Andrew Peirson, Managing director of iO Partners for the Czech Republic, Serbia and Croatia - Serbia is becoming an increasingly desirable investment destination

(Andrew Peirson) The commercial real estate market in Serbia is increasingly showing the new rules of the game: offices are sought in the central areas of Belgrade, logistics is being developed where it did not exist before, and investors do not consider projects without an ESG component anymore. In parallel, in the industrial sector, the trend of returning production from Asia to the European continent is strengthening, which opens additional space for development to Serbia. Novi Sad, until recently outside the mainstream of commercial investment, is becoming a new point of interest.

- When it comes to office real estate, Belgrade remains the focal point. Office demand is still high, especially from the IT sector and business services, and supply is struggling to keep pace. With just under 1.2 million square meters of modern office space in the capital, vacancy rates remain low, and rents have held steady. Developers are responding with around 45,000 square meters of new space expected by the end of 2025. There’s a clear shift toward quality, green certified, tech buildings that support hybrid work models are most attractive to both tenants and investors.

Following a record year in 2024, 2025 marks a rise in industrial development activity, with new projects underway and continued momentum in Serbia’s industrial sector. Developers are actively delivering new warehouse and production space. Over 146,000 square meters are under construction, with another 350,000 in the pipeline. Also, in Q1 2025, net take-up amounted to 52,450 sqm, with the logistics sector taking a dominant share, reflecting rising demand for modern warehousing and increased logistics activity. Serbia’s strategic location, nearshoring trends, and strong FDI in manufacturing, especially automotive and electronics are fueling this growth. What’s interesting is that even secondary cities like Kragujevac, Niš, and Sombor are becoming logistics and production

hubs.

Overall, both sectors offer long-term fundamentals and stable yields, which makes them highly appealing in the current macroeconomic climate. Serbia’s blend of affordability, skilled labor, and infrastructure momentum continues to position it as one of the most attractive emerging markets in CEE for commercial real estate investment.

- Each of these markets has a distinct investment profile, but if we’re talking pure development growth potential, Serbia currently offers the most room to scale, especially in industrial and office real estate. Logistics and manufacturing are booming, driven by nearshoring, labor costs and supply, infrastructure upgrades, and continued FDI. Office demand, particularly from IT and business services, also continues to outpace supply in Belgrade, that it still requires a more hands-on approach and local partnerships to navigate development and permitting.

The Czech Republic, by contrast, is a more mature, institutionalized market. Prague has long been a core destination for international capital, especially for office and retail assets and there is now a huge domestic capital base that is often out-bidding traditional international capital. Industrial space around Prague and Brno is near full occupancy, and the market has become very competitive with compressed yields. So, the Czech Republic offers more stability and liquidity, but fewer value-add opportunities unless you’re repositioning older assets or entering niche sectors like ESG retrofits or last-mile logistics.

- Serbia presents the highest growth potential with strong upside in both office and industrial sectors, albeit with higher risks and less liquidity. Croatia offers a balanced mix of growth and stability, especially in logistics and urban offices, while Slovenia provides a mature, low-risk environment with premium rents and yields in a compact market.

Over the next five years, Serbia’s office market is expected to grow steadily. The upcoming EXPO 2027 in Belgrade will act as a major catalyst, accelerating infrastructure and hospitality-related office demand. As Serbia moves closer to EU integration, yield compression may occur, improving liquidity.

Croatia`s office sector will benefit from continued business centralization in Zagreb. With extremely low vacancy and rising rents, developers are already responding with new projects that will be delivered between 2025 and 2027.

- Domestic money has dominated the CEE market, with retail and office being the busiest sectors. Yields have shown signs of stabilization, and in general investment activity surged by over 60% year-over-year, reaching €8.3 billion. This significant increase follows a subdued 2023, with 2024 marking a return of investor confidence and more active capital deployment.

Despite limited supply, this presents opportunities for investors to focus on developing new, quality properties to meet growing demand. Belgrade continues to offer attractive investment prospects due to its increasing demand for modern office space and its role as a regional business hub..

What’s interesting is that, alongside Belgrade, Novi Sad is increasingly developing as an office destination, primarily due to the strong community of tech companies operating in the market. Currently, around 80,000 sqm is under construction, confirming that this market is entering an expansion phase when it comes to office space.

- Novi Sad is increasingly attractive to investors thanks to its lower market saturation, strong talent base, and cost efficiency. Unlike Belgrade, which is more developed and competitive, Novi Sad still offers room for first movers to shape the market, whether in office, residential, or mixed-use projects. The city benefits from a young, educated workforce, especially in tech and engineering, which is driving demand for modern workspace and housing. Land and construction costs are significantly lower than in Belgrade, improving margins, and the city’s high quality of life adds to its appeal.