city report - beobuildbeobuild.rs/shared/jllq117.pdf · the overall complex now has 27,000 sq m....

Q1 2017

City Report

Belgrade City Report Q1 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2017

According to Oxford Economics, the strong 2016 export and investment upturn puts the economy on track for 3% growth in period from 2018 to 2020, as capital inflows finance the external deficit, and IMF and EU support allows expansionary budgets. Short term recovery still relies on export revival, which remains vulnerable to possible EU and Russian growth setbacks in 2017.

Although risks are balanced, there could be delays to the recovery in growth if still high unemployment, slow growth in real incomes and difficult public sector reforms drain the government’s popularity. Despite this caution, growth is forecast to climbslightly to about 3% a year in 2018 - 20, 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 steady progress towards EU membership, and precautionary IMF standby funding that insulates the deficits against FDI downturn.

Economy

Unemployment rate2016,

Belgrade

GDP GrowthQ1 2017

Salary March 2017, Belgrade

Inflation March 2017 y-o-y

Retail Sales, March 2017 y-o-y,

Serbia

Industrial production, March 2017 y-o-y, Serbia

1.0% 3.6% 15.9%

€495 11.4% 0.9%€


Prime Yields

Notable Recent Investment Transactions

IndustrialShopping Centre Office

8.00% 8.5% 10.00%

Sector Property Market Est. Price (€ million) Seller Buyer

Retail Big Fashion Belgrade - Plaza Centres BIG CEE

Retail Delta City Belgrade 127.7 Delta Real Estate. Hyprop Investments /

Homestead Group Holdings

The investment potential has improved significantly over the previous 12 months, which has been reflected through various investors seeking for opportunities throughout the country. One of the major driver has been relatively unexplored market, positive economic movements as well as favourable business environment.

However, due to undersupplied real estate markets, the number of transactions has been limited compared to other more developed markets. The previous year was notable for sale of one of the prime shopping centres in the country, namely Delta City. The overall transaction included sale of Delta City in Podgorica, Montenegro as well. From the beginning of the year 2017, investors remained focused on retail segment. The recently completed Big Fashion shopping centre, initially developed by Plaza Centres was acquired by Israeli company Big CEE. The overall price will be determined after 12 months operating.


Office stock in Belgrade

Recent completions • Belgrade office market continued to grow in the first quarter of the year, with one new project delivered, namely GTC Fortyone phase 3. This is the final stage of the project, which spreads over 10,000 sq m, while the overall complex now has 27,000 sq m.

• The construction activity remains high, and we expect to see more Class A office projects in the upcoming months.

• Market activity was driven by net take up, underpinned by relocations and expansion of existing contracts.

• The most active sectors were IT, followed by consumer goods and professional services.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2010 2011 2012 2013 2014 2015 2016 Q1 2017

Class A Stock Class B Stock

Property Submarket Size (sq m)

GTC Fortyone phase 3 New Belgrade 10,000

Navigator Business centre New Belgrade 14,600

Green Square Vračar 2,700

Source: JLL, 2017


Vacancy rate based on office building class

Prime rental levels (€/sq m/month)

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

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

Total vacancy rate A Class vacancy rate B Class vacancy rate

Future office projects

Property Status Size (sq m)

Sirius Offices 1st phase Under construction 14,500

Napred blok 21 Under construction 13,000

Atrijum 63 Under construction 5,000

Deneza Under construction 2,700

Usce Tower 2 Planned 22,000

Green Heart Planned 46,000

€15 - € 17

Source: JLL, 2017


Prime shopping centre stock in Belgrade

Prime Shopping centre density in Belgrade

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

97 sq mPer 1,000 inhabitants

• Following the increasing construction activity during the previous 12 months, Belgrade retail market has witnessed increase of modern retail stock. In the beginning of the second quarter of 2017, new shopping centre was opened, namely Big Fashion, totalling over 32,300 sq m GLA.

• There are several shopping centres under construction in the capital, scheduled for completion in the upcoming three years.

• The development of retail parks has continued throughout the country

• The construction of the first Ikea store is progressing and the company has announced the construction of retail park at the same location

Source: JLL, 2017


Future retail schemes in Belgrade

Demand Rental levels (€/sq m/month)

Shopping centres

€25 - €27

High street

€40 - €60

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

Ikea Big Box 34,000 2017

Capitol Park Rakovica Retail park 21,000 2017

• Opening of new shopping centre brought new brands to the market

• Present retailers continued market expansion

• Costa Coffee closed its operations

Property City Brand

Big Fashion Belgrade Reserved, Tezenis, Funky Buddha

Fashion Park Outlet Indjija Facis

Zira Belgrade Mana

Market entrants


Recent completions

Industrial stock

Belgrade (sq m) Greater Belgrade (sq m)

528,000

242,000

Property Type Location Size (sq m)

Phoenix Distribution centre Simanovci 7,000

Hutchinson Light industrial Ruma -

Knott Autoflex Light industrial Becej 9,500

Univerexport Distribution centre Novi Sad 30,000

• Since the beginning of the year, market activity relied on the construction of owner occupied schemes majorly in the secondary cities.

• Phoenix group opened new logistic centre in Simanovci, spread over 7,000 sq m

• Univerexport completed new distribution centre in Novi Sad, spread over 30,000 sq m

• The future period will rely on construction of light industrial and distribution warehouse facilities within various cities


Future industrial projects

Industrial production index

Prime rents (€/sq m/month)

96%

97%

98%

99%

100%

101%

102%

103%

104%

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Oct

-16

Nov

-16

Dec-

16

Jan-

17

Feb-

17

Q1 2017

€4 - €5

• From the beginning of the year, the market activity was largely driven by manufacturing and distribution companies in Greater Belgrade area and Vojvodinaprovince.

• The further expansion of logistic as well as retail sectors will be major market drivers over the mid-term, underpinning the development of speculative schemes.

Source: Statistical Office of the Republic of Serbia

Project Type Location Size (sq m)

Lidl Distribution centre / Administrative buildings

Nova Pazova 78,500

Eyemaxx phase 2 Distribution centre Stara Pazova 30,000

Industrial Park Belgrade 3 Distribution centre Simanovci 7,200

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]

Contacts

city report - beobuildbeobuild.rs/shared/jllq117.pdf · the overall complex now has 27,000 sq m....

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