One of the basic requirements for a good purchase and sale on the real estate market is an adequate, that is, realistic, appraisal of the real estate value. It is a service provided by licensed appraisers according to established methodologies that has a wide application in the economy and is of great importance for the stability of the entire financial market. We asked Uroš Novković, the founder and CEO of Data Investment, one of the leading appraisal companies in Serbia and the region, why a professional real estate valuation is important, what it includes, and what trends in the real estate market he predicts by the end of the year.
Although you are from Novi Sad, Data Investment covers the entire country with its services. You have been studying the real estate market and establishing trust in the financial market for the past 17 years. What has this journey looked like so far?
Along with my father, who served as an expert witness in economics and finance at the Novi Sad court, I developed an interest in property valuation. I met many people in this industry while working with my father, Dragutin, and independently preparing real estate valuations, and I gained knowledge that helped me make the decision to go independent. In May 2006, Data Investment was founded, and that’s when the road of no return began. In 2015, I became a member of the RICS (Royal Institution of Chartered Surveyors) in the UK, and since then, we have been sharing knowledge and experience in the field of appraisals with the whole world. DATA now has more than 20 employees; our headquarters are in Novi Sad, and we have branches in Belgrade, Niš, Subotica, and Zlatibor. We gather experienced experts as well as young people eager to learn and grow.
Real estate valuation is one of the main services you provide. What does a real estate valuation involve, and how important is local market expertise for a successful appraisal?
The valuation includes several crucial stages: identification and inspection of real estate, determination of the factual situation, analysis of legal documentation, ascertainment of any deviations and/or discrepancies, and, of course, the methodology of defining the value. The basis of any valuation must be a quality market analysis. Based on this information, the methodology that the appraiser chooses leads to the market value of the real estate that best reflects what we basically call the real value. The value of real estate is determined by a number of factors: location, age of the property, area, number of floors, quality of finishing, etc. Commercial real estate requires additional analysis and processing of several factors that affect its value: functionality, exposure, equipment, the possibility of parking, and the like. Knowledge of the local market is of crucial importance, and that is why we transferred our business to other locations in Serbia in order to employ people "from home" who can recognize the subtleties of the city or area they live in.
Why is a professional real estate valuation important, and who are mostly your clients for this type of service?
Most people only come across appraisals when using a home loan to purchase an apartment or house. As a result, the general public is not well informed about what we do. Valuation is an essential system of market information control by certified, expert professionals whose task is to adequately interpret data on real estate market dynamics. I am not referring only to housing loans and residential real estate appraisals, which will slowly become a matter of software data processing, but to all business loans granted with various types of commercial real estate as collateral. The appraisal of the market value of real estate ensures the stability of the banking (credit) system. Our most frequent clients are legal entities that use banking services—various forms of loans secured by mortgage liens—as well as individuals as buyers of residential real estate. We cooperate with practically all banks in Serbia, and we can boast that we are among the strongest "players" in the field of appraisals in Serbia and the region. A new service we have offered to banks in order to speed up and make the valuation process of residential real estate cheaper is AVM, or Automated Valuation Model, which relies on our database and the register of realized sales of the Republic Geodetic Authority.
Given the huge database at your disposal and more than 20,000 assessments you have carried out, how do you see the real estate market in Serbia?
The real estate market in Serbia, especially in the residential sector, experienced its peak in 2022, similar to the situation before the great economic crisis at the end of the first decade of the 20th century. Real estate prices are at their peak, fueled not only by the strong demand for new apartments but also by the tendency of our citizens to invest their savings in real estate as the safest investment. In 2023, we are entering a period of stabilization. By the end of the year, we expect a slowdown in growth and, consequently, stagnation and a drop in prices. Our predictions are that smaller towns with less attractive projects will first experience a slowdown in construction activity. As absurd as it sounds, luxury projects and expensive apartments will still find buyers. We predict that real estate prices in Belgrade and Novi Sad will remain at their current levels, with a slight decline in activity in less developed locations. A positive trend that we notice, especially in Novi Sad but also in Belgrade, is the "American" type of construction of smaller, luxury residential areas with individual houses on the outskirts of the city. What we can recommend as a safe investment are good small apartments in the center of Belgrade and Novi Sad, but one should also think about buying plots in suburban areas that can experience expansion in a few decades.
By: Petra Vasiljević
Photo: Private archive
