Abstract
The global recession hit home in the Central and Eastern Europe (CEE) real
estate markets in the first
quarter of this year. Market turnover,
according to CB Richard Ellis (CBRE) data, fell 57% between the
last
quarter of 2008 and Q109, from EUR616mn to EUR268mn.
In its May report on
the CEE markets, CBRE reported just EUR100mn in transactions across the
entire
region in April, compared with transactions worth more than EUR3bn
in the second half of last year.
Although CBRE does not cover the Bosnian
market in any great detail, it is clear from another source
(balkaninsight.com) that the situation was no different here from anywhere
else in the region. According
to a report published in June on the
website, the number of real estate-related transactions fell by 50% in
some parts of the country over the past three months.
The problems cited
in this article make familiar reading:
! New commercial loans are becoming
harder to obtain
! Rising payments on old loans make it more difficult for
residential property owners and
operators to service their debt
In its
latest quarterly report, real estate adviser DTZ Research has a more negative
outlook on CEE than
other parts of the continent, because investors
consider them to be more vulnerable to economic and
financial turbulence,
the report argues. Volumes and pricing have deteriorated, and very few deals
were
recorded. DTZ argues that yields are likely to continue moving
outwards in the less transparent markets
of the region, into which
category Bosnia most certainly falls, in some cases expanding by 250 basis
points.
However, sounding a note of optimism, DTZ also says that buyers
may be looking to take advantage of
falling prices, and so decide to enter
the market. Again, while not offering direct insight into the Bosnian
market, this sentiment is reflected in the balkaninsight.com article, which
suggests that buyers are waiting
for prices to fall further, at least in
the residential sector.
The article quotes one Sarajevo banker as saying:
‘We will know that the real crisis is here when a threebedroom
apartment in Sarajevo city center is offered for EUR20,000 and there is nobody
willing or able
to buy it.’
The following are the key issues to
monitor for the real estate sector:
Signs that endemic corruption will be
tackled, and property rights improved
! The absolute level of bank lending
in Bosnia, given that the availability of finance appears to
have been the
main challenge in the recent past
! Improvements to address the clear
shortage of accurate and relevant data on bank lending and
deposits
!
Any clear sign of a reduction in bureaucracy and improvement of the legal
system, which may
come about with (or even before) EU accession
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