powerpoint presentation · from autumn 2017 the range of new, ... decline over the past six years,...

2017Commercial Real Estate

Market Report

Europe & Middle East

Table of contents

Cyprus

Greece

Czech Republic

Germany

Italy

Estonia

Latvia

Lithuania

Netherlands

Poland

Romania

Ukraine

Sweden

Switzerland

Serbia

Austria 6

28

Georgia

8

10

12

14

16

18

20

22

24

26

30

32

34

36

38

ACROSS EUROPE

0

10

20

30

40

50

60

Germ

any

Sw

eden

Neth

erla

nds

Italy

Po

lan

d

Au

str

ia

Cze

ch R

epublic

Georg

ia

Lith

uania

Esto

nia

Gre

ece

La

tvia

Cyp

rus

in €

bn

Investment Volume in RE by Country - 2017

Source: NAI Global Network

Across Europe

Across Europe

Note: Yield refers to Grade A office in prime location

Source: NAI EMEA Network

Office Yields in European Cities - 2017

Note: Yield refers to Grade A Warehouse / Logistics ( >5,000m2) in prime location


Logistics Yields in European Cities - 2017

Note: Yield refers to high street retail in prime location


Retail Yields in European Cities - 2017

2,80

%

2,85

%

3,10

%

3,15

%

3,20

%

3,25

%

3,50

%

3,50

%

3,60

%

3,90

%

4,00

%

4,00

%

4,15

%

4,80

%

4,85

%

4,90

%

5,30

%

5,42

%

5,50

%

6,00

%

6,25

%

6,50

%

6,50

%

6,75

%

7,00

%

7,25

%

8,00

%

8,50

% 10,0

0%

14,0

0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Zür

ich

Vie

nna

Gen

eva

Mun

ich

Ber

lin

Ham

burg

Fra

nkfu

rt

Mila

n

Sto

ckho

lm

Dus

seld

orf

Am

ster

dam

Rom

e

Got

henb

urg

Rot

terd

am

Pra

gue

Lim

asso

l

Nic

osia

Ave

rage

War

saw

The

ssal

onik

i

Tal

linn

Kra

ków

Viln

ius

Rig

a

Brn

o

Buc

hare

st

Ath

ens

Bel

grad

e

Tbi

lisi

Kyi

v

3,60

% 4,75

%

4,80

%

4,80

%

4,80

%

4,80

%

5,60

%

5,70

%

5,80

%

6,00

%

6,00

%

6,00

%

6,25

%

6,30

%

6,50

%

6,75

%

6,75

%

7,25

%

7,80

%

8,00

%

8,00

%

8,75

% 10,5

0%

10,5

0% 11,7

5% 13,0

0%

15,0

0%0%

2%

4%

6%

8%

10%

12%

14%

16%

Lim

asso

l

Mun

ich

Fra

nkfu

rt

Ber

lin

Ham

burg

Dus

seld

orf

Am

ster

dam

Nic

osia

Sto

ckho

lm

Pra

gue

Got

henb

urg

Zür

ich

Mila

n

Rot

terd

am

Gen

eva

Rom

e

War

saw

Ave

rage

Tal

linn

Rig

a

Viln

ius

Buc

hare

st

Ath

ens

Bel

grad

e

The

ssal

onik

i

Tbi

lisi

Kyi

v

2,75

%

2,75

%

2,80

%

3,00

%

3,10

%

3,30

%

3,35

%

3,45

%

3,50

%

3,50

%

3,60

%

3,70

%

3,70

%

4,00

%

4,15

% 5,18

%

5,25

%

5,60

%

5,75

%

5,90

%

6,50

%

6,50

%

6,75

%

6,80

%

7,00

%

7,25

%

8,00

% 9,20

%

14,0

0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Mila

n

Rom

e

Zür

ich

Mun

ich

Gen

eva

Ber

lin

Ham

burg

Dus

seld

orf

Vie

nna

Fra

nkfu

rt

Sto

ckho

lm

Am

ster

dam

Rot

terd

am

Pra

gue

Got

henb

urg

Ave

rage

War

saw

Nic

osia

Kra

ków

Lim

asso

l

Tal

linn

Viln

ius

The

ssal

onik

i

Rig

a

Ath

ens

Buc

hare

st

Bel

grad

e

Tbi

lisi

Kyi

v

€324

€148

€203

€264

€162

€468

€355

€426

€312

€318

€510

€400

€192

€198

€198

€350

€200

€282

€174

€222

€670

€330

€656

€656

€305

€192

€84

€192

€240

Vienna

Nicosia

Limassol

Prague

Brno

Frankfurt

Berlin

Munich

Hamburg

Dusseldorf

Milan

Rome

Riga

Tallinn

Vilnius

Amsterdam

Rotterdam

Warsaw

Kraków

Bucharest

Stockholm

Gothenburg

Geneva

Zürich

Kyiv

Athens

Thessaloniki

Belgrade

Tbilisi

Office Rent (€/m2/annum) in European Cities - 2017

Note: Rent refers to Grade A office in prime location


Major Transactions 2016 - 2017

Source: OECD Data

OverviewNew investment volume record in Q1 2017 with around € 2.4 bn

invested in Austrian commercial real estates. Prime yields for office

properties in Vienna fell to 3.95% in Q1 2017 as a result of high

demand. Especially high investment activity from German investors

within the Austrian real estate market. Offices was the most popular

asset class with around 60% of the investment volume in Q1 2017.

Rental capacity in Q1 2017 with 87,000m² was about 30% lower than in

Q1 2016. Completion volume of around 34,000m² in Q1 2017

significantly higher than in Q1 2016. Modern office real estate stock

(class A and B) amounts to approx. 5.63 mn m². Rents in good office

locations rose by about 1.5% in Q1 2017. In 2015 and 2016, the

Austrian retail market recorded some 69 international retail brands and

the trend definitely continues. Especially Vienna´s prime locations in the

city centre are high in demand due to the growing numbers of tourists.

Very big office cluster projects in Vienna will be finished in 2017 and

2018. New acquisitions of shopping centres and specialist market

centres are increasingly focusing on peripheral locations. Top leasing in

shopping centres increased by around 4% in Q1 2017 to around €

120/m²/month.

Investment Volume in the Austrian Real Estate Market

Source: NAI Austria

Source: NAI Austria

Opportunities In general, a stable economic market environment and positive mood

among tenants dominates the office and investment market.

Nowadays, start-ups are increasingly using campus solutions, which

offer employees an attractive work-life balance and are thus intended

to bind specialists to the employer in a sustainable manner. Another

trend are big office clusters in Vienna, which will be completed in 2017

and 2018. Austria will remain an attractive target market for

international retail brands, especially the city centres of Vienna and

Salzburg where tourism booms.

0 0,5 1 1,5 2 2,5 3 3,5 4 4,5

2010

2011

2012

2013

2014

2015

2016

2017F

in bn €

Contact Details

Martin Hirl

Director

[email protected]

NAI Austria

Mariahilfer Straße 142, 1150 Vienna

+43 660 188 8809

www.naiglobal.com

Country Profile

Population (mn) 8.5

Capital city Vienna

Currency Euro (€)

Country Macroeconomic Profile (2016)

GDP $ 438 bn

GDP growth 1.61%

Unemployment rate 6.00%

Inflation 0.89%

PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price

(in mn)

Q2 2016 Office Building IZD Tower 64,500 Signa n/a confidential

Q1 2016 Office Building

Aqua Portfolio

(Solaris | Florido

Tower)

49,800Union

InvestmentAmundi confidential

Q4 2016 Retail UNO Shopping 47,000Bank Austria

Real InvestPrivate Investors confidential

Q1 2016 Retail Fischapark 42,800 SESAllianz Real

Estate confidential

Q2 2016Logistics/Indust

ry

Aviva Logistics

portfolio49,000

Aviva

Investors

Tristan Capital

Partnersconfidential

Q1 2017 Retail ZIB Salzburg 16,650 Immofinanz Private Investors confidential

Q3 2017 Office Building The Icon 80,000 Signa Allianz Real

Estateconfidential

Q3 2017 Office Building DC Tower 74,500 WED Deka confidential

6

Source: NAI Austria

Grade A Office (@ prime location) High Street Retail (@ prime location)

Source: NAI Austria

Rental capacities by the end of 2017 will be approx. 190,000 m² and the completion

volume of around 34,000 m² was significantly higher than in 2016. There will be about

150,000 m² more office space in 2017, of which 92,000 m² (61%) are already pre-let or

owner-used. The prime rent is stable with €25.75/m² and the average rent with

€13.75/m². The volume of transactions in Q1 2017 amounts to €2.3 billion. For the full

year, the forecast for the sale of commercial real estate would increase to €3.2 bn. The

highest yield is 3.9%. From autumn 2017 the range of new, high quality office space

will be able to satisfy the high demand of the market. Thus, the gap between demand

and supply will gradually subside and the pressure on rental prices will relax.

Vienna has retained its status as an attractive retail market by European standards.

This standing is based on strong purchasing power, which equals €22,000 per capita

and is increasing slightly but steadily. Vienna is a focal point of expansion for 15% of

all international retailers. Retail in the prime segment continues to benefit from the

outstanding development of tourism. The strong demand represents an advantage for

prime locations in the city centre and the largest shopping centres with the highest

visitor frequency. Rents are stable in these so-called A locations, reaching from

€120/m² up to €400/m² and up to €125/m² in the top shopping centres.

0%

1%

2%

3%

4%

5%

€ -

€ 1.000

€ 2.000

€ 3.000

€ 4.000

€ 5.000

€ 6.000

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2 /an

num

)

Vienna Rent Vienna Yield

0%

1%

2%

3%

4%

5%

6%

7%

8%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)

Vienna Rent Vienna Yield Vienna Vacancy Rate

7

Investment Volume in the Cypriot Real Estate Market

Source: NAI Cyprus

Opportunities Overseas investors are increasingly interested in acquiring Grade A office buildings

in key locations to be rented to AAA tenants. On the other hand, Cypriot investors

traditionally prefer acquiring properties mainly for own use even if recently many of

them had to deleverage and ‘sell’ their own assets to the Banks (deleveraging via

D2A swaps).

Country Profile

Population (mn) 8.48

Capital city Nicosia

Currency Euro (€)


GDP $19.8bn

GDP growth 2.8%


Inflation -1.4%

Sources: CyStat, Eurostat and World Bank

Contact Details

George Mountis

CEO

[email protected]

NAI Cyprus

4th Floor, Georgiou Griva Digeni 36,

1066 Nicosia, Cyprus

+35 722 000 090

www.naicyprus.gr

OverviewThe Real Estate and Construction sector has been showing positive signs of

growth in 2017, restoring optimism to industry professionals. Following a constant

decline over the past six years, market prices are stabilising. In 2016, a significant

amount of companies proceeded to downsizing or even went out of business,

drastically effecting demand and rent prices in areas such as Nicosia and

Limassol. Following a reduction and stabilisation in capital values and rental prices,

investment yields are stabilising at low levels, a strong indication of opportunities

for re-pricing of capital values, mostly in secondary location properties. Investment

yields in the Cypriot commercial market for Q4 2016 in Nicosia were at 5.8% for

retail properties and 5.3% for offices, while in Limassol they were 5.6%, and 4.6%

respectively.

