Residential construction in Serbia declining

The long-term and sustainable growth of the Serbian GDP is possible only if the country’s construction sector is strong. Since 2012, the share that construction projects had in total investments has fallen to 40.2% in Serbia – warns economy expert, Ivan Nikolic.

At the presentation of the latest issue of Macroeconomic Analyses and Trends Magazine (MAT), he said that successful and fast growing economies try to boost their construction sector as much as possible. “In order for the economic growth in Serbia to expedite, investments need to make at least 25% of the national GDP. At the moment, this share is 17.7%”, says Nikolic.

He adds that despite Serbia having an appealing business environment, investments have not been growing at the expected rate, and in order for the country to have a more substantial economic growth, the investments had to be equally distributed among construction sector, machines and equipment.

In the last ten years, Nikolic points out, Serbia did have a period when the share that construction activities had in total investments was really good, and that period lasted from 2009 to 2011. “Back then, the investments in residential construction made 48% of the total investments made and this was the result of subsidized mortgages. Since then, these investments have fallen to 37%”, Nikolic warns.

The residential construction in Serbia was at its lowest in 2015, when only 10,300 flats were built, i.e. 1.5 flats per 1,000 inhabitants. The number of newly built flats has also declined in Belgrade so, in 2016, a total surface of built flats was 2.5 times lower than in 2008.

“I think that problem lies in the population’s low income. For instance, if you want to buy a 57-square-metre flat in Serbia, you would need to set aside over 16 average annual salaries, while in Great Britain, for instance, where flats cost more, a typical Brit will have to set aside 5.2 annual salaries”, Nikolic adds.

(Beta, 11.10.2017)



This post is also available in: Italiano

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