Next to Belgrade’s downtown Kalemegdan Park, close to the point where the river Sava meets the Danube, is the crumbling old hulk of a textile factory. In many European capitals, a similar four-hectare site would be considered prime real estate and would have been built on long ago. But the violent break-up of the former Yugoslavia, nearly 10 years of sanctions and the Nato bombing in 1999 over Serbian involvement in the war in Kosovo, means that Belgrade is no ordinary place to live.
The future, however, is now looking brighter for this city of 1.2m people. The defunct textile factory is set to be demolished and replaced by the €220m Beko complex, a mixed-use development, which will include 230 high-end apartments, a retail scheme, a hotel and a conference centre. Set for completion in 2017, the building will feature the distinct sweeping, curved contours that are the signature of its architect, Zaha Hadid.
“Belgrade is a very energetic city with a lot of potential, and there is a shortage of high-end apartments,” says Justin Faiz, director of Pluto Capital, a London-based company investing in real estate projects in Serbia and beyond. “Up to now, Belgrade hasn’t spawned the kind of out-of-town estates of luxury detached houses you find outside Budapest and Prague.”
Pluto Capital is selling the last apartments in its LiveIN Dorcol project, a new 46-unit, five-storey residential scheme in the central district of Dorcol, a historic neighbourhood which has the city’s only surviving Ottoman mosque. A 51 sq metre, one-bedroom penthouse at LiveIN Dorcol, with oak parquet floors and a 66 sq metre terrace is available for €143,000.
A block from the city’s main pedestrianised shopping street, Knez Mihailova, a renovated, fifth-floor, 190 sq metre duplex penthouse apartment with three bedrooms is on sale with CBRE Serbia for €800,000. Mina Kalezic, an agent at CBRE Serbia, says most high-end homes in Belgrade cost €2,500 to €3,000 per sq metre, down from about €3,500 in 2007. “Russian buyers in Montenegro pushed up prices here before the [global] financial crisis, but the market here has been stable for the past two years.”
The number of foreign buyers may at present amount to a trickle, but the country’s image appears to be improving. Sandra Vlatkovic, of the National Tourism Organisation of Serbia, says overseas arrivals were up 11 per cent over the first eight months of this year compared with the same period in 2012. Air Serbia launched last month and has plans to double the flight network of its defunct predecessor over the next six months.
For all the buzz of downtown Belgrade, many expats and diplomats in the city opt to live in one of the greener districts in the south of the city. The Dedinje neighbourhood, with its British International School and wooded royal compound (once the official residence of Marshal Tito) is particularly coveted. Here, a five-bedroom house with an indoor swimming pool is on the market for €2.8m through Prime Real Estate Belgrade. Nela Zakula, who is handling the sale, says the gross rental yield of the property would be about €5,000 a month.
House prices in Dedinje reflect the exclusivity of the neighbourhood and the often generous budgets allocated by embassies for housing their staff. In turn, this is creating a new breed of Serbian buy-to-let investors. But with Serbia due to open talks early next year over its application to join the EU, could Belgrade be a worthwhile investment for overseas buyers, too?
“Five years from now, this place will be booming,” says Nigel Robinson, of CWP Finexco, a company that installs wind farms in Serbia. “Young people have a great work ethic and they are often really smart. In the 18 months I have lived here, there have been continual changes, such as small new shops appearing on the streets. There’s a belief in the future of this place.”
But Serbia’s residential market is still playing catch-up. Its relative isolation during and after the wars in Bosnia and Kosovo, as well as the absence of a large, prosperous middle class, have hampered opportunities for local architects and interior designers.
“Going back a few years, people would come from overseas and basically design vulgar interiors for a certain class of eastern European nouveau riche,” says Jovan Jelovac, founder of Belgrade Design Week, an annual event that showcases Serbian design talent.
“But Belgrade has a strong Bauhaus tradition,” he adds. “We need to reconnect with the modernist, and more minimalist, style that was prevalent here in the 1980s.”
● Foreigners can buy property in Serbia if their own country allows reciprocal buying rights for Serbs
● New-build residential property is subject to 8 per cent VAT (10 per cent starting in 2014)
● The official currency is the Serbian dinar, but residential property is bought and sold in euros
● Belgrade has a continental climate, with hot summers and cold, snowy winters
What you can buy for . . .
€100,000: A one-bedroom newly built unit with a balcony in the Vracar district
€1m: A detached four-bedroom house in the upmarket Senjak district in the south of the city
€2m: A four-bedroom, four-bathroom home in Dedinje with a gym and an outdoor swimming pool