0 50 100 150 200 250

2010

2011

2012

2013

2014

2015

2016

2017F

in mn €

8

Source: NAI CyprusSource: NAI Cyprus

Grade A Office (@ prime location) Grade A Warehouse / Logistics

( >5,000m2 @ prime location)High Street Retail (@ prime location)

Source: NAI Cyprus

Office Market Values were increased in almost all cities and

asset classes in Q4 2016 compared with Q4 2015. Across

Cyprus, offices market values increased by 4.7%. In Nicosia

by 5.65%, in Limassol by 11.04%, in Pafos by 1.78% and in

Famagusta by 2.58%. Larnaca was the only city were prices

did not increase, but remained stable. Grade A seafront/ sea

view office spaces for 2016, were sold for €9.000 per sqm,

while same type offices in secondary locations were sold for

€4.500 per sqm.

Cyprus is making a name as a key regional transport hub. In

2014, around 7.84 million metric tonnes of cargo passed through

Cypriot ports and terminals, representing an increase of 12% on

the previous year. Across Cyprus, rental values increased by

3.5% from Q4 2015 to Q4 2016. At the Q4 of 2016 average gross

yields stood at 4.4%. The parallel reduction and/or stabilisation in

capital values and rents is keeping investment yields relatively

stable and at low levels (compared to yields overseas). This

suggests that there is still room for some re-pricing of capital

values to take place.

Following a constant decline over the past six years, market

prices are stabilising. In 2016, a significant amount of

companies proceeded to downsizing or even went out of

business, drastically effecting demand and rent prices in areas

such as Nicosia and Limassol. Following a reduction and

stabilisation in capital values and rental prices, investment

yields are stabilising at low levels, a strong indication of

opportunities for re-pricing of capital values, mostly in secondary

location properties. Investment yields in the Cypriot retail market

for Q4 2016 in Nicosia were at 5.8%, while in Limassol they

were 5.6%.

0%

1%

2%

3%

4%

5%

6%

7%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2 /an

num

)

Nicosia Rent Limassol Rent Nicosia Yield Limassol Yield

0%

1%

2%

3%

4%

5%

6%

7%

€ -

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2 /an

num

)


0%

1%

2%

3%

4%

5%

6%

7%

8%

€ -

€ 20

€ 40

€ 60

€ 80

€ 100

€ 120

€ 140

€ 160

€ 180

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2 /an

num

)


9


Source: OECD Data

OverviewStrong stable demand across all investment sectors is expected to

continue throughout the year and the total transaction volume in 2017 is

on the way to exceed its previous year's record figures. Czech Republic

proves as attractive for investors as it receives over 40% of the total

real estate investment in CEE region in the first half of 2017. Most of

the industrial supply is not available open market, as majority of the

deals are made as BTO/BTS. Hospitality business currently lives its

renaissance and offers some interesting investment opportunities.

Finally, Czech office sector is having best year in recorded history with

most demand driven by expansions of existing businesses across

sectors, growing SSCs as well as local IT sector.

Investment Volume in the Czech Real Estate Market

Source: Prochazka & Partners


Opportunities Positive macroeconomic outlook will drive the investor demand for A-

class office buildings, that shall be partly satisfied by increased

construction, which is expected in the following years. Retail market is

slowly becoming mature, as no major new construction is expected and

the prime offer is limited.

PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price

(in mn)

Q3 2016 Office Prague 49,000PPF Real Estate

HoldingREICO € 180

Q3 2016 Retail Liberec 47,000 Tesco Rockcastle € 80

Q3 2016 Retail/Office Prague 62,000 GTC/Lighthouse Wood & Co € 115

Q4 2016 Office Prague 30,000Erste Group

ImmorentRSJ € 122

Q4 2016 Office Prague 116,000 Starwood Capital Deka € 360

Q4 2016 Industrial Various portfolioTPG/Ivanhoe

CambridgeGIC Real Estate € 761

Q4 2016 Office Prague 56,500Penta

InvestmentsCEFC € 283

Q1 2017 Retail Brno 85,000ECE &

Rockspring

Deutsche

EuroShop€ 374

Q1 2017 Retail Prague 63,500 TescoVGV Property

Investment€ 225

Q2 2017 Office Prague 16,500Walton Street

Capital

Aventicum

Capital€ 170

Q2 2017 Office Prague 36,000CEE Property

DevelopmentPortland Trust € 65

Q2 2017 Office Prague 19,300 Invesco Caerus € 62

Q2 2017 Office Prague 19,200 IAD InvestmentsLaSalle

Investment€ 57

Q2 2017 Office Prague 14,500Skanska

PropertyTriuva € 50

Country Profile


Capital city Prague

Currency Czech koruna (CZK)


GDP $ 371 bn

GDP growth 2.33%


Inflation 0.68%

Contact Details

Radek Prochazka

Managing Partner

[email protected]

Prochazka & Partners

Václavské náměstí 841/3, 110 00 Prague

1, CZE

+420 222 242 342

www.prochazkapartners.com

0 0,5 1 1,5 2 2,5 3 3,5 4

2010

2011

2012

2013

2014

2015

2016

2017F

in bn €

10



( >5,000m2 @ prime location) High Street Retail (@ prime location)

After a year of unprecedented low level of new commercial real

estate development, more than 140,000 m2 of new office space

is expected to be delivered to the (Prague) market in 2017.

Many firms, encouraged by strong and stable economic growth,

plan considerable expansions, which shows as relocations

represent 70-80% of total take-up. As the vacancy rate

(Prague) further declines to an all-time low 8.60%, headline

rents are expected to remain rather stable or slightly increase in

prime locations.

Logistics vacancy rates have fallen in the past years, driven by

strong occupier demand, reaching one of the lowest figures

ever. Most of the newly delivered warehouse space have been

already leased by the time of its completion, however the

speculative development increased slightly and represents

roughly a third of the total. Four major developers control almost

two thirds of the total stock, which makes the current market

very concentrated.

Czech Republic (Prague) lately became an attractive

destination for a number of major retailers, making the interest

strong while the high street space is limited. That creates

pressure on prime high street rents that have reached more

than €200 per m2 and are likely to maintain this path of slight

growth in the foreseeable future.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

2010 2011 2012 2013 2014 2015 2016 2017E

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)

Prague Rent Brno Rent Prague Yield

Brno Yield Prague Vacancy Rate Brno Vacancy Rate

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

€ 42

€ 44

€ 46

€ 48

€ 50

€ 52

€ 54

2014 2015 2016 2017E

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)

Prague Rent Prague Yield Prague Vacancy Rate


0%

1%

2%

3%

4%

5%

6%

€ 1.900

€ 2.000

€ 2.100

€ 2.200

€ 2.300

€ 2.400

€ 2.500

€ 2.600

2013 2014 2015 2016 2017E

Yield

Ren

t (in

€/m

2 /an

num

)

Prague Rent Prague Yield


11


Source: OECD Data

OverviewDuring 2016 real estate investment dynamics have been somewhat

lower compared to record high 2015 investment transaction volumes,

but investor’s interest towards Estonian investment market maintains to

be continuously high. Investment activity in 2016 and beginning of 2017

was dominated by office along with retail sectors. Availability of capital,

attractive price of financing, entrance of new Western and Eastern

investors to Estonian real estate market along with new local players

will result in further investment volume growth. Most active are local

and foreign funds, as well as local and foreign private investors.

Investors interest combined with so far quite balanced demand/supply

proportion facilitated activities in new commercial space development,

especially in office and retail sectors. There is mainly speculative

constructions observed with an aim to attract tenants during

development phase. We estimate that the increasing speculative

supply will cause pressure to vacancies and rental rates during next

couple of years. Prime yield compression continues, 15 - 30 bps was

observed during 2016, yet maintaining favorable levels compared to

Scandinavian and Western European yields.

Investment Volume in the Estonian Real Estate Market

Source: NAI Baltics

Source: NAI Baltics

Opportunities Due to high liquidity investors’ interest towards well-performing

commercial real estate properties will remain continuously high. Prime

yields are between 6.3%-7.3% with even lower sellers expectations.

Retail and office sectors will unchangeably dominate, however more

favorable yields in warehouse/logistics segment might facilitate

investment flow in this field.

Country Profile

Population (mn) 1.3

Capital city Tallinn

Currency Euro (€)


GDP $ 38 bn

GDP growth 1.72%


Inflation 0.15%

Contact Details

Valdis Ligers, LLB, MRICS

Principal

[email protected]

NAI Baltics

95 Brivibas Str., Riga, Latvia

+37129473300

www.naibaltics.com/

0 50 100 150 200 250 300 350 400 450 500

2010

2011

2012

2013

2014

2015

2016

2017F

in mn €Period

Property

TypeLocation Size (m2) Vendor Buyer

Price

(in mn)

Q1 2016 Office Baltic countries 84,000 Geneba Laurus € 87.0

Q2 2017 Logistics Tallinn 77,000 VGP East Capital € 54.0

Q1 2016 Retail Tallinn 23,800Partners

GroupEast Capital € 30.9

Q1 2016 Retail Tallinn 13,500Mustamae

centreEast Capital € 27.5

Q1 2016 Retail Tallinn 9,450 Citycon EfTEN € 24.0

Q2 2017 Retail Narva 9,000 EfTEN Corum € 16.7

12

Source: NAI BalticsSource: NAI Baltics



Source: NAI Baltics

Positive previous year’s trend in absorption of newly erected

office buildings combined with yet upward rent rate tendency

encouraged developers starting new office developments even

with non-existent pre-lease. It is expected that new space

entering the market will exceed more than twice the space

launched during 2014/2015, enlarging modern office stock by

another 20% by the end of 2017, accounting to 670k m2 in

total. Take-up activity is mostly driven by information and

communication sectors, followed by the professional, scientific

and technical service sectors. High demand for small office

premises in CBD is still unsatisfied despite notable office

development pace.

Warehouse and industrial property market continues to remain

active in terms of new developments and high demand for

modern quality space. Total modern industrial premises

constitutes 265k m2. Market managed to mostly absorb the

increasing new supply, nevertheless, huge space developed

resulted in slight overall vacancy growth reaching 5.5% in H1-

2017, compared to 5% last year. Demand was mainly driven by

manufacturing companies with about 40% of total take-up

volume, followed by wholesale and retail companies. There is

shortage of medium class warehouse/logistics premises

observed that would be affordable for smaller tenants.

Estonian retail property market is benefiting from growing

household consumption, increasing wages and positive

consumer confidence. Retail is the most active real estate

sector - for several years in a row major retail chains have

opened new stores and supermarkets, expanded and

renovated existing stock. Three more large - scale shopping

centers are going to be opened in coming years adding to the

market 150k m2. Competition between shopping centers will

cause some redistribution of the market, may put downward

pressure on rent rates and cause adverse effect on vacancies.

