SQUARES SOLD OUT IN 7 MINUTES: Are new opportunities coming for those interested in group investment in real estate?

The first group investment model in real estate in Serbia has sparked significant interest among small investors, potentially indicating a need to democratize this market, as options for investing smaller amounts in the country remain limited.

The project "Investiram na kvadrat" plans to construct a residential-commercial building on Ustanička Street in Belgrade, covering 1,880 square meters. The novelty lies in the focus on citizens as financiers. With a price of €1,862 per investment square meter and a projected profit of €431 per square meter, the entire offered area was reserved in just seven minutes during last week's sale day.

According to reports, 207 investors managed to secure their investment squares, reserving between one and 67 square meters, with most opting for investments around €10,000.

"People responded very positively to this idea of collective direct investment in real estate. The high level of interest was evident during the project's public presentation, where additional chairs had to be brought in to accommodate everyone who wanted to learn more. Many actively participated in the discussion and asked numerous questions. However, you can never be sure how many people will commit to a project until you put a specific property on the table," said Dušan Uzelac, author of "Investiram na kvadrat" and founder of the financial portal Kamatica.

He expressed surprise when the sale day opened on Thursday, with all offered units swiftly claimed. “The sheer number of registrations in such a short time exceeded all expectations. Clearly, the idea of collective investment makes sense, and it just needed a fair offering.”

Uzelac noted that the investors are individuals with some extra money—savings that do not have to be significant—who want to invest in business ventures and earn higher returns than those offered by traditional savings and investment options.

"This model and the team behind it seem to inspire trust. That 'Serbian mattress,' where money was stashed away collecting dust, now has the opportunity to be put to good use," Uzelac added.

Having raised 100% of the necessary investment funds, the construction of the multi-story building will begin shortly. "We now face the task of constructing the building and delivering profits to the investors who have entrusted us with their money."

Given the evident interest, Uzelac emphasized that preparations for a new location would begin much earlier than anticipated to accommodate those who missed the chance to invest in this initial project.

"I cannot specify the location at this time, as thorough analyses—legal, urban, construction, financial, and market—are required," he explained.

Regarding future project locations, he highlighted that investment decisions are dictated by financial calculations, which might even lead to projects outside Belgrade or other types of real estate.

The team behind the project emphasized that the transparency of this model is a major advantage, allowing every investor to see how their money is used throughout the investment cycle. In this model, citizens who invest in and purchase investment squares act as financiers, not co-investors. As co-investors, they would be personally liable for the project's completion with their assets.

Experts in Serbia's real estate market noted that a similar investment approach had not been recorded before. According to Uzelac, "Investiram na kvadrat" represents Serbia's first true "crowdinvesting" model. While crowdfunding platforms exist, they often offer "crowdlending" under the guise of "crowdinvesting."

For clarity, the term crowdfunding generally refers to raising money for various purposes, including donations. Subcategories include crowdinvesting, where contributors share in the profits, and crowdlending, which involves lending money with or without interest. A long-awaited crowdfunding law could better define these concepts and regulate the field systematically.

Nebojša Nešovanović, Southeast Europe Director of Valuations at CBRE, compared "Investiram na kvadrat" to capital market practices, noting its unique scale and structure. He highlighted its departure from traditional real estate investment dynamics, where fewer participants typically invest much larger amounts.

Rade Rakočević, CEO of Senzal Capital, praised the project as an example of investment democratization, enabling small investors to diversify across projects with smaller sums. However, he noted the projected profit per investment square meter was modest, and advised citizens to explore other investment types, such as mutual funds, cryptocurrencies, or stock markets.

The project represents a bold step forward, but it may encounter challenges, particularly bureaucratic ones. Rakočević suggested that the process could be simplified by introducing legal structures specifically designed for one-off investment ventures, similar to SPVs (Special Purpose Vehicles) or REITs (Real Estate Investment Trusts) in other markets.

Despite the complexities, Rakočević is optimistic about the potential of such initiatives, provided the first project succeeds and the team maintains a strong reputation.

Conversely, Nešovanović expressed reservations, warning that the project's success relies on managing potential deviations from initial plans—common in real estate development. The large group of inexperienced small investors may struggle to handle unforeseen challenges, risking negative perceptions and media scrutiny.

"While collective investment in real estate could appeal to the media more than influence the market, it remains to be seen whether it can establish a sustainable trend in Serbia," Nešovanović concluded.