Construction and Sale of Apartments in Bosnia and Herzegovina

According to the final results of the 2013 Census of Population, Households and Dwellings in Bosnia and Herzegovina, there are 3,531,159 permanent residents in this country. The city with the most inhabitants is Sarajevo 275,524 inhabitants, and whole Canton of Sarajevo has around 500,000 inhabitants.

Source: https://popis.gov.ba/popis2013/doc/RezultatiPopisa_BS.pdf

This is the largest city in whole country and also the most populated one. It is important to know the fact that Sarajevo Canton generates almost 25% of the country’s GDP, and the reason for that is that this is the strongest economic region of the country with large manufacturing, administrative, and tourism sectors.

Source: https://web.archive.org/web/20071106094414/http://www.seerecon.org/bosnia/ec/sectors/sarajevo.htm

All the elements that we mentioned are important to understand the fact that Sarajevo needs to have plenty of apartment offers for their citizens, both for sale and rent.

Although the corona virus pandemic has had a negative impact on many industries, as well as on the purchasing power of citizens, the real estate market in Bosnia and Herzegovina has not changed significantly. Real estate agents felt a significant drop in the third and fourth months of last year (2020), but immediately after the lifting of the state of emergency, real estate buying started on an upward trajectory again.

However, whoever planned to buy an apartment in the Bosnia and Herzegovina’s capital in the last year has encountered an unexpected rise in prices, regardless of which part of the city the property is located in.

The growth of real estate prices is noticeable in other B&H cities as well. They explain this by the law of the market, which in this case is dictated by never higher demand and weak supply.

Institute of Statistics of Federation of Bosnia and Herzegovina gave us two important releases for us to understand the situation in this part of the country. In First release of the year 2021, Institute is informing the public that the number of building permits for construction issued compared to average number of building permits issued in 2020 increased by 10,2% and compared with May 2020, increased by 4,5%. Also, number of dwellings planned for construction in May 2021, compared to the average number of dwellings planned for construction in 2020 increased by 35,8%, and compared with May 2020, increased by 51,9%.

Table 1. Indices of building permits issued, May 2021

Table 2. Indices of planned dwellings

Source: Institute for Statistics of FBiH, ISSN 1840-3478

In First release of Institute for Statistics of FBiH for first quarter 2021, public was informed of prices of sold new dwellings. The number of sold new dwellings in the first quarter of 2021, compared to average number of sold new dwellings in 2020 is decreased by 0,7%. In comparison to the first quarter of 2020 it is increased by 3,6%. Useful floor area of sold new dwellings in the first quarter of 2021, compared to the average floor area of sold new dwellings in 2020 is decreased by 4,8%. In comparison to the first quarter of 2020, it is decreased by 6,6%. Average price of sold new dwellings in the first quarter of 2021 compared to the average price of sold new dwellings in 2020 is increased by 4,1%. In comparison to the first quarter of 2020 is increased by 6,7%

Structure of the average price of sold new dwellings, I quarter 2021

The price of a square meter of a new dwelling includes the following:

o   Price of  building land – land acquisition costs and costs of ending an occupancy in the existing residential buildings, in case the purchased land was occupied,

o   Construction costs and profit margin – demolition of existing structures, cleaning of construction site, excavation works, building, roof covering and frames, installation and final construction works on the building and dwellings,

o   Other costs and VAT – obtaining building permits, building project, land surveying, expert supervision and control of the project, various fees and taxes, insurance, interest on the loan, other costs which are not specified, and profit margin of the business entity that ordered the construction for further sale on the market.

Table 3. Indices of sold new dwellings, I quarter 2021

Table 4. Average prices of sold new dwellings, I quarter 2021

Source: Institute for Statistics of FBiH, ISSN 1840-3478

Apartment or property ownership is a necessity, so there are always buyers and sellers. For many individuals, life circumstances have changed during a pandemic, which is why they are changing real estate, because real estate is always tied to the standard we live by.