0%

5%

10%

15%

20%

25%

€ 170

€ 175

€ 180

€ 185

€ 190

€ 195

€ 200

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)

Tallinn Rent Tallinn Yield Tallinn Vacancy Rate

0%

5%

10%

15%

20%

25%

€ 51

€ 52

€ 53

€ 54

€ 55

€ 56

€ 57

€ 58

€ 59

€ 60

€ 61

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

€ 400

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)


13


Source: GeoStat

OverviewThere have been no notable transactions during 2017 mainly

privatizations of soviet era office buildings and land for development

such as the Tbilisi Balneology Resort with 10,500 m² GFA on 10,500 m²

of land in the historic city center to MEIDAN Group and one bigger

private transaction the sale of the former hotel Saqaartelo with 8,500 m²

GFA in the center of Tbilisi to Arabela Invest Group.

Investment Volume in the Georgian Real Estate Market

Source: NAI REA Caucasus

Opportunities Feasible investment or rather development opportunities exist in all

segments but especially for hotels throughout Georgia and residential

second homes for rent in Tbilisi and on the Black Sea cost. Georgia’s

tourism industry has for the last years been growing continuously,

international arrivals in 2017 are up 30%. Georgia’s tourism strategy

2025 seeks to increase the revenues received from international tourism

to $5.5 bn per year. The government is supporting tourism, it has

invested heavily and continues to do so in developing Georgia’s ski

regions, has now started focusing on the countries potential for spa

tourism and has initiated a program offering financial support for hotel

developments in select areas.

PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price

(in mn)

Q2 2016 Land Tbilisi Suburb 290,000 STATE

Georgian

Coinvestment

Fund

€ 2.66

Q2 2016Pushkin street

5/7

Tbilisi

Freedom

Square

2, 500 STATE LLC Globalfarm € 4.50

Q4 2016Former- Post

BuildingTbilisi Old City 4,700 STATE LLC telegraph € 2.11

Q1 2017 Former- Hotel Tbilisi Center 8,900LLC

Saqartvelo

Arabela Invest

Groupn/a

Q1 2017Balneoloy

ResortTbilisi Old City 10,000

LLC Balneo

TbilisiMeidan Group n/a

Q2 2017 Land Tbilisi Old City 1,700 LLC CI LLC Evo € 2.00

Country Profile


Capital city Tbilisi

Currency Lari (GEL)


GDP $ 3.75 bn

GDP growth 2.60%


Inflation 5.70%

Contact Details

Thomas Foehrer

Managing Partner

[email protected]

NAI REA Caucasus LLC

5 Marjanishvili Street, Office 403

Tbilisi, Georgia 0102

+995 32 2180901

www.rea-caucasus.com/

0 100 200 300 400 500 600

2010

2011

2012

2013

2014

2015

2016F

2017F

in mn €


14



Tbilisi A class office market due to past years oversupply is

tenant driven and price sensitive, rents for the last 3 years have

remained stable. Prime rents are slowly increasing. Demand is

slowly growing and vacancy decreasing. So far developments

have mainly been based on tenant orders or been pre-let, thus

the 12,000 m² of new supply in 2016 was absorbed by market.

Changes in the market are expected late 2017 when 25,000 m²

of speculative high-quality offices in prime locations Axis

Towers and King David's will enter the market.

Warehouse space in Tbilisi is mainly owner occupied and except

the Gebrüder Weiss 10,000 m² warehouse established in 2013

and the Hualing 150,000 m² trading center not of international

standards. McDonald’s Georgia opened a 3,300 m² logistics

center in Tbilisi serving its restaurants in the South Caucasus.

Georgia is promoting investments in warehouses. Georgia

serves as an entry gate for the resource rich Central Asian

landlocked countries and is investing in a new deep see port and

in 2018 the upgrade of the China, Central Asia, Caucasus route

completes.

Tbilisi dominates the Georgian retail market with a share of

above 80%. High street retail occupying ground floors of

residential buildings is well developed.

Supply of modern shopping centers still remains far behind CEE

and most notable international type malls are Tbilisi Mall 70,000

m², opened in 2012 and East Point 65,000 m², opened in 2015,

both located at the outskirts of the city. In late 2017 on Tbilisi’s

main avenue Galleria Tbilisi a 22,000 m² mall will be opened.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

€ 190

€ 200

€ 210

€ 220

€ 230

€ 240

€ 250

€ 260

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)

Tbilisi Rent Tbilisi Yield Tbilisi Vacancy rate


0%

2%

4%

6%

8%

10%

12%

14%

€ 40

€ 42

€ 44

€ 46

€ 48

€ 50

€ 52

2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)



0%

5%

10%

15%

20%

25%

30%

€ -

€ 100

€ 200

€ 300

€ 400

€ 500

€ 600

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)



15

Major Transactions H1 2017

Source: OECD Data

OverviewFollowing a record start to 2017, the German investment market for

commercial real estate continued to perform strongly in the second quarter of

the year. In the months from April to June 2017, a further €13.10 bn was

invested in the German market. This is a third more than in the same quarter

of the previous year. The total transaction volume for the first six months

amounted to €25.58 bn, which is 41.5% above the first six months of 2016.

Portfolio transactions thereby increased disproportionately, and were

responsible for sales of €9.64 bn in the first six months of 2017. This not only

represents 37.7% of the total volume, but was also almost double the

investment level compared to the previous year. The sale of the European

logistics platform Logicor to Chinese state fund China Investment Corporation

(CIC) contributed substantially to this development. The German share has

an estimated value of €2 bn. Individual transactions increased year-on-year

by 22.0% to a transaction volume of €15.93 bn. Office properties remained

the dominant asset class with €11.86 bn or a 46.4% market share. Retail

properties were in second place with €6.06 bn (23.7% share). Logistics

properties achieved the strongest growth of 154.0%. The absolute volume of

this asset class reached €5.49 bn, and already exceeded all previous annual

volumes after only the first six months of 2017.

Investment Volume in the German Real Estate Market

So

urc

e: N

AI a

pollo

Source: NAI apollo

Opportunities Following the spectacular start to the year by the German

commercial property investment market, activity is expected to

remain at a high level during the rest of the year. In addition to the

continuing strong interest from investors in the property asset

class, portfolios and large properties that are currently in the

marketing phase will influence further investment activity.

Furthermore, the second half of 2017 is also likely to see a large

number of transactions. NAI apollo real estate therefore expects

the transaction volume for the commercial property investment

market to again exceed €50 billion in 2017 as a whole.

Country Profile


Capital city Berlin

Currency Euro (€)


GDP $ 4,028 bn

GDP growth 1.78%


Inflation 0.48%

Contact Details

Andres Krone

CEO

[email protected]

apollo real estate GmbH & Co. KG

Schillerstrasse 20

60313 Frankfurt am Main

+49 69 9705050

www.nai-apollo.de

0 10 20 30 40 50 60

2010

2011

2012

2013

2014

2015

2016

2017F

in bn €

Period Property Type Location Size (m2) Vendor BuyerPrice

(in mn)

H1 2017Logicor-Portfolio

(German-part) (Logistics)Germany 2,300,000

Blackstone /

Logicor CIC € 2,000

H1 2017Hansteen-Portfolio

(German-part) (Logistics)Germany 1,560,000 Hansteen Blackstone / M7 € 974

H1 2017 Retailportfolio Germany 290,000 CORESTATE BVK € 687

H1 2017Gramercy-Portfolio

(German-part) (Logistics)Germany 661,000 Gramercy AXA IM € 465

H1 2017Geneba (German-part)

(Logistics)Germany 486,000

Catalyst

Capital

Frasers

Centrepoint

(FCL)

€ 430

H1 2017 Office building "T8" Frankfurt 29,600 Credit Suisse

Mirae Asset

Global

Investments

€ 300

H1 2017Ikea-Portfolio (German-

part) (Retail)Germany 638,300 Ikea Pradera € 295

H1 2017Symphonie-Portfolio

(Office)Germany 60,625

Orion Capital

ManagersPatrizia € 280

H1 2017Office building "Kap

West"Munich 42,000 OFB

Allianz Real

Estate€ 242 16



In H1 2017 the take-up of office space (through letting and

owner-occupiers) in the top five German real estate markets

totaled 1,571,300 m2 (+6.1% compared to the previous year).

The highest take-up was achieved in Munich with 411,000 m2

(+6.5%), followed by Berlin (395,000 m2; -4.1%), Hamburg

(297,000 m2; +24.3%), Frankfurt am Main (248,300 m2;

+12.6%) and Dusseldorf (220,000 m2; -1.3%). Although take-up

in the top five market is rising and the vacancy rates are sinking

the prime rents kept in four of five markets stable compared to

the end of 2016. Berlin achieved an increase of 5.0% compared

to Q4 2016.

In H1 2017 approx. 1,042,000 m2 warehouse and logistics space

were let or occupied by owners in the top five markets (Berlin,

Hamburg, Munich, Frankfurt am Main and Dusseldorf). Compared

to the previous year this is an slight increase of 3.6%. Highest

take-up was achieved in Frankfurt (369,000 m2; -6.7% y-o-y),

followed by Berlin (255,000 m2; +53.6%), Hamburg (235,000 m2; -

6.7%), Munich (125,000 m2; +27.6%) and Dusseldorf (58,000 m2;

-32.6%). Compared to the end of 2016 the prime rents in Q2 2017

kept stable in the top five markets.

The top five markets, which are also the most sought-after

shopping locations, registered in 2017 an increase of the

purchasing power between 1.1% and 2.0% in 2017. Berlin is

characterised by the high increase of 2.0% (€20,390 per

inhabitant) while Munich has the highest total of €30,136 per

inhabitant. In comparison to the end of 2016 the prime rents in Q2

2017 are unchanged besides Berlin. In the German capital the

retail prime rent decreased by 2.9%.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

€ 400

€ 450

€ 500

2010 2011 2012 2013 2014 2015 2016 2017E

Yield / V

acancy Rate

Ren

t (in

€/m

2 /an

num

)

Frankfurt Rent Berlin Rent Munich Rent

Hamburg Rent Dusseldorf Rent Frankfurt Yield

Berlin Yield Munich Yield Hamburg Yield

Dusseldorf Yield Frankfurt Vacancy Rate Berlin Vacancy Rate

Munich Vacancy Rate Hamburg Vacancy Rate Dusseldorf Vacancy Rate

0%

1%

2%

3%

4%

5%

6%

7%

8%

€ -

€ 20

€ 40

€ 60

€ 80

€ 100

€ 120

2010 2011 2012 2013 2014 2015 2016 2017E

Yield

Ren

t (in

€/m

2 /an

num

)

Frankfurt Rent Berlin Rent Munich Rent Hamburg Rent Dusseldorf Rent

Frankfurt Yield Berlin Yield Munich Yield Hamburg Yield Dusseldorf Yield

0%

1%

2%

3%

4%

5%

€ -

€ 500

€ 1.000

€ 1.500

€ 2.000

€ 2.500

€ 3.000

€ 3.500

€ 4.000

€ 4.500

€ 5.000

2010 2011 2012 2013 2014 2015 2016 2017E

Yield

Ren

t (in

€/m

2 /an

num

)

Frankfurt Rent Berlin Rent Munich Rent Hamburg Rent Dusseldorf Rent

Frankfurt Yield Berlin Yield Munich Yield Hamburg Yield Dusseldorf Yield

Source: NAI apolloSource: NAI apolloSource: NAI apollo

17

Country Profile


Capital city Athens

Currency Euro (€)


GDP $ 287 mn

GDP growth -0.05%


Inflation -0.83%

Contact Details

Thomas Ziogas

Senior Partner

[email protected]

NAI Hellas / AVENT S.A.

