Looking for another draft, I came across this text which I’d written for my employer, GBD Real Estate. Even though I am momentarily not involved with real estate (but still recommend GBD to anyone interested in real estate in Slovenia!) I’ve had several interesting discussions over the past few days.

A large piece of land in an interesting location for a substantial investment was put up for auction by the City of Ljubljana today and despite a significantly reduced price, there were no bidders. None whatsoever. Click here to hear/see the story in Slovenian (courtesy of Radio Kaos). Good location, reasonable price, would have been gone in a heartbeat not too long ago. Has the City made a mistake by offering it for sale too late? Possibly not. The City has made some lucrative deals and holding on to this particular plot of land, though it may lay heavy in the City’s hands and on its books, will not translate to a disaster. The event does, however, reflect the changing situation on the Slovenian real estate market.

I still do not expect any bubbles bursting at the speed and with the sound of the great overseas balloons, but with buyers either convinced that prices will be further slashed or unable to secure loans because of the rising interest rates and/or job insecurity, the times ahead will pose a challenge to investors, builders, sellers, buyers and lenders alike. I would a venture a guess that the only ones sitting pretty are those few whose business consists of quality-service rental properties.

It will be most interesting to see the development by the end of Summer 2009. Even here in Luxembourg, property prices  are on the decline and that’s saying something. Hold on, everyone!

Published on 8 April 2008:

Are they bound to decline?

Lately, clients have been asking for our predictions regarding prices of real estate in Slovenia, particularly in Ljubljana where the growth has been exceeding expectations for years.

Marko Puschner of Slonep reports that the Surveying and Mapping Authority of the Republic of Slovenia will publish its report on the price trends in late May 2008. The report was due in March, but some glitches in data collection occurred.

In view of extensive new development in Ljubljana and surroundings we believe older properties are unlikely continue to appreciate with the same pace and the prices of properties close in the greater Ljubljana area have grown so much over the recent years that the trend is not likely to continue in absence of substantial changes in Slovenian economy.

The growing real estate prices were accompanied by a growing sector of real estate loans which, as an example, grew by 71.5 per cent in 2005. The share of real estate loans in the debt of the Slovenian population with banks increased from one tenth in 2004 to 67 per cent in 2005 alone. (source: Institute of Macroeconomic Analysis and Development of the Republic of Slovenia)

The properties most likely to retain their current value and increase it over time although probably not at the same rate as in the past, are those in the most sought-after locations and high-quality new constructions.