The Cost of Housing in Ljubljana Continues to Grow: Review of Real Estate Prices
The trends of recent years in the field of residential real estate are encouraging. Investors ready to launch the new and revive the old projects have come to the market. Only a large offer of primary housing in Ljubljana can stop a sharp jump in prices.
As expected, the buyers bought 51 apartments in the “Celovški Dvor” residential complex, which was up for sale by the Slovenian Bank Debt Management Company (DUTB). Over 370 people claimed these apartments. Therefore, it is not surprising that the amount offered by buyers significantly exceeded the starting price of apartments. In April, a new line of 117 apartments will be put up for sale in the “Celovški Dvor” complex. This time, registering a purchase and sale transaction will be accompanied by the collection of mandatory auction offers and the provision of a deposit.
Despite a not very attractive reputation of the residential complex, the shopping hype can be explained. Starting prices were so low that the cost of these new buildings in Ljubljana was more attractive than the price of secondary housing in the old builds. For example, the starting price of a 2-room apartment with a living area of 41 sq. m, a large balcony and two parking spaces in the “Celovški Dvor” residential complex made only 88,500 euros.
In the list of current advertisements, a similar price is offered for a 1-room studio apartment with a living area of 20 sq. m and without a parking space in front of the building of the Radio and Television Company of Slovenia (RTV), another similar apartment in the third stage of construction in the Jama v Šiški residential complex, as well as an apartment of 55 square meters located on the top floor in the vicinity of Mount Saint Mary (Šmarna gora—in Slovenian). For an amount less than 100,000 euros in Ljubljana, you can purchase studio apartments, 2-room apartments on the outskirts or apartments in old-developed buildings and in old low-rise buildings (without elevator).
According to the Statistics Service, prices for secondary housing in Ljubljana have been constantly growing since the summer 2014. Since then, according to preliminary data, they have grown by another 15%. The increase in the cost of housing in Ljubljana coincides with the increase in the number of transactions, which have almost reached the pre-crisis level. According to the Statistics Service, in the first half of 2016, more than 3,560 deals were made on the secondary housing market, which corresponds to a 24% increase at the average annual level, which is the highest since the crisis start.
The increase in demand and the rise in prices are caused by favourable lending conditions. According to the Bank of Slovenia, interest rates on loans for housing purchase are declining and on average fell below the 2% effective interest rate. The maturity period of new loans for the purchase of housing has also been extended, which on average exceeds 19 years. “In the future, we expect the preservation of similar trends in the housing affordability index, as it will be influenced by the increase in the value of real estate objects and the growth of salaries. To a lesser extent, the availability of housing will be affected by credit conditions, for which we do not forecast further interest rate cuts. However, their growth is unlikely in the short term,” the Bank of Slovenia notes.
In the future, according to bank analysts, the demand for residential real estate will grow. “Many people postponed the purchase of real estate due to the financial crisis and were waiting for prices to continue to fall. Improvement of the situation in the labour market and credit potential can favourably affect the dynamics of demand and the need for new housing construction. Favourable financing conditions and relatively low house prices stimulate demand not only from customers, but also from investors. This could have a negative impact on the sale of high-end real estate and lead to potential risks for the banking system,” experts say.
The Supply in the Housing Market Lags Behind the Actual Demand
Growing demand and rising prices for housing, obviously, motivated investors who buy out unimplemented projects of bankrupt construction companies. First, a construction site for the Tribuna residential complex of Kraški Zidar Company (93 apartments) was sold. The MM SVTK Company owned by Blaž Miklavčič purchased the site for 2.4 million euros. In September last year, this Company acquired from the municipality a land plot in the Rožna dolina district with a total area of almost 10,000 square meters for 3.3 million euros. The Belle vie Tivoli (195 apartments) project, which occupies the site of the former Slovenija Vina store in the Spodnja Šiška residential complex, also changed its owner. After the Energoplan Company, this project continues to be implemented by the Gorenje Projekt and Kolektor companies.
Not far from the Atrium residential complex, near the Šmartinska Road, at the construction site of a pit that belonged to the bankrupt SCT Company, the Zelene Jarše micro district is being built (108 apartments). The KOG Company acts as the construction operator. The Zlatarna Celje Company bought a plot of land in the Bavarski Dvor residential complex to build a skyscraper, as well as a land plot on the Vurnikova Street (Župančičeva Jama residential complex), where a 7-storey residential complex (almost 100 apartments) is planned to be built. Preparatory construction works on this site began in late February. Large investments are also planned for the residential complex in the area of Parmova Street (next to the mosque), where 150 apartments will be commissioned. Now this project is at the stage of spatial plan preparation.
New Buildings in Ljubljana: the Cost of Housing
Prices for primary housing in Ljubljana are significantly higher than those established by the Slovenian Bank Debt Management Company (DUTB) for the apartments in the “Celovški Dvor” residential complex. The prices for apartments in Belle vie Tivoli range from almost 104,000 euros for studio apartments to 770,000 euros for a penthouse with a terrace. A 2-room apartment with a study and a courtyard will cost almost 198,000 euros with a living space of 67 sq. m. Outdoor premises occupy even more than 22 sq. m. In the Zelene Jarše residential complex, a studio apartment will cost from 97,000 euros, and a 3-room apartment with a living area of 81 sq. m and a terrace area of 45 sq. m will cost more than 250,000 euros.
Table 1. The average cost of secondary housing in Ljubljana and the number of sale and purchase transactions (2010–2016, a sample by half-year periods, for the second half of 2016 there are no data). Price per square meter is given in euros.