4 Nikitara Str & Psaron

Halandri, 15232, Athens

+30 210 68 11 760

www.nai-hellas.gr


PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price

(in mn)

Q3 2016Hypermarket

Portfolion/a

100,000

Sklavenitis

Group

Grivalia Properties

REIC€ 60.0

Q4 2016 5* Hotel Rhodes 308 rooms Landa Hotels London & Regional € 30.5

Q4 2016 5* Hotel Athens 506 roomsIonian Hotel

Enterprises

TEMES - D-MARINE

Investments Holding

BV

€ 145.9

Q1 2017 Office Building Glyfada, Athens2,719

n/aInternational

Intercontinental REIC€ 3.4

Q1 2017 Office Building Kifissia, Athens1,302

n/a Trastor REIC € 2.5

Q1 2017 Office Building Athens2,574

n/aInternational

Intercontinental REIC€ 1.7

Q1 2017 5* Hotel Rhodes 691 rooms Eurobank Private Investor € 30.0

Q2 2017 5* Hotel Athens 314 rooms Alpha Bank Hines € 33.0

Q3 2017 Retail Building Thessaloniki2,322

n/a Trastor REIC € 8.4

Source: OECD Data

OverviewThe commercial real estate market in Greece after being almost for a

decade in uncertainty and continuous contraction is presenting signs of

stabilisation and marginal growth especially in the commercial property

sector. The downward trend of the market, is showing signs of

corrections from early 2017 with many investment transactions having

taken place. International institutional or private investors are looking at

the local market mainly focusing on the commercial sector and in

particular on hospitality assets. Investment funds hold a wait-and-see

approach with regards to the NPLs portfolios held by the Greek banking

system. Expectations in the RE market point to gradual recovery,

awaiting for a number of transactions of prime properties to be

completed in the coming years. New development activity is not

forecasted to pick up any time soon, especially as long as there is

adequate stock of properties to cover investors' demand.

Investment Volume in the Greek Real Estate Market

0 200 400 600 800 1000 1200

2012

2013

2014

2015

2016

2017F

in mn €

Source: NAI Hellas

Source: NAI Hellas

Opportunities The eventual stabilisation of the macroeconomic and political

environment in Greece is the most important development in 2017 and

the most significant coefficient for the recovery and growth of the

country's real estate market. Investment interest for the Greek CRE

market is strong with the hospitality sector leading the way. The

sector's excellent performance is breaking each year's international

arrivals record making both city and resort hotels some of the most

attractive investment assets. Focus remains sound for asset backed

NPLs with the Greek banks holding a portfolio of non-performing loans

exceeding €100 bn. New development projects are scarce and concern

merely the hospitality sector while for the rest of the CRE market in

Greece redevelopment / refurbishment schemes are starting to pick up.

18

Source: NAI HellasSource: NAI Hellas

Grade A Office (@ prime location)

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2/an

num

)

Athens Rent Thessaloniki Rent Athens Yield Thessaloniki Yield

Grade A Warehouse / Logistics

( >5,000m2 @ prime location)

0%

2%

4%

6%

8%

10%

12%

14%

€ -

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2/an

num

)


High Street Retail (@ prime location)

0%

1%

2%

3%

4%

5%

6%

7%

8%

€ -

€ 500

€ 1.000

€ 1.500

€ 2.000

€ 2.500

€ 3.000

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2/an

num

)


Source: NAI Hellas

The office market in Greece has substantially contracted over

the past years due to constant pressures that the economy has

been experiencing. In 2016 the Grade A office market showed

marginal increase in terms of rental levels compared to 2015,

mainly as an outcome of continuous reduction in supply. Lack of

new development projects resulted in the take up of existing

quality stock at a marginally higher rent. Vacancy rates in the

top three office locations in Athens have decreased over the last

two years for both Grade A and B stock exhibiting an increasing

take-up trend.

The logistics market in Greece, as opposed to industrial

properties, is a sector attracting increased investment interest

lately supported by many important infrastructure projects that

have been completed. The country's advantageous

geographical position together with the privatisation projects in

Piraeus and Thessaloniki commercial piers as well as the

National Railway have managed to place the logistics hubs of

Athens and Thessaloniki on investors' map. Occupancy rates

for Grade A logistics properties is as high as c. 95%.

Noteworthy activity was recorded in the high street retail market

of Athens during 2016-2017. Many international retailers

reinforced their position in the traditional Athenian shopping

locations with supply being low. Prime rents remained

unchanged or increased marginally due to limited or zero supply

of vacant space. Gradual improvement was also recorded in the

high street market of Thessaloniki with increased take up

leading to lower vacancy rates and higher rental levels.

19


Source: OECD Data

OverviewThe investment volume up to H1-2017 has reached a remarkable €5.8 bn, due

to a strong 2Q of €4bn (+58% QoQ). There has been a continuation in the trend

started in 2016 characterised by foreign investors' interest in Italian CRE

motivated by relative considerations; national investors as well have been

active, mostly investment management companies (Sgr). The foreign

contribution to this new capital is very high at 80%, c. €4.6 bn (+67% vs H1-

2016), with domestic capital at 20%, €1.2 bn. The proportion of these

investments is represented by: 34% offices (€2 bn, +30% vs H1-2016), 21%

retail (€1.2 bn, +76% vs H1-2016), 14% logistics (€0.8 bn, +291% vs H1-2016),

13% hotels (€0.77 bn, +49% vs H1-2016), 18% alternatives (c. €1 bn, +100%

vs H1-2016). The NPL market has finally seen large interesting transactions

originated and executed as a testimony of the commitment from banks,

investment managers, investors, regulator and other key players to make 2017

the breakthrough year. The geographical area having experienced the highest

growth vs previous semester is Rome, with €1 bn new invested cash being

+30% vs H1-2016; Milan is still leading in terms of absolute amount though with

€1.8 bn, +25% vs H1-2016, and nearly half of it represented by offices. Prices

in general have followed a positive evolution as rent levels are in a marked

downward trend, especially on core prime opportunities.

Investment Volume in the Italian Real Estate Market

So

urc

e: N

AI Ita

ly

Source: NAI Italy

Opportunities The outlook for the second half of 2017 in terms of invested

volumes is still positive with Institutional Investors' presence

strong and widespread. In the coming years there will be several

investment opportunities also coming from the Public Sector and

the State which is trying to rationalize its estate as well as

attracting necessary investments for upgrade the state of repair of

strategic assets. As economic growth stabilizes and foreign

investments keep on at a steady pace, the outlook on prices

remains positive as on a relative basis Italian assets have still

some upside potential to achieve.

Country Profile


Capital city Rome

Currency Euro (€)


GDP $ 2,312 bn

GDP growth 0.99%


Inflation -0.09%

Contact Details

Carlo Bragazzi, Senior Partner

Head of Alternative Investment Solutions

[email protected]

NAI Italy

Via Monte di Pietà 21,

20121 Milan

+39 02 8633 7703

www.naiglobal.com

0 1 2 3 4 5 6 7 8 9 10

2012

2013

2014

2015

2016

in bn €PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price (in

mn)

2016 - Q2

2017Office Building Rome, Milan n/a

Milano 90 Srl

(Scarpellini)

Tristan, York

Capital, Feidos€ 510

Q1 2017 Office BuildingMilan city

centre12,000 Luxottica Hines Italia € 100

Q1 2017 Shopping Center Bari n/a BNP Paribas REIM Serenissima Sgr € 61

Q1 2017 Retail Building Various cities n/a Feltrinelli Group Coima Sgr € 50

Q1 2017 Retail BuildingMilan city

centre3,750 Porta Rossa

Meyer Bergman

European Retail

Partners III

€ 55

Q1 2017 Office BuildingsMilan, Rome,

Bari91,000

Cloe Office Fund

(Prelios Sgr)

AREEF Fund 1

Italy (Ardian RE

European Fund)

€ 300

Q2 20175 Star Luxury

Hotels

Rome, Venice,

Florence~ 500 rooms

B5 srl (Boscolo

Family)Varde Partners n/a

Q3 2017 Office Buildings Milan n/aEdison (sale &

lease back deal)

Fondo Ippocrate

(Idea Fimit Sgr)€ 270 20

Source: NAI ItalySource: NAI Italy




Source: NAI Italy

The interest from international investors in the office market has

continued its trend during the first half of 2017. Milan maintains

the leading place in the country; the supporting factors for this

overperformance are a larger number of opportunities, lower

perceived risks and a superior stock quality. The activity in the

Milan market has increased further registering a peak over the

last decade. The interest and activity in the Rome office market

is similar to last year's levels. The vacancy rate in Rome is

going down also because owners are in the process of taking

out from the market their assets to refurbish them in order to

attract proper interest going forward. Investors are still showing

a keen preference on core assets, however, as the availability of

such good quality products is now limited, the demand for

value-added opportunities is growing. There should be a

continuation of this positive trend especially on core assets in

core locations with value added opportunities emerging in a

more regular fashion as prime yields remain compressed.

Q1-2017 has been marked by a very strong start in the logistic

market with €145 mn of new investments, +238% vs Q1-2016,

through four transactions executed by foreign investors and the

largest one by a local investment manager, Kryalos Sgr. Most

of the activity is concentrated on build to suit/refurbished

opportunities since the demand for core assets is still dominant

and the speculative developments have yet to consolidate.

Prime net yields have experienced a further contraction

compared to the previous year. Lombardy and Emilia

Romagna remain the two more dynamic regions in terms of

take-up and 3PL operators have the lions' share in the logistic

space take up to date, since E-commerce ones have scaled

down.

Investment volumes in Q1-2017 have decreased compared to

the previous' year period with high street opportunities still

leading attracting more than 2/3 of the total. Foreign investors

are yet again dominating the arena. Prime rents in Milan and

Rome are stable for both high street and shopping centers whilst

yields are in a steady declining trend. Because of these low yield

levels now international investors are willing to consider

secondary cities as well as refurbishment/new development

projects. A two rounds auction process has been tried for prime

high street core assets in Milan (8.3k m2 & €5.7 mn p.a. rent) and

Rome (850 m2 & €2.6 mn p.a. rent): NBO received by the owners

who then shortlisted the counterparties having shown the better

offer terms giving them VDR access for the second round.

