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Bosnia-Herzegovina Real Estate Report Q1 2012
Business Monitor International, Dec 2011, Pages: 45
Business Monitor International's Bosnia-Herzegovina Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bosnia-Herzegovina's Real Estate industry.
Bosnia & Herzegovina has a positive period ahead as it rebounds from the recession from which it emerged at the end of 2010. It has a renewed enthusiasm for business – following neighbour Croatia’s accession into the EU – and a strengthening market for exports, which will drive the manufacturing sector, as well as utilities and tourism. The country’s real estate market is more locally influenced than many other Central and Eastern European (CEE) countries, and Bosnia needs input and investment from outside to help boost the sector. With that in mind, rental costs for property range across the cities and sub-sectors we monitor, and are currently wavering between growth and decline.
The Bosnian economy is still in the throes of recovery, buoyed by a resurgent industrial sector. With real wage growth returning to positive territory, we also expect consumer spending to pick up in 2011. That said, there are a number of significant downside risks to our projection, including poor local harvests, rising inflationary pressures and weak investor confidence in light of the domestic political impasse and eurozone sovereign debt crisis. Nevertheless, the gradual economic recovery has yet to fully trickle down into the real estate market.
Key opportunities in the real estate market:
- Revisions of land ownership and construction laws are under way, which will provide the industry with a more comparable legal base from which to operate.
- Projects to improve local infrastructure and increasing foreign direct investment into the sector will positively impact the real estate sector.
- Improvement of legislation related to foreign investment, including tax incentives and a reduction in bureaucracy. Included are attempts to strengthen the protection of assets, and to encourage freedom in their management and disposal.
- The introduction of the new (Global Navigation Satellite System) GNSS reference station network represents the first step in the Ministry of Civil Affairs’ spatial information services development programme. It is hoped that the network will help with legal and land administration, as well as the rapidly growing real estate sector and its necessary spatial planning.
Key risks to the real estate market:
- Political issues remain the hottest topic for Bosnia. Even if a new power-sharing agreement is reached, we warn that political reforms will remain piecemeal, given that the presidential and parliamentary elections left the political landscape still divided along ethnic lines. The biggest risk from this is that foreign investment – which is needed in the real estate sector – will be put off.
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