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Q2 2017
City Report
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
According to the Serbian Statistical Office, GDP noted growth of 1.2% in the first quarter of 2017 when compared to the same period of 2016. Furthermore, according to Oxford Economics, the strong 2016 export and investment upturn puts the economy on track for a 3% growth in the period from 2018 to 2020, as capital inflows finance the external deficit and the IMF and EU support allows expansionary budgets.
Although risks are balanced, there could be delays to the recovery in growth if high unemployment, slow growth in real incomes and difficult public sector reforms drain the government’s popularity. Despite this caution, growth is forecast to climb slightly to about 3% a year between 2018 and 2020, with the sustained recovery driven by firm political direction, external support and conditions, EU accession prospects and sustained trade recovery. April’s presidential vote strengthens the ruling party, whose focus on reform to meet EU accession criteria will boost domestic investment and maintain the regional lead in FDI. The country remains well placed to accelerate its progress towards EU accession while retaining trade and investment links with Russia, other Balkan states and China. Medium term growth will be supported by the steady progress towards EU membership and the precautionary IMF standby funding that insulates the deficits against FDI downturn.
Economy
Unemployment rateQ1 2017, Belgrade
GDP Growth
Q1 2017 y-o-y
Net Salary May 2017, Belgrade
Inflation May2017 y-o-y
Retail Sales, May 2017 y-o-y
Industrial production, May 2017 y-o-y
1.2% 3.5% 13.2%
€489 11.1% 6.2%€
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Prime Yields
Recent Investment Transaction
IndustrialShopping Centre Office
8.00% 8.50% 9.75%
Sector Type Property City Seller Buyer
Retail Shopping centre Big Fashion Belgrade Plaza Centres BIG CEE
The real estate market potential remains stable throughout the country and investors continue to look for investment opportunities. The appeal of Serbia’s relatively unexplored market has been increasing due to positive economic movements and a favourable business environment.
Even though the demand for investment opportunities is high, activity remained low during the second quarter. One of the most notable and recent transactions includes the sale of the Big Fashion shopping centre, while under development. The recently completed shopping centre, initially developed by Plaza Centres, was acquired by Big CEE, an Israeli company . The overall price will be determined after 12 months of operation.
Source: JLL, 2017
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Office stock in Belgrade (sq m)
Recent completions • The second quarter witnessed no new completions on the market although there are several projects in the final stages of development
• The beginning of the third quarter was marked by the completion of the first phase of the Sirius Offices project, which added 14,500 sq m of office space to the market
• Construction activity remains high and more Class A office projects are expected to be completed by the end of the year
• Market activity was driven by net take-up, underpinned by new leases and relocations
• The most active sector was IT, followed by consumer goods
Property Submarket Size (sq m)
Sirius offices phase 1 New Belgrade 14,500
GTC Fortyone phase 3 New Belgrade 10,000
Navigator Business centre New Belgrade 14,600
Source: JLL, 2017
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2012 2013 2014 2015 2016 Q1 2017 Q2 2017
Class A Stock Class B Stock
Source: JLL, 2017
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Vacancy rate based on office building class
Prime rental levels (€/sq m/month)Future office projects
Property Status Size (sq m)
Sirius Offices 2nd phase Planned 10,000
N HouseUnder
construction10,700
Usce Tower 2 Planned 22,000
Green Heart Planned 46,000
Airport City V Planned 75,000
€15 - € 17
Source: JLL, 2017
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Total vacancy rate A Class vacancy rate B Class vacancy rate
Source: JLL, 2017
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Prime shopping centre stock in Belgrade (sq m)
Prime Shopping centre density in Belgrade
97 sq mPer 1,000 inhabitants
• Big Fashion shopping centre delivered in Q2 2017, totalling over 32,000 sq m of GLA
• There are several shopping centres in the capital which are planned or under construction, scheduled for completion over the next three years
• The construction works on Rajićeva shopping centreare progressing with completion due very shortly
• The first IKEA store opened
• The development of retail parks has continued throughout the country
Source: JLL, 2017
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2012 2013 2014 2015 2016 H1 2017
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Future retail schemes in Belgrade
Demand
Rental levels (€/sq m/month)
Shopping centres
€25 - €27
High street
€80
Property Format Size (sq m) Completion year
Rajićeva Shopping centre 15,300 2017
Ada Mall Shopping centre 34,000 2018
Big Fashion Vidikovac Shopping centre 70,000 2019
BW Galerija Shopping centre 93,000 2020
Capitol Park Rakovica Retail park 21,000 2017
• The opening of new shopping centres has prompted new brands to enter the market
• Existing retailers continue their market expansion plans
• Home Centre has changed its name to Home Plus and has launched a new retail concept - Mini Home
Location City Brand
Big Fashion BelgradeReserved, Tezenis, Funky Buddha
Knez Mihajlova Belgrade WYCON
Market entrants
Source: JLL, 2017
Source: JLL, 2017
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Recent completions
Industrial stock (sq m)
Belgrade Greater Belgrade
531,000
242,000
Sheme Type Size (sq m) Location
Univerexport Distribution centre 30,000 Novi Sad
Phoenix Distribution centre 7,000 Šimanovci
Ametek Light industrial 10,000 Subotica
Lear Light industrial 29,000 Novi Sad
• During the second quarter of 2017, development activity relied on the construction of new distribution centresand the expansion of existing production facilities
• Univerexport has finished its distribution centre in Novi Sad, spread over 30,000 sq m
• Phoenix group opened a new logistic centre spread over 7,000 sq m in Šimanovci
• Ametek expanded its operations by opening a new production facility in Subotica, spread over 10,000 sq m
• Construction activity will remain high with various production facilities and distribution centres being announced
Source: JLL, 2017
Belgrade City Report Q2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017
Future projects
Industrial production index Prime rents (€/sq m/month)
Q2 2017
€4 - €5
• During the second quarter of the year, the market activity was driven mainly by manufacturing and distribution companies
• Further development of the retail as well as the logistics sector are expected to remain the key drivers of market expansion, which will further support the development of speculative schemes
Source: Statistical Office of the Republic of Serbia, 2017
Project Type Location Size (sq m)
Yazaki Light industrial Šabac 30,000
Eyemaxx phase 2 Distribution warehouse Stara Pazova 30,000
LidlDistribution warehouse/ administrative bldg
Nova Pazova 78,500
Industrial Park Belgrade 3 Distribution warehouse Šimanovci 7,200
Quass Light industrial Inđija 5,000
90.0%
92.0%
94.0%
96.0%
98.0%
100.0%
102.0%
104.0%
Source: JLL, 2017
www.jll.rs
© 2017 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.
Jana GolubovićSenior Research Analyst - SEE
+381 11 785 [email protected]
Andrew PeirsonManaging Director - SEE
+381 11 785 [email protected]
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