0%

2%

4%

6%

8%

10%

12%

14%

16%

€ -

€ 100

€ 200

€ 300

€ 400

€ 500

€ 600

2010 2011 2012 2013 2014

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Milan Rent Rome Rent Milan Yield

Rome Yield Milan Vacancy Rate Rome Vacancy Rate

0%

2%

4%

6%

8%

10%

12%

€ 48

€ 50

€ 52

€ 54

€ 56

€ 58

€ 60

€ 62

2010 2011 2012 2013 2014

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)



0%

2%

4%

6%

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10%

12%

€ -

€ 2.000

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€ 16.000

2010 2011 2012 2013 2014

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)



21

Major Transactions 2016 - 2017Source: OECD Data

OverviewThe investments in real estate continued to show positive results after

steep decline during the financial crises. Market witnessed remarkable

investment growth pointing to €730 mn over last 2 years returning to pre-

crises levels. The main drivers for the investment growth are relatively

good access to financing, low interest rate environment, increasing

liquidity, lack of high-yielding alternatives and lack of prime real estate

assets, which are also the main factors putting downward pressure on

yields, compressing those by even 100 to 200 bps. Up to the end of 2016

most demanded were substantial cash flow generating retail and office

assets. H1-2017 has shown positive investment volume growth also in

industrial / warehouse segment, however total H1-2017 investment

volumes has slowed down compared to previous years, which is

explained by a shortage of an attractive investment properties in Riga.

Considering great interest from investors and the lack of large modern

office space, high new development activity has been noted, which in the

nearest future will supplement office market space by at least 150k m2.

The same pace of development activity is shown also in other commercial

segments - retail and industrial/warehouse, providing positive ground for

new investment deals.

Investment Volume in the Latvian Real Estate Market

Source: NAI Baltics

Source: NAI Baltics

Opportunities Investor interest towards prime cash flow generating assets will remain

high, keeping low yield levels. Nevertheless quite notable reduction,

yield gap is still favorable compared to Scandinavian and Western

European levels. Opportunity to gain better yields is the main reason for

new profile and geography investor appearance in the region.

Contact Details


Principal

[email protected]

NAI Baltics


+37129473300

www.naibaltics.com/

Country Profile

Population (mn) 2.0

Capital city Riga

Currency Euro (€)


GDP $ 50 bn

GDP growth 1.95%


Inflation 0.14%

0 50 100 150 200 250 300 350 400 450

2010

2011

2012

2013

2014

2015

2016

2017F

in mn €PeriodProperty


Price

(in mn)

Q3 2016 Retail Riga 49,000 Diksna Lone Star € 93.40

Q2 2016 Retail Riga 42,000 KanAm Grund EfTEN € 74.50

Q3 2016 Office Riga 10,000 Bauplan Nord Baltic Horizon € 23.00

Q1 2016 Office Riga 36,500 SWH Group Private investors € 20.00

Q4 2016 Retail Riga 20,000Nunica

HoldingsKesko Group € 12.50

Q2 2017 Retail Latvia 39,000 Kesko GroupBaltic Retail

Propertiesn/a

22




Source: NAI Baltics

Modern office stock is concentrated in Riga amounting to

610k m2. Modern stock increase by 150k m2 is expected in

coming years. New speculative developments capable to

attract tenants during construction stage, providing positive

sentiment for further investments. Demand is mostly driven by

financial sector and IT companies, consolidating in single

locations with further expansion possibilities. Expansions are

based on improving economic environment. International

companies are willing to relocate their back-office units to

Latvia. Rent rates expected to increase gradually. Vacancy

will witness slight reduction in A class buildings. Occupancy

fluctuations in older buildings without adequate Capex

investments is most likely.





sentiment for further investments. Demand is mostly driven

by financial sector and IT companies, consolidating in single












sentiment for further investments. Demand is mostly driven

by financial sector and IT companies, consolidating in single








0%

2%

4%

6%

8%

10%

12%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Riga Rent Riga Yield Riga Vacancy Rate

0%

2%

4%

6%

8%

10%

12%

€ 45

€ 46

€ 47

€ 48

€ 49

€ 50

€ 51

€ 52

€ 53

€ 54

€ 55

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)


0%

2%

4%

6%

8%

10%

12%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

€ 400

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)


23


Source: Swedbank

OverviewReal estate investment market have been substantially active,

dominating by Scandinavian and Baltic investors as well as international

investment funds. Office and retail segments with sustainable cash flow

have attracted the highest investment volumes. Increased investors

interest to invest in Lithuanian real estate market was one of the drivers

to yield compression by 100-150 bps. Nevertheless, investment yields

are still higher compared to Nordic and Western European countries.

Prime investment yields for office and retail properties bottomed out to

6.75% and maintained at 8% level for industrial properties. Notably

active has been office sector in terms of new developments – five large

office centers have been put into operation during 2016, followed by

another 82 tgh sqm to be completed by the end of 2017. Lithuanian

office market is benefitting from Shared Service Centers by international

companies. Extreme development has been observed also in hotel

segment, since in Vilnius there is the least number of hotel rooms

compared to other Baltic capitals, although tourist flow is raising YoY.

Investment Volume in the Lithuanian Real Estate Market

Source: NAI Baltics

Source: NAI Baltics

Opportunities Taking into account positive economic outlook and still comfortable level

of returns from investments in comparison with the Nordic and Western

countries, as well as acceptable risk, we expect that investors interest will

remain high. Prime yields are expected to continue downward trend, yet

maintaining favorable levels compared to other regions.

Contact Details


Principal

[email protected]

NAI Baltics


+37129473300

www.naibaltics.com/

Country Profile

Population (mn) 2.9

Capital city Vilnius

Currency Euro (€)


GDP $ 28 bn

GDP growth 2.30%


Inflation 0.90%

0 50 100 150 200 250 300 350 400 450 500

2010

2011

2012

2013

2014

2015

2016

2017F

in mn €

PeriodProperty


Price

(in mn)

Q1 2016 OfficeBaltic

countries84,000 Geneba Laurus € 87

Q2 2017 Office Vilnius 13,800 ICOR Group Technopolis € 32

Q2 2017 Office Vilnius 9,000 LaurusEast Capital

Explorer AB€ 29

Q1 2017 Office Vilnius 8,300YIT Kausta

būstasBaltic Horizon € 15

24




Source: NAI Baltics

Office market experiences rapid development pace. Last year

total modern office stock was supplemented by 95 K m2 or 19%

y-o-y amounted to 597 K m2, even more substantial growth

expected within two consecutive years adding another 200 K m2

to Vilnius office market, mainly supplementing A class

properties located in CBD. Demand is mainly driven by

banking, insurance and financial services, IT and customer

contact services. Vilnius have been awarded best city for SSC

in CEE, and as the destination of choice for the top brands, as

Nasdaq and Barclays, Vilnius is firmly on the map as a growth

centre for SSC development.

Vilnius warehouse/logistics market was continuing intensive

built-to-suit development pace, however speculative

development activity is also taking place adding to the market

three such logistics centers. Satisfactory take-up activity for

speculative constructions reflects high demand for modern

logistics facilities, giving positive ground for slight rent rate

upward trend, yet quite substantial stock increase may put

downward pressure on occupancy, still maintaining it in

comfortable level. Increased demand for combined

production/warehouse facilities is observed. Positive economic

outlook and convenient geographical location contributes to

further growth of Lithuanian warehouse/logistics market.

Retail property market was mostly activated by grocery chains,

developing new stores or reconstructing existing ones. Stock

expansion will be mostly driven by extension of existing SC. In

order to increase number of visitors SC owners are hardly

working on extension of entertainment and leisure areas, due to

increasing purchasing quality demands and changing habits.

More active have become street retail segment. Vacancy level

in shopping centers is low, forming good base for rent rates

growth in the future.

0%

2%

4%

6%

8%

10%

12%

14%

16%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Vilnius Rent Vilnius Yield Vilnius Vacancy Rate

0%

2%

4%

6%

8%

10%

12%

14%

€ -

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

€ 400

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)


25


Source: OECD Data

OverviewOwing to low interest rates among other things, the economy continued to

pick up in 2016 en was lifted to new records. Within a single year, an

unprecedented amount of properties had been sold, including commercial

premises. And yet, there is no denying that some of the sectors were by no

means served by those positive changes. Like the residential property

market for instance, going too far at some levels. No market has benefited

more from low interest rates than the housing market. Last year the

number of existing owner-occupied houses sold went up by more than

16%; national prices climbing by nearly 9%. Similar numbers were

reported in the new buildings segment of the owner-occupier housing

market. The housing market picked up in almost every region, however

some segments had become overheated. With the city being so incredibly

attractive, demand exceeded supply significantly. Prices skyrocketed, with

those interested having to pay beyond the asking price in many cases.

Prices also climbed substantially on the private sector rental market, in fact

by nearly 8% per m2.

Investment Volume in the Netherlands Real Estate Market

Source: NAI Netherlands

Opportunities Investors appetite continued to remain high in the first six months of

2017, although, the availability of prime investment products in

dominant areas of the country is rather limited. The outlook on the

Dutch investment market continues to improve due to a positive

economic growth, declining unemployment rate and a growing

consumer confidence.

Country Profile


Capital city Amsterdam

Currency Euro (€)


GDP $ 873 bn

GDP growth 2.13%


Inflation 0.32%

Contact Details

Robert Das

Managing Director / Partner

[email protected]

NAI Netherlands

Concertgebouwplein 15

1071 LL Amsterdam

+31 636 40 007

www.nainetherlands.nl/en

0 1 2 3 4 5 6 7 8

2010

2011

2012

2013

2014

2015

2016

2017F

in bn €

PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price

(in mn)

Q2 2017 Office Amstelveen 58,000

Commerz Real

Investment-

gesellschaft

Prowinko n/a

Q1 2017 Office

Amsterdam,

Atrium,

Strawinskylaan

56,000 Icon Real Estate Amundi € 500

Q2 2017 Apartment

Grotius I-II, P.

Clauslaan, Den

Haag

650 units Provast CBRE GI n/a

Q2 2017 Hotel Bilderberg portfolio 16 prop Goldman SachsFirst Sponsor

Group€ 205

Q2 2017 Office Den Haag,

Plesmanweg40,000 Rijksvastgoedbedrijf

Impact

Vastgoed€ 43

Q2-2017 Office Utrecht 40,022CBRE Dutch Offie

FundAnbang € 157

Q3-2017 Logistics Raamsdonkveer 20,499 HB Capital Intervest € 14


26




Positive changes also presented themselves on the Dutch office

market in 2016. Demand increased by 25%, supply going down

by 9%. Supply rates also dropped as many offices had been

withdrawn from stock, to Introduction make room for houses

among other things. But despite better market conditions, office

rents hardly changed last year. The lease and sale of office

space in the first half of 2017 was slightly lower compared to the

same period last year. In total the take up was c. 475,000 m2

compared to c 557,000 m2 in the first half year of 2016. Only

45,000 m2 was newly built. In Amsterdam the take-up was 15%

lower compared to the first 6 months 2016. The rental prices

remained stable. Only in Amsterdam in specific areas the rental

prices are tending to rise due to lack of suitable supply.

