We expect 2025 to be a positive year for our region, supported by continued interest from local and international investors and generally stable and good performance of the real estate sector. The real estate markets in the region are not oversaturated, and vacancy rates are very low compared to Western Europe. Traditionally, the largest investment volumes are in the biggest markets, i.e., those with the most developed offerings, such as Serbia, Croatia, and Bulgaria, followed by Slovenia, writes Biznis.rs.
The supply of modern office space in Serbia, especially in Belgrade, is significantly below that of more developed regional cities in Central and Eastern Europe, like Budapest, Bucharest, or Prague, which have more than three times the supply. In the Southeastern Europe region, Sofia has the largest supply of office space – almost twice as much as Belgrade, while Zagreb and Belgrade have similar supply, although Zagreb has a significantly smaller population.
The development of office space in Belgrade began about a decade later than regional markets, which initially slowed the entry of international companies that constitute a large part of demand and stimulate sector growth. However, with gradual growth and the fact that over 600,000 m² of modern office space has been built in Belgrade since 2015, Belgrade has become a regional business center, currently hosting over one million m² of office space, and continues to grow. Sofias supply is more substantial, but the share of older buildings is also higher, contributing to higher vacancy rates.
The availability of office space in Belgrade has significantly decreased, even by 40% – down to four percent.
Modern office space is still considered insufficient, indicated by the low vacancy rate. Modern buildings in prime locations in the central business zone of New Belgrade or downtown are fully occupied, which shows the need for more projects, but not to oversaturate the market. Over the years, the optimal number of buildings has generally been constructed, so at no point did we have high vacancy rates like in more developed markets, where vacancy exceeds 10 percent.
There has also been a slight increase in rental rates. Are we returning to offices, considering that more than 110,000 m² of new office space is under construction in Belgrade?
Rental rates have been rising for several consecutive years due to increasing land prices, construction costs, and financing expenses. The requested rental rates in new or planned buildings exceed previously achieved rents. Accordingly, we expect the trend of rising rents to continue in the next 12 months. Compared to previous years, future supply has slightly declined, partly due to hybrid work models and companies downsizing offices, increasing sublease participation among tenants.