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Q1 2018

City Report

Belgrade City Report Q1 2018COPYRIGHT © JONES LANG LASALLE IP, INC. 2018

According to Oxford Economics, GDP growth slowed to an estimated 1.9% in 2017 due to subdued EU/Russian export markets and fiscal restraint aimed at lasting deficit and inflation reduction. Progress with these reforms and an agricultural rebound after last year’s weather issues, have created conditions for a recovery to 2.7% growth in 2018 and then about 3% in the period between 2019 and 2021.

Growth is set to be more stable in the forecasted period, with the reduced budget deficit helping to improve the trade balance and keep the current account deficit small enough to be financed by FDI and remittances, ensuring a more stable exchange ratethat further tightens control over inflation. Lower inflation can allow a continued decline in interest rates, sustaining the growth of investment, which will drive medium term growth along with rising exports and recovering household expenditure as real incomes slowly rise.

Economy

Unemployment rateQ4 2017, Belgrade

GDP Growth

Q1 2018 y-o-y

Net Salary February 2018,

Belgrade

Inflation March2018 y-o-y

Retail Sales, March 2018 y-o-y

Industrial production, March 2018 y-o-y

4.5% 1.4% 14.3%

€494 2.2% 4.1%€


Prime Yields

Recent Investment Transaction

IndustrialShopping Centre Office

8.00% 8.50% 9.75%

Sector Property City Seller Buyer

Office Belgrade Business Center Belgrade Centrice Real Estate Gmbh Global Trade Centers (GTC)

Retail Mercator Centre Belgrade Mercator MPC Properties

Stable economic growth, government reforms and other incentives have secured a stable influx of investments in Belgrade’s real estate market. The appeal of the market has been confirmed by the continuous expansion of investors already present on the market.

Such an example is the acquisition of Mercator Center, one of Belgrade’s modern shopping centers, by well-known local investor MPC Properties in the first quarter of 2018. Previously, during 2017, international investor GTC acquired Belgrade Business Center, one of the city’s modern office buildings located in the central business district. With this acquisition, GTC’s portfolio in Belgrade totals nearly 100,000 sq m of Class A office stock.

Source: JLL, 2018


Office stock in Belgrade (sq m)

Previous office completions• No new large-scale office completions in the first

quarter of 2018

• More active period expected ahead with several projects in the pipeline

• Most active submarket remains to be New Belgrade with increasing activity recorded in the city center

• Secondary cities, particularly Novi Sad, note higher levels of construction activity

• Market activity was dominated by net take-up, driven mostly by relocations in New Belgrade

• The most active sector was IT, followed by the construction industry

Property Submarket Size (sq m)

Sirius offices phase 1 New Belgrade 14,500

N House phase 1 New Belgrade 5,800

Atrijum 63 New Belgrade 5,000

GTC Fortyone 3rd phase New Belgrade 10,000

Source: JLL, 2018

Source: JLL, 2018

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018

Class A Stock Class B Stock


Vacancy rate based on office building class

Prime rental levels (€/sq m/month)Future office projects

€15 - € 16.5

Source: JLL, 2018

Source: JLL, 2018 (*whole project size)

Project Size (sq m) Status

Green Heart *46,000Under

construction

Business Garden 16,000Under

construction

Ziegel House 5,000Under

Construction

Usce Tower 2 22,000 Planned

Skyline Belgrade 30,000 Planned

NavigatorBusiness centre 2

27,000 Planned

Sirius Offices 2nd phase

10,000 Planned

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Total Vacancy Rate Class A Vacancy Rate Class B Vacancy Rate


Modern shopping centre stock in Belgrade (sq m)

Prime Shopping centre density in Belgrade

105 sq mPer 1,000 inhabitants

Source: JLL, 2018

Property Type Size (sq m) City

Stop Shop Retail Park 7,200 Požarevac

Stop Shop Retail Park 8,200 Vršac

Latest retail deliveries in Serbia

Source: JLL, 2018

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2012 2013 2014 2015 2016 2017 Q1 2018


Future shopping centres in Belgrade

Demand Rental levels (€/sq m/month)

Shopping centres

€27 - €29

High street

€40 - 60

Property Format Size (sq m) Completion year

Ada Mall Shopping centre 34,000 2018

Big Fashion Vidikovac Shopping centre 65,000 2019

BW Galerija Shopping centre 93,000 2020

• Several brands are interested in entering the market

• Retailers present on the market remain active

Retailer activity in Q1 2018

Source: JLL, 2018

Source: JLL, 2018

Location Brand

Zemun Park, NEST Kraljevo Maxi Supermarket

Novi Pazar, Aviv Park Zvezdara Nefa Furniture

Stadion Voždovac Meli Melo, Women Secret

Ušće Shopping Center Gagliardi

Big Fashion Tehnomanija

Capitol Park Sombor Intersport

Vivo Shopping Park Jagodina LC Waikiki

Capitol Park Šabac H&M


Recent completions

Industrial stock (sq m)

Belgrade Greater Belgrade

• Construction activity in the first quarter of 2018 was mostly focused within secondary cities

• Numerous new projects and project expansions to be completed in secondary cities

• Several speculative schemes in the pipeline for the Greater Belgrade region

• Local municipalities continue to invest in infrastructure and offer incentives

Source: JLL, 2018

292,000

599,000

Scheme Type Location

Yumco Light industrial Bujanovac

BizLink Light industrial Prokuplje

Agromarket Distribution warehouse Inđija

Prva petoletka-namenska Light industrial Trstenik

Leoni Light industrial Niš


Future projects

Industrial production index Prime rents (€/sq m/month)

Q1 2018

€4 - €5

• Several leasing transactions and acquisitions have been recorded on the market

• Demand in the first quarter of 2018 was mostly driven by the automotive sector

Source: Statistical Office of the Republic of Serbia, 2018

Source: JLL, 2018

Project Type Location

Mei Ta Light industrial Obrenovac

Yura Light industrial Leskovac

Albon Light industrial Ruma

Leoni Light industrial Kraljevo

Essex Europe Light industrial Zrenjanin

ZF Friedrichshafen Light industrial Pančevo

Vorwerk Autotec Light industrial Čačak

Caminada Light industrial Subotica

Tai Group Light industrial Kraljevo

LogMax Beta Distribution warehouse Stara Pazova

Industrial Park Belgrade 4 Distribution warehouse Šimanovci

92%

94%

96%

98%

100%

102%

104%

106%

Feb

-17

Ma

r-17

Ap

r-1

7

Ma

y-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

www.jll.rs

© 2018 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]

Vesna KićovićResearch Analyst - SEE

+381 63 235 [email protected]

Contacts

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