In the logistic sector total take up was c. 787,000 m2. Most

transactions were in newly built warehouses. Large transactions

were VidaXL which leased 104,000 m2 in Venlo and the lease of

58,000 m2 to Lidl in Roosendaal. Despite the reasonable

demand for logistic space there exist a fear for oversupply. This

is caused because of the fact that on a number of locations

developers started the construction of new logistic warehouses

without any pre-letting. Lease prices remained stable.

The retail market continued to recover as well. Supply

diminished for the first time in years, after successfully

transforming vacant stores into residential, office or hospitality

areas. Letting out many of V&D’s previous stores ensured a

record take-up of 1.1 mn m2. But still, the retail market was

unmistakably divided as intensifying demand and falling supply

levels in large cities were offset by poor demand and high

vacancy rates in medium-sized and small towns. Despite an

improving market the recovery of the retail sector remains fragile

with insolvencies that continue to target the sector, although

these are increasingly used for drastic operational restructuring.

Different retail sectors show an improvement in turnover sales,

especially online retail trad registered a strong performance. The

outlook on the Dutch retail market continues to improve due to a

positive economic growth, declining unemployment rate and a

growing investment pressure as interest rates remain low.

0%

2%

4%

6%

8%

10%

12%

€ -

€ 500

€ 1.000

€ 1.500

€ 2.000

€ 2.500

€ 3.000

€ 3.500

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Amsterdam Rent Rotterdam Rent

Amsterdam Yield Rotterdam Yield

Amsterdam Vacancy Rate Rotterdam Vacancy Rate

0%

5%

10%

15%

20%

25%

€ -

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Amsterdam Rent Rotterdam Rent Amsterdam Yield

Rotterdam Yield Amsterdam Vacancy Rate Rotterdam Vacancy Rate


0%

5%

10%

15%

20%

25%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

€ 400

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Amsterdam Rent Rotterdam RentAmsterdam Yield Rotterdam YieldAmsterdam Vacancy Rate Rotterdam Vacancy Rate


27

PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price

(in mn)

Q1 2016 Acquisition n/a n/aEcho

Investment

Redefine

Properties€ 1,200

Q4 2016 Office BuildingWarsaw City

centre53,000

Echo

Investment

INVESCO Real

Estate European

Fund

€ 230

Q3 2016 Retail building Krakow city centre 91,000Trios Dutch

Holdings

Rockcastle Global

Real Estate€ 361

Q3 2016 Office BuildingWarsaw Żoliborz

District48,000 HB Reavis

Savills Investment

Management€ 186

Q3 2016 Retail building Zielona Góra 26,800Aviva

Investors

Rockcastle Global

Real Estate€ 161

Q3 2016 Retail buildingPiotrków

Trybunalski35,286

Q4 2016 Retail building Olsztyn 42,711Galeria

Warmińska

Rockcastle Global

Real Estate€ 150

Q1 2017 8 Hotels n/a n/a Warimpex U City € 180


Source: OECD Data

OverviewPoland is the largest country in the CEE region with over 38 mn

inhabitants. Experts forecast that investment volume in 2017 will reach

similar value as in previous year, and considering that 2016 achieved

the highest recorded investment volume of €4.5 bn, keeping it on a

similar level may indicate that Poland is experiencing a stable growth.

Investment transactions recorded in 2016 state clearly that Poland

remains a desirable destination among international investors. Over

90% of the investment transactions in the Polish market in 2017 were

conducted by foreign investors. Prime rents in major cities remain

stable, as well as prime yields. Additional beneficial factors include the

steadily lowering unemployment rate and growing retail sales. It is

predicted that the country’s GDP should remain above European

Union's average and oscillate at around 3% per year. Polish economy

was mostly unaffected by the recent political changes in the EU and in

the USA which allows for it’s steady growth.

Investment Volume in the Polish Real Estate Market

Source: NAI Estate Fellows

Opportunities In the coming years Poland will continue to offer many opportunities

for investors to diversify their real estate portfolios. High activity

from both developers and clients keeps the market in high gear.

Therefore it is becoming more common to observe pre-let

agreements in buildings that are under construction.

Country Profile


Capital city Warsaw

Currency Polish złoty (PLN)


GDP $ 1,055 bn

GDP growth 2.68%


Inflation -0.66%

Contact Details

Bartosz Pustuł

Property Management Director

[email protected]

NAI Estate Fellows

Warsaw, Pankiewicza 3

00-696

+48 22 379 73 00

www.estatefellows.com

0 1 2 3 4 5

2010

2011

2012

2013

2014

2015

2016

2017F

in bn €


28



The Polish office market is developing in a steady manner.

Regional cities are experiencing high occupancy rates which

supports increased development activity. Developers remain

strongly influenced by the BPO/SSC sector which is a main

force propelling regional cities towards development. Krakow

as one of the most popular targets in Europe for BPO/SSC is

expected to provide an additional 300,000 m2 of office space

this year. Yet the leader in Poland’s office market is still the

capital city - Warsaw. Thanks to it’s dynamic growth and

constant interest of companies in Warsaw, flow of modern

offices continues.

The industrial market in Poland can be characterised by it’s very

low vacancy rate and stable rental levels. Warsaw’s suburban

area achieved best score in it’s industrial history by reaching the

lowest vacancy level of 5.5%. On the other hand, Krakow is

experiencing high supply of industrial space which resulted in

it's stock increase by nearly 90% in the last two years.

Prospects for future development of regional markets remain

positive in the upcoming years.

Retail rents in prime locations are expected to remain stable,

whereas in secondary locations rents are expected to fall in

response to growing competition. A small shift from main

markets towards regional cities with population around 100k

population inhabitants is being recorded. The prime retail

market in Poland is Warsaw. From c. 690,000 m2 of GLA space

under construction over half is located in Warsaw and the rest in

other main region cities. Current economic changes (lowering

unemployment, 500+ program) empower the growth of retail

market in Poland.

Source: NAI Estate FellowsSource: NAI Estate Fellows

0%

1%

2%

3%

4%

5%

6%

7%

8%

€ -

€ 200

€ 400

€ 600

€ 800

€ 1.000

€ 1.200

€ 1.400

2010 2011 2012 2013 2014 2015 2016 2017E

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Warsaw Rent Kraków Rent

Warsaw Yield Kraków Yield

Warsaw Vacancy Rate Kraków Vacancy Rate

0%

2%

4%

6%

8%

10%

12%

14%

€ -

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

2010 2011 2012 2013 2014 2015 2016 2017E

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Warsaw Rent Kraków Rent Warsaw Yield


0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Warsaw Rent Kraków Rent

Warsaw Yield Kraków Yield



29


Source: Eurostat

OverviewRomania registered a strong economic growth in 2016, with most indicators reporting

improving results as compared with the previous year. Internal consumption was the

main source of growth, being stimulated by tax reductions, increases in salaries and low

interest rates. GDP reported a 4.8% jump which represents an 8-year record rate.

Economy is planned to continue to grow in 2017 based on internal consumption. VAT

was reduced from 20% to 19% from the start of 2017, while public salaries and

pensions were increased by 20%, respectively 9%. Unemployment is expected to

decrease further as business sector is likely to expand in both production and services.

IT&C sector is expected to continue at high speed, with Romania to strengthen its

ranking as a major destination for outsourcing and regional / global services centers. In

2016, the office market was considered the most attractive segment of the real estate

market, being responsible for half of the transactions. The most important transaction on

the national real estate market was represented by the acquisition of 26.88% of the

capital of Globalworth, one of the major players on the office market by the South-

African investment fund Growthpoint for 186 mil. Euro.

Opportunities The Romanian real estate market is currently in an

expansion phase. Good opportunities are available on

all segments of the real estate market. The general

macroeconomic environment favor moderate

development of the Romanian real estate market during

2017 and in the near future. The development activity is

intense on residential, retail and office markets and the

industrial segment still remains a valuable opportunity

for investors to diversify their portfolios. Although on its

path to maturity, the Romanian real estate market

exhibits high yields when compared to other Central

and Eastern European countries and has become a

more attractive environment for investments.

Source: NAI Romania

Country Profile

Population 19.6

Capital city Bucharest

Currency LEU (ROL)


GDP $ 462 bn

GDP growth 4.40%


Inflation -1.10%

Period Property Type Location Size (m2) Vendor BuyerPrice

(in mn)

2016Logicor Logistics

Portfolio

Entire European

Portfolion/a Immofinanz Blackstone € 305

2016

2 Office Buildings -

Premium Plaza and

Premium Point

Bucharest 14,385 Volksbank GTC € 35

2016 Sibiu Shopping City Sibiu 79,100 Argo Real Estate NEPI € 100

2016Mega Mall Bucharest

30%Bucharest 75,200 Real4You NEPI € 71

2016Metropolis Center

(Office)Bucharest 18,695 Soravia PPF Real Estate € 48

2016 Swan Park Bucharest 29,125 Casa de Insolventa

Transilvania

Smartown

Investments€ 30.3

2016 Phoenix Tower Bucharest 10,000

Aberdeen Asset

Management and

Commerzbank

Adam America € 10

2016 McDonald's Restaurants Romania 67 restaurants McDonald's Premier Capitals € 65.3

2016P3 Logistics Park

BucharestBucharest 300,000

TPGRE/ Ivanhoe

Cambridge

GIC Investment

Fund Singapore€ 2,400

2017 Construdava Bucharest 9,400 Aberdeen Asset

ManagementAdam America € 7

2017 ART Business Center Bucharest 18,600 Art Group Hili Properties € 30

2017Logicor Logistics

Portfolio

Entire European

Portfolio13,700,000 Blackstone China Investment € 12,250

2017 Green Court 3 Bucharest 16,300 Skanska Globalworth € 38

Contact Details

Andrei Botis

Managing Partner

[email protected]

NAI Romania

87 Nicolae Caramfil, 4th floor,

Bucharest, District 1, 014143.

+40 311 011 890

www.nairomania.ro30



In 2016, the office market was the most attractive segment of

the real estate market. In Bucharest, the main development

poles were Grozavesti, Pipera and the central zone. The

development of new office projects in the central area - Victoria

Office Building, Center Square, Unirii View - and close to the to

the subway stations Grozavesti and Politechnica - Skanska, CA

Immo, The Bridge offers to the employers an alternative to the

increasing agglomeration in the Northern part of Bucharest.

33% of the lease transactions on the office segment in

Bucharest were realized in Grozavesti area. New buildings with

a total of 265,000 m2 GLA were completed last year in

Bucharest, at the highest level in 7 years. Modern office stock in

the capital reached 2.44 mn m2 GLA at year-end, out of which

75% is A-class stock. The Romanian market continues to offer

high yields (7.50%-9.00%) compared to other Central European

markets.

