Serbia is strategically located on the borders of the EU, neighboring Hungary in the north and Romania and Bulgaria to the east.

Two major Pan-European transport routes lead through the country – corridor VII and X.

Belgrade is the most important population centre and is experiencing faster economic growth than other regions in the country. The majority of property market activity is concentrated there.

Serbia has developed into a stable growing market economy, which boomed in 2004, achieving 8.80% annual GDP growth and most recently at 5.4% in 2008. The economy is expected to contract at a rate significantly above the EU average.

Serbia has the lowest corporation tax in Eastern Europe, at 10%.

Politics

The Serbian government has approved a security agreement for the interchange of information with NATO, but the majority of citizens are reluctant to join NATO. 

All together Serbia is making good political progress. Serbia is now an EU candidate will finish EU reforms by 2012 and expects to enter the EU by 2014.

Serbia has been proactive in international politics by recently meeting with France’s President Sarkozy (May 2009), with visits by U.S. Vice President Biden (May 2009), and visit to Russian President Medvedev by the (end of 2009).

Population

Serbia has a total population of 7.5 million (according to the latest census in 2002), around the same as Austria.

The Serbian capital is Belgrade, with a population of 1.7 million. The second major city is

Novi Sad, located 80 km north of Belgrade, with a population of 300,000.

The next largest city is Niš, with 250,000 inhabitants, located 250km from Belgrade in the south of Serbia.

Belgrade is the most important population centre and the majority of property market activity is concentrated there. The regional cities are seeing a significant rise in investment over last two years which has been a combination of foreign and domestic investment.

Labor costs in Serbia are among the lowest in the Eastern European region and significantly lower than those in the EU member countries. This will undoubtedly attract foreign investors planning potential operations in the region provided the necessary skill base exists.

Average labor costs in 2008 in Serbia are around €406/month, less than 50% of the average labour costs in Poland, the Czech Republic and Hungary. In addition, minimum earnings, fixed at €145/month, which, though comparable with Bulgaria and Romania, are dramatically lower than in other Eastern European countries.

Economy

Over the past few years, Serbia has developed into an increasingly stable growing economy based on free market rules.

Despite strong growth recorded in 2008 at 5.4%, the Serbian economy contracted by 5.1% in 2009 which is predicted to continue into early 2010 with moderate growth forecasted for 2011.

This contraction is mainly due to a knock-on effect of the world financial crisis.

Source: BMI and NBS

Although many are pessimistic regarding privatization, the sale revenues are key in bridging

The time between now and the sustainable operation of the country.

Moreover, the privatisation puts the companies into either better operating hands or companies are terminated opening space in the market for other more efficient operators.

According to the NBS, the consumer average annual inflation rate in 2008 was 8.6% and is expected to remain around 9% in 2009 with a decline in 2010.

It is estimated that the inflation rate will continue to drop after 2010.

Serbian corporate income tax is charged at a rate of 10% - the lowest rate in Eastern Europe. This has attracted many corporates to the market, such as Carlsberg, VIP, Kraft, Gazprom, Bank of Moscow and Fiat.

China and Russia are important business partners of Serbia

Transport infrastructure

Serbia occupies a prime crossroads location between Western Europe and the Near East. Along with Croatia and Slovenia, Serbia is on the main transport route between Vienna and Istanbul, and offers major trade potential to foreign investors.

Two major Pan-European transport routes lead through Belgrade – corridor VII and X. In general, the quality of existing roads and railway infrastructure is good. Serbia has been updating its infrastructure and received more than €300m from the World Bank for Corridor 10 Highway and another €600m is expected from EIB and EBRD also for highway improvement in the south.

Belgrade continues its construction of the Ring Road which will significantly improve the flow of traffic within and out the city.

Following the secession of Montenegro in June 2006, Serbia lost its access to the sea. However, the Port of Belgrade, situated on the Danube River, has increased its importance for the goods exchange.

It forms an important traffic, transloading and cargo transportation centre for goods distribution in

Serbia, handling 3 million tons of freight a year.

St Sava Cathedral in Belgrade