for the risk tolerant who like cutting edge opportunity.  But if Serbia and the Serbian people make a collective decision to turn away from the EU and the UN and peace and turn back towards the past and instigate fresh conflicts in the region no one in their right mind will invest another penny into the Serbian property market.

Special Reports: Property News for Serbia

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