Industrial sector continued on a positive trend, being noted further

improvements in this segment. There was registered a strong

leasing activity and a high volume of new supply delivered at

national level. Development activity accelerated last year to a total

of 400,000 m2 GLA of new developed space at national level. In

2016, Bucharest’s stock increased by 190,000 m2 GLA and it has

consolidated its position as the main industrial market in Romania,

reaching 1,170,000 m2 GLA of modern industrial stock. With a

stock under construction of 110,000 m2 and new extensions

planned, Bucharest’s market is expected to see further growth.

CTP and WDP are the most active developers at national level.

Prime yields in the industrial sector oscillate around 9-10%.

Romania still preserves advantages in terms of competitiveness in

attracting direct investments.

The 2016-2017 period was highly favorable to the retail real

estate market. Increased development will continue in the

following year due to the trend of concentrating the commercial

activity in big modern commercial centers such as the malls,

based on changing preferences of the consumers, especially in

the big cities. The biggest real estate transaction in 2016 belongs

to the investment fund NEPI, which concluded the acquisition of

the shopping center in Sibiu from Argo for €100 mn. During

2016, another 2 shopping malls opened in Bucharest - Park Lake

located in Titan and Veranda in the central area. Bucharest has

exceeded for the first time 1 million sqm of shopping centre

space. A new stock of 311,215 sq m GLA is announced to open

in 2017- 2018 at national level. Highest rents are registered in

Bucharest, being placed at 65-70 Euro/sq m/month double than

the prime rents of 30-35 Euro/sq m/month found in the largest

markets outside the Capital.

0%

2%

4%

6%

8%

10%

12%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Bucharest Rent Other Rent Bucharest Yield

Other Yield Bucharest Vacancy Rate Other Vacancy Rate

Note: Other cities include Cluj-Napoca, Iasi and

Timisoara

Source: NAI Romania

0%

2%

4%

6%

8%

10%

12%

€ -

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Bucharest Rent Other Rent Bucharest Yield

Other Yield Bucharest Vacancy Rate Other Vacancy Rate


Timisoara

Source: NAI Romania

0%

2%

4%

6%

8%

10%

12%

€ -

€ 100

€ 200

€ 300

€ 400

€ 500

€ 600

€ 700

€ 800

€ 900

2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Bucharest Rent Other Rent

Bucharest Yield Other Yield

Bucharest Vacancy Rate Other Vacancy Rate


Timisoara

Source: NAI Romania

31


Source: National Bank of Serbia

OverviewDuring 2017 in addition to existing benefits, such as strategic geographical

location, duty-free exports to the countries of South Eastern Europe and

Russia, the lowest corporate tax rate in Europe of 15% as well as an

educated and skilled labor force available at competitive cost, Serbia has

prepared a package of financial support to investors. As a result, Serbia have

made the investment climate together with industrial sector more accessible

and attractive than ever before.

Opportunities What we can see these days is actually the beginning of a new property cycle.

There was long time no better moment to start up a new real estate project in

Belgrade or Serbia. Rents have been bottoming out, occupancy goes up and

construction activity is at historical high. This goes along with a quite stable

demand for commercial property. We at NAI believe that the office market will

take up momentum first, then to be followed by other submarkets.

Source: NAI atrium

Country Profile

Population (mn) 7.1

Capital city Belgrade

Currency Dinar (RSD)


GDP € 34 mn

GDP growth 2.80%


Inflation 1.60%

Contact Details

Roman Klott

Director

[email protected]

NAI atrium

Blvd. Mihajla Pupina 165 G

+381 11 2205 880

www.nai-atrium.com

PeriodProperty


Price

(in mn)

Q1 2016Shopping

centerBelgrade 33,000 Delta

Hyprop Investments &

Homestead Group

Holdings Limited

€ 127.7

32




Intense development activity keeps on from the last year,

resulting in over 50,000 m² of new office space that is added to

the market in 2016. Although market activity in the first half of

the 2016 year recorded y-o-y drop by 30%, due to excellent

results in the previous year, total take-up stands at c. 35,000 m²

and combined with pre-lease activity leads to low vacancy, now

slightly decreased to the level of 6%. Rental levels didn’t record

significant changes, i.e. prime rents for A Class office space are

in range of €14-16.5/m², while B Class prime rates stands in

range €10-14/m². Prime office yields remained unchanged at

the level of 8.5%.

The development of industrial market is speeding up as new

large-scale projects are completed during 2017. Main projects

on the market are those of the big food retailers, LIDL and

Univerexport that choose to built distribution facilities with

announced surface area of approximately 109,000 m². Besides,

new factories of Yazaki, Mai Ta and Lear were opened at the

end of 2016 and in 2017, with total surface of approximately

94,295 m². Depending on location and characteristics, quality

and size, rent levels for modern warehouse space remained

stable, in the interval between €3-5/m². Prime yield reached

level of 10.5%.

Belgrade retail market continued with its recovery in 2017,

which resulted in transactions that took place in Belgrade,

where BIG Shopping Centres, Israeli company bought shopping

center Belgrade Plaza. As a main contribution to the retail

shames stock, two new shopping centers are delivered to the

market with total GLA of 47,600 m², which is together with

another two retail shames as are IKEA and Capitol park

Rakovica bust retail shames stock in Belgrade in 2017 for over

105,000 m². Prime shopping center rents remained stabile in the

range between €20-60/m².

Source: NAI atrium Source: NAI atrium Source: NAI atrium

0%

5%

10%

15%

20%

25%

€ 150

€ 160

€ 170

€ 180

€ 190

€ 200

€ 210

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Belgrade Rent Belgrade Yield Belgrade Vacancy Rate

3%

4%

5%

6%

7%

8%

9%

10%

11%

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

€ 80

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2/an

num

)

Belgrade Rent Belgrade Yield

3%

4%

5%

6%

7%

8%

9%

10%

€ 200

€ 300

€ 400

€ 500

€ 600

€ 700

€ 800

€ 900

€ 1.000

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield

Ren

t (in

€/m

2/an

num

)

Belgrade Rent Belgrade Yield

33

€ 0 € 5 € 10 € 15 € 20 € 25

2010

2011

2012

2013

2014

2015

2016

2017F

in bn €


Source: OECD Data

OverviewThe Swedish property market keeps attracting foreign and domestic

investment capital thanks to a fundamentally strong economy, paired with

expansive monetary policy, a high level of transparency and liquidity in

the market and a low level of political risk. Funding is still quite easily

obtained. Residential properties, community properties and quality

commercial properties – mainly in metropolitan areas and regional growth

markets – are still seen as the most attractive investments. Prime office

rents have increased rapidly recently. A few suggested changes in

Swedish tax laws are currently being considered, which risks causing

lower liquidity and upward pressure on the lower yield segments

especially. There is also a strong interest for new construction and

development rights. The low interest rates has been contributing to rapidly

accelerating housing prices and household debt, increasing risk.

Investment Volume in the Swedish Real Estate Market

Source: NAI Svefa

Opportunities Depending on future interest rates there is still some room for yield

decline, looking at yield gap and general investor interest. However, the

potential of general yield decline is quite marginal and higher yield

investments such as office properties outside of A-locations or

warehouses & logistic can therefore be seen as interesting alternatives.

Source: NAI Svefa

Country Profile

Population (mn) 9.6

Capital city Stockholm

Currency Swedish krona (SEK)


GDP $ 486 bn

GDP growth 3.05%


Inflation 0.98%

Contact Details

Gustav Källén

Deputy CEO & Head of Investment

[email protected]

NAI Svefa

Mäster Samuelsgatan 60

103 66, Stockholm, Sweden

+46 10 603 86 00

www.naisvefa.se

PeriodProperty

TypeLocation

Size

(m2)Vendor Buyer

Price

(in mn)

Q2 2017 University Kalmar 38,000 SkanskaIntea

Fastigheter€ 146

Q2 2017Residential

portf.

Greater

Stockholmc. 80,000 Alecta

Heimstaden

Bostad€ 225

Q1 2017 Office BuildingStockholm CBD

West34,000 NIAM

M&G Real

Estate€ 229

Q1 2017Assisted living

fac

Stockholm

suburb23,000

Botkyrka

Municipality

Sterner

Stenhus€ 31

Q1 2017 Retail (Mall)Stockholm

Bromma55,000 Starwood CBRE GI € 220

Q4 2016Prime Office

portfolioNorthern Sweden 235,250 Castellum

Diös

Fastigheter€ 478

Q4 2016 Mixed industry Gothenborg 338,000 AB Volvo Platzer € 291

Q4 2016Residential

portf.Malmö 140,175

Malmö

Municipality

Balder,

Heimstaden &

Victoria Park

€ 115

Q3 2016 Retail (Mall)Stockholm

Kungens Kurva49,400 NIAM

Cavendo,

Capman &

Varma OY

€ 97

34



The office market in Sweden's larger cities keeps strengthening,

stimulating new construction at an accelerating rate. Thanks to

a higher level of user efficiency, this has raised rents even

further. The vacancy rates in prime locations are near zero,

which indicates that the market is solid for the time being. Rents

in Stockholm CBD are at record highs. In minor cities however,

the demand for office space seems to be slowly declining.

The Swedish logistics market has seen an increasing amount

of interest from international investors. Most of logistic facilities

are placed within the triangle made up by the three largest

cities, with Gothenburg being the best logistic location for

national transportation. The technical advancements being

made within the sector over the last couple of years has made

new construction more common. In the northern parts of

Sweden, large server centers are being built for some of the

world's largest internet players, thanks to the cold weather

supplying a natural coolant for the servers.

A shift towards e-commerce and low sales growth keeps

putting pressure on the retail market, even though the low

interest rates are giving the Swedish public a lot of room for

consumption after paying their mortgage. The competition

between malls and retail locations has toughened, but the best

and newest malls as well as high street retail is still going

strong. The food and beverage-segment is growing at a fast

pace.

Source: NAI SvefaSource: NAI SvefaSource: NAI Svefa

0%

1%

2%

3%

4%

5%

6%

€ -

€ 100

€ 200

€ 300

€ 400

€ 500

€ 600

€ 700

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Stockholm Rent Gothenburg Rent

Stockholm Yield Gothenburg Yield

Stockholm Vacancy Rate Gothenburg Vacancy Rate

0%

1%

2%

3%

4%

5%

6%

7%

8%

€ -

€ 20

€ 40

€ 60

€ 80

€ 100

€ 120

€ 140

€ 160

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)




0%

1%

2%

3%

4%

5%

€ -

€ 500

€ 1.000

€ 1.500

€ 2.000

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)




35

Major Transactions 2017

Source: OECD Data

OverviewFollowing a slow start in Q1, the Swiss economy has been stable in 2017 and

is showing signs of progression in some areas in Q3. Although the recovery

has been less rapid than expected, nonetheless, the projected increase of

GDP is 1.4% for 2017 with domestic demand on an upward trend, due in part

to low interest rates and a continuous demand for real estate, combined with

foreign trade, which is showing modest, but stable growth. Inflation remains

low in Switzerland and is expected to settle at an annual average of 0.5% for

2017, reducing further to 0.2% in 2018. Within the job market, the

unemployment rate has also stabilized in 2017, remaining at around 3% with

a general forecast of 3.2% for 2017 (SECO). The Swiss economy is finely

balanced and linked to the Eurozone for its economic progression. Whilst the

trend has been good for the last few quarters, on the basis that the trajectory

continues, we will see the Swiss economy benefit. There are, however, fears

regarding the fragility of Italy’s banking sector, which as one of the larger

members of the Eurozone, could result in financial instability within the zone,

with consequences for the Swiss economy.

