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Change in Serbia

New community management legislation reflects what’s ahead

By Dr. Slaviša Pešić, Ph.D.
The popular Kalemegdan Park in the capital’s historic city center
The popular Kalemegdan Park in the capital’s historic city center

In 2016, the Serbian government enacted a new housing and building maintenance law. According to the new law, apartment owners are now obligated to form condominium associations, referred to as “communities of the building.” As part of creating these communities, the buildings must choose managers and record each property in a public register. The law sets out to clearly define the activities of the community, as well as the job of the professional manager. However, the real estate industry will need some time to catch up and improve professional property management standards to meet and hopefully exceed the minimum licensing requirements outlined by the law.

A brief history of real estate in Serbia

To make sense of the current context of Serbia’s real estate market, we first have to understand that most of the country’s modern real estate market was actually born around 1990. Like other Eastern European countries, the state government and public institutions controlled the market and handled all construction and development before that time. The one exception was the building of family homes.

Before the 1990s, in the countries of the former Yugoslavia, including Serbia, whenever a family obtained an apartment to use, they signed a contract related to the maintenance of the building. They were obliged to enter into a building community, but this was not monitored or regulated. As tenants were given the apartments directly by the government, they never felt obligated to care about common spaces that were personally not “owned” by them. Tenants managed the apartment units by themselves.

After the fall of the Soviet Union, laws were enacted that enabled tenants of government-owned apartments to take ownership of those apartments under favorable conditions. As soon as the tenants became owners, the right to sell and buy those apartment units came into effect. That’s where the need for the first real estate professionals came from, and most urgently needed were the brokers and agents.

Around 2005 or 2006, banks started supplying mortgages for buying properties, creating an additional need for appraisers and valuators.

As the years progressed, it became apparent that Serbia needed a new law that would regulate maintenance of these now privately owned buildings, provide procedures to manage and maintain the common spaces, support and protect owner/tenant rights and obligations, and create a framework for handling many other issues related to housing.

When the 2016 law was enacted, it included stipulations that owners, as part of the building community, should care for their individual units and the building’s common spaces. It defined how apartment owners should use, manage, and carry out building maintenance. Furthermore, the law established a new field: professional property management and the property manager. In this way, property management can be thought of as the youngest profession in the real estate industry in Serbia.

Local impressions of property management

In recent years, people have better understood the need for professional property management, and their impression of property managers has improved. Unfortunately, a full appreciation of the value of professional property management has a ways to go. It’s still considered applicable only to large properties such as shopping malls, retail centers, and other large developments. For larger properties, too, Serbians are just beginning to fully recognize the importance of professional property management. Even now, single residential and small commercial properties tend to be managed mainly by the owners. Even some big shopping malls and retail centers are managed by the owners, despite those owners often being larger national or international companies. Some of the biggest shopping malls are managed by property management companies, but typically, only those firms with an international presence are employed as management.

Since the implementation of this law, professional managers have been engaged in managing multifamily apartment buildings. The law is comprehensive and stipulates provisions to fill previous “legal gaps” that were not well-defined. The law also addresses the use of government-owned apartments for official use, eviction of tenants, and housing support for socially vulnerable categories. The law’s guardrails should help make residential property management much more clearly defined and organized.

Response to COVID-19

In the last few years, the pandemic has catalyzed some changes in Serbian work life. Like everywhere, it has shown that many jobs can be done from home. This was particularly clear for the IT industry. Serbia has a strong IT industry and previously suffered from many local, young, high-quality engineers leaving the country to work for stronger international companies abroad. Now, they don’t have to leave the country, as they can work from home.

However, many small shops have stayed empty. As is happening worldwide, bigger chains and online shopping opportunities are taking over. Serbia historically was on the low end per capita for shopping centers compared to neighboring countries. However, given the rapid investment and development in the last few years, especially in Belgrade, Serbia is approaching the same level of growth seen in these neighboring economies. The rapid expansion of online shopping has created the need for logistics centers to store the goods for online retailers and expanded the industrial market, creating another niche area for the burgeoning property management profession.

New norms equal a need for professionalizing property management

Serbia is a country undergoing constant transition. It’s a core part of Serbian culture to own a house and act so that future generations can continue living together in that same home. But in recent times, this custom is changing rapidly. Young people are finding financial freedom by securing professional jobs, getting approved for mortgages, and buying properties. This trend has further grown due to another Serbian law providing incentives for first-time homeowners.

A modern mixed-use property in Belgrade’s central business district

As the economy grows, the number of people able to invest in savings has also increased. The stock market isn’t accessible to most retail investors, and holding gold still begs the question, “Once I have it, what do I do with it?” Digital currencies, on the other hand, still seem too intangible. As a result, investing in real estate has become the standard approach for those in Serbia with savings and the ability to obtain a mortgage. As more young professionals opt to stay in Serbia now that they have more options to work remotely, they’re looking to invest locally. I often sum up the impact of this shift with the phrase: “Nothing’s more real than real estate.”

As investments increase and drive a construction boom like we’ve never seen in the last 40 years, the need for professional property managers, and laws regulating the profession, will follow. Serbia will look to IREM for its educational and professional standards to improve the profession at the national level, as IREM has successfully done before in other countries.

While the new law is intended for condominiums, once Serbians come to appreciate a well-managed home and building, and fundamentally understand what the law was created to achieve, that opinion will spread. The hope is that the Serbian real estate industry will soon benefit from professional management across all property types.

Journal of Property Management

Slaviša Pešić, Ph.D., graduated from the Faculty of Philosophy at the University of Niš and earned his Ph.D. from the Faculty of Technology and Metallurgy at the University of Belgrade. Dr. Pešić has served as a member of the NAR Board of Directors since 2019 and holds the position of NAR In-region Global Ambassador for Eastern Europe.

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