Opportunities

The main players in the investment market remain the large

Swiss Institutions. As with previous years, quality product

remains limited. Last year saw a situation of falling rents and

hardening yields, mainly due to low interest rates coupled with

high demand and the obligation for the Swiss funds to

purchase Swiss real estate. Given the lowering of interest

pressures and a slight reduction of demand prime, yields have

eased, with the key purchases by Bank J. Safra Sarasin from

BNP at a value of over CHF 78 mn, representing a yield of just

over 3.25%. AXA however, have recently purchased two

buildings along side of the above building at yields below 3%.

A number of transactions have taken place along

Bahnhofstrasse in Zürich at yields even harder than those

mentioned above. However, away from the CBD, yields soften

between 5%-6% net yield.

Source: NAI Commercial CRE

Country Profile

Population (mn) 8.1

Capital city Bern

Currency Swiss franc (CHF)


GDP $ 526 bn

GDP growth 1.31%


Inflation -0.43% PeriodProperty


Price

(in mn)

Q1 2017 Mixed UseAlexandre-Gavard

rue 16 - GE2,050

FONGEVA

FINANCIERE SA

CAISSE DE

PREVOYANCE

DE L'ETAT DE

GENEVE

CHF 15

Q1 2017 OfficeRue François-Diday

2- GE650 DE PICCIOTTO

RENATO,

SETTON FILIPPO

AXA

ASSURANCES

SA CHF 57.5

Q1 2017 OfficeRue de la corraterie 6

- GE1,250 n/a

Q1 2017 Mixed UseTwo Buildings

Altstetten - ZH3,800 n/a

HELVETICA

SWISS

COMMERCIAL

FUND

CHF 37

Q2 2017 OfficeRue de la Corraterie

4 - GE4,000

BNP PARIBAS

(SUISSE) SA

BANK J. SAFRA

SARASIN AGCHF 70

Q3 2017 OfficeBoulevard Helvétique

10 - GE1,750

IMMOBILIERE

CAPITAL SA

EUNATE REAL

ESTATE SACHF 17.5

Contact Details

Eric Howard BSc FRICS

Chief Executive Officer

[email protected]

NAI Commercial CRE AG

Usteristrasse 9, 8001 Zürich

+41 44 221 04 04

www.naiglobal.com 36



Whilst the overall office supply has increased in Zürich due to

new developments to the south, west, north (Airport) and the

Europaallee scheme alongside Zürich’s main railway station,

vacancy levels within the CBD area of Zürich have stabilised

despite a prolonged period of increasing over supply. This

improvement is mainly due to important take-up by large

institutions, such as Google’s decision to lease over 50,000 m2

within Europaallee: Absorption levels are creating an equilibrium

within the market, therefore growth may be anticipated within the

following 12 months with stabilising supply and falling vacancy

levels. Subject to quality of buildings, rents are between CHF

770 and CHF 750/ m2 p.a. for prime office space. Geneva’s

prime CBD market experienced a continued decline in the first

two quarters of 2017. However, Q3 has seen a stabilisation

within the CBD. The outer areas have seen a mixed response

with strong take-up for the new developments in Pont-Rouge to

the south west of Geneva, whereas the airport area to the north

and west remains sluggish with high levels of vacancy. Despite

the fall in rents, only now have office rents realigned themselves

to that of Zürich.

Warehousing and R&D rental market is not a strong sector in

Switzerland, with occupiers preferring to own. However,

incentives are being offered by several Cantons, such as Zug,

Luzern and Schywz to attempt to attract pharmaceutical, biotech

and medical-technology related firms.

Switzerland’s high street retailers, similarly to the Eurozone, are

suffering from the economy and the increasing trend towards

internet shopping. The high-end retail units have remained

relatively stable however, the peripheral areas are being

affected by the change in the retail pattern.

0%

1%

2%

3%

4%

5%

6%

7%

- CHF

200 CHF

400 CHF

600 CHF

800 CHF

1.000 CHF

1.200 CHF

1.400 CHF

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Geneva Rent Zürich Rent Geneva Yield

Zürich Yield Geneva Vacancy Rate Zürich Vacancy Rate


0%

1%

2%

3%

4%

5%

6%

7%

8%

- CHF

50 CHF

100 CHF

150 CHF

200 CHF

250 CHF

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

CH

F/m

2/an

num

)

Geneva Rent Zürich Rent Geneva Yield Zürich Yield


0%

1%

2%

3%

4%

- CHF

1.000 CHF

2.000 CHF

3.000 CHF

4.000 CHF

5.000 CHF

6.000 CHF

7.000 CHF

8.000 CHF

9.000 CHF

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Geneva Rent Zürich Rent Geneva Yield Zürich Yield


37


Source: OECD Data

OverviewAfter several years of deep crisis Ukraine's real estate market

recovers gradually. Improvement of macroeconomic indicators,

business activity and consumer sentiments, help to increase demand

for office, retail and logistic real estate. Thereby vacancy and rental

rates have stabilized. Nevertheless, recover of development activity

still needs more time. Decline of the main real estate indicators in the

recent years pushed down real estate prices, which has activated

interest of investors. The most active is logistic market given to low

disposal prices and high demand for warehouses from retail and

logistic companies. Also, residential property in the country stays a

popular instrument for micro and average investments given to crisis

of financial system.

Investment Volume in the Ukrainian Real Estate Market

Source: NAI Ukraine

Opportunities Investor’s interest for real estate in the country will be driven by

economic recovery: if demand and rents grow, real estate objects will

be interesting. The most active probably will stay local investors or

companies, which has experience on the Ukrainian market, while new

foreign investors will be held by countries risks.

Source: NAI Ukraine

Country Profile


Capital city Kiev

Currency Ukrainian hryvnia (UAH, ₴)


GDP $ 93.27 bn

GDP growth 2.30%


Inflation 12.40%

Contact Details

Dmytro Korniienko

Head of Corporate Real Estate

[email protected]

NAI Ukraine

Mechnikova str., 2, Kyiv,

Ukraine, 01601

+38 044 337 7677

www.naiglobal.com

0 5.000 10.000 15.000 20.000 25.000 30.000

2010

2011

2012

2013

2014

2015

2016

2017F

in mn $

PeriodProperty


Price

(in mn)

Q2 2017Logistic

complexKyiv region 30,000

Ghelamco

GroupATB n/a

Q4 2016Logistic

complex

Brovary, Kyiv

region49,000

Secure Property

Development &

Investment plc

Temania

Enterprises

Ltd.

n/a

Q4 2016Retail -

Shopping mallKyiv 16,000

1849-Apollo

Overseas I

Limited

Dragon Capital n/a

Q3 2016

Retail -

Shopping

center

Bucha, Kyiv

region7,000

Bank 'Kyivska

Rus'n/a $1.72

Q1 2016

Retail -

Shopping

center

Kyiv 22,000 VK Development Epicenter-K $10

38



Shopping Centres

After several crisis years, the rental rent stabilized given to

increased demand and a small amount of new supply in 2016.

At the same time, there are prerequisites for ongoing demand

increase: despite absence of new foreign tenants, the existing

companies probably will continue to benefit market conditions

and improve commercial lease terms. Against this background,

the vacancy rates likely would decrease further along with rental

rates growth. Nevertheless, the overall development reduction

trend, as well as the frequent postponing of projects

commissioning likely remain in the next years.

The logistic market has shown the first marks for stabilization,

driven by improvements on retail and logistics market - the

main demand forces on the logistic property market. The first

achievements were vacancy reduction and rents stabilization.

In case of ongoing positive dynamics of macroeconomic

indicators, the logistic market forecasts for 2017 are positive

too: growth in demand, rates strengthening and vacancy

lowering.

The special event on the market in 2016 was opening of the first

super regional mall in Ukraine - Lavina mall (GLA 127,000).

This event along with the consumer’s sentiments and retail

turnover recovery founded prerequisites for further retailers

direct and franchise development on the background of quality

retail areas supply growth and loyal commercial terms. Given to

opening of Lavina mall vacancy rate went up to 9%.

Nevertheless, it is expected that vacancy will stabilize at 5% for

the year end of 2017. The next market changes occur in 2018

with the opening of several super regional scale objects.

Source: NAI UkraineSource: NAI UkraineSource: NAI Ukraine

0%

5%

10%

15%

20%

25%

30%

€ -

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

€ 400

€ 450

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)

Kyiv Rent Kyiv Yield Kyiv Vacancy Rate

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

€ -

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

€ 80

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)


0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

€ -

€ 100

€ 200

€ 300

€ 400

€ 500

€ 600

€ 700

€ 800

2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Yield / V

acancy Rate

Ren

t (in

€/m

2/an

num

)


39

Global Locations

Europe & Middle East

© NAI Global EMEA Region September 2017. All data contained in this report has been compiled by NAI Global EMEA Region member firms and is published for general information purposes only. While every effort

has been made to ensure the accuracy of the data and other material contained in this report, NAI Global and all NAI Global member firms that took part in this report do not accept any liability (whether in contract, tort

or otherwise) to any person for any loss or damage suffered as a result of any errors or omissions. The information, opinions and forecasts set out in the report should not be relied upon to replace professional advice

on specific matters, and no responsibility for loss occasioned to any person acting, or refraining from acting, as a result of any material in this publication can be accepted by NAI Global and/or NAI Global member

firms. 40

GeorgiaTbilisi

GreeceAthens

GermanyBerlin

Dusseldorf

Frankfurt am Main

Hamburg

Mulheim an der Ruhr

Munich

Stuttgart

Ulm

ItalyMilan

NetherlandsAmsterdam

PolandGdynia

Lodz

Poznan

Warszawa

Wroclaw

RomaniaBucharest

SwitzerlandGeneva

Zurich

SerbiaNew Belgrade

SwedenFalun

Gävle

Göteborg

Härnösand

Jönköping

Kalmar

Karlstad

Linköping

Luleå

Malmö

Mora

Örebro

Östersund

Stockholm

Umeå

Vänersborg

Västerås

Växjö

Czech RepublicPrague – Old Town

LatviaRiga

UkraineKyiv

AustriaVienna

CyprusNicosia

2017Commercial Real Estate Market Report

400+ local offices, 7.000+ local market leaders.

Over 425 million square meters of property managed.

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New York, 10022, USA

Tel. +1 212 405 2500

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