real estate market report 2010
DESCRIPTION
real estate marketTRANSCRIPT
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MacedoniaReal Estate Market Report 2010
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www.investinmacedonia.com
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C o n t e n t s :
Introduction 5
Macroeconomic stability 5
Foreign direct investments 6
Legal aspects 6
Real-estate market summary 9
Offi ce market 11
Retail market 16
Residential market 19
Industrial market 23
Hotel market 25
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KOS
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Greek coast line ~ 100kmAthens ~ 560km
Greek coast line ~ 100kmAthens ~ 553kmThessaloniki ~ 69kmAlbanian
coast line ~ 150kmTirana ~ 109km
Bulgarian coast line ~ 700kmTurkey ~ 650km
France ~ 1700kmGermany ~ 1500kmItaly ~ 1200kmAustria ~ 1000kmBelgrade ~ 389km
Serbia
Greece
Alb
ania
Bulgaria
M3
M1
M4
M4
M4
M1
M5E75
E65E65
E65
E75
TIDZ SkopjeTIDZ Skopje 2
TIDZ Tetovo
TIDZ Stip
Corr
idor
8
Corridor 8
Corridor 10
Corr
idor
10
Corr
idor
10
Kumanovo
Skopje
StipVeles
Gostivar
Tetovo
OhridResen
Struga
Debar
Bitola
Prilep
Strumica
Kocani
Kicevo
Krusevo Demir Kapija
SvetiNikole
Radovis
NegotinoKavadarci
Kratovo
Kriva Palanka
Berovo
Capital City
International Border
Multi-lane Undivided Highway
Multi-lane Divided Highway
Larger City
Smaller City/Town
Airport
TIDZ
Land
Water
Legend
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INTRODUCTION
The Republic of Macedonia is a sovereign republic with multi-party parlia-mentary democracy that got its independence in 1991. The country is rapidly advancing on the path of political and economic reforms towards strength-ening its democratic society and its open market economy. The result is po-litical and macroeconomic stability providing much room for growth, espe-cially in the area of the real estate market.
Macedonia is an emerging and relatively unexplored real estate investment loca-tion in South-East Europe. The recently initiated investments send a clear mes-sage about the growing attractiveness of the Macedonian real estate market.
The promising potential of this market is primarily based on the stable economy, the strong FDI forecast, as well as the steady trend of growing demand, particu-larly visible in the residential and offi ce market, and the relatively high yields.
Macedonia is an EU and NATO candidate country and drawing on the expe-riences of the neighbouring countries that relatively recently joined NATO, a huge boost on the real estate market demand side is expected, therefore fostering the profi tability prospects. The new Law on Construction Land, which provided further liberalization of the real estate market in Macedonia for foreign companies and citizens, is an additional impetus for accelerated development of this market.
MACROECONOMIC STABILITY
The economic performance of the Macedonian economy improved consider-ably prior to the global economic crisis, as a result of a strong record of mac-roeconomic stability and prudent macroeconomic policies. While growth in the fi rst half of the decade was below regional averages, real GDP expanded more vigorously between 2005 and 2008.
The country weathered the global crisis relatively well, which is confi rmed by the optimistic forecast for 2010 for an expected annual growth of the economy of about 2%, benefi ting from continued fi scal expansion, improving demand and carefully managed monetary policy. The expected growth of the economy for 2010 is among the highest of the SEE countries.
Closer relations between Macedonia and the European Union, as well as the strong commitment of the Government to implement necessary structural re-forms, are expected to give an impetus to economic growth in the medium-run, forecasted at 4-6%.
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2005 2006 2007 20092008
Source: National Bank of the Republic of Macedonia, State Statistical Offi ce
Real GDP growth (%) 4.1 4.0 5.9 5.0 -0.7
Annual infl ation (%) 0.5 3.2 2.3 8.3 -0.8
Export (EUR million) 1,643 1,914 2,472 2,684 1,921
FDI (USD million) 97 424 699 587 252
Unemployment rate (%) 37.3 36 34.8 33.9 32.2
MKD/1 USD 49.3 48.8 44.7 41.9 44.1
MKD/1 EUR 61.3 61.2 61.2 61.3 61.3
FOREIGN DIRECT INVESTMENTS
With the governments continued drive towards improving the business climate, and its stable economic and political climate, Macedonia has become one of the most attractive investment destinations in Europe, which together with several free trade agreements, allows the Macedonian economy free access to a market of over 650 million consumers, making it a highly competitive production and export platform.
FDI has been on an upwards trend ever since 2004. The worldwide economic cri-sis has resulted in a signifi cant decrease in investment fl ow in 2009, but the fi rst months of 2010 have shown signs of restoration of the previous investor interest.
As a result of the growing interest in Macedonias investment potential, a number of international companies have started operations in the country, both as Greenfi eld projects and through diff erent types of asset acquisition and privatization.
Probably the best illustration for the strides of the government for providing fa-vourable investment environment is the opening of the Johnson Mattheys GBP 34 million emission control catalyst plant in Macedonia in April 2010.
Other signifi cant foreign investors include T-mobile (Germany), EVN (Austria), Mobilkom Austria (Austria), Societe Generale (France), Johnson Controls (USA), the National Bank of Greece (Greece), Hellenic Bottling Company S.A. (Greece), QBE Insurance Group Limited (United Kingdom), Mittal Steel Holding N.V. (Neth-erlands), Duferco Lugano (Switzerland), Titan Group (Greece), Industrial Building Corporation (Israel), Agrokor (Croatia), Tus (Slovenia), Aquapura (Portugal), and Verouplos (Greece).
LEGAL ASPECTS
According to the Law on Construction Land (2008), both foreign and domes-tic companies and individuals can acquire property in Macedonia.
The land plots can be private or state owned, and zoned either as construc-tion or agricultural land.
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Construction land in private ownership is subject to debenture and owner-ship acts, and it can be sold and bought through direct settlement between the selling and the buying party.
State owned construction land can be alienated through a public tender procedure. Minimum bidding prices are set by the Ministry of Transport and Communications in compliance with the Construction Land Price Determina-tion Methodology.
State owned construction land can also be leased for a short and long-term pe-riod, as well as given under concessions if the use of the land is connected to a business of general interest to the Republic of Macedonia. The regulations on long-term lease include a minimum of 5 years and a maximum of 99 years.
The State Authority for Geodetic Works (www.katastar.gov.mk) is an independent body in charge of conducting geodetic works and registering real estate rights.
Construction Permit
The procedure for obtaining construction permits is regulated by the Law on Spatial and urban planning and Law on Construction.
In order to start the permitting procedure the investor has to have clear title on the land.
Average time frame for obtaining construction permit is around 2 months and it is separated in two stages: approval on site conditions and obtaining of construc-tion permit.
Every municipality has its own pricelist for utility fees that have to be paid prior to obtaining the fi nal construction permit.
Once the permit is issued, the investor must commence with construction activi-ties within 6 months of the day the permit is eff ective.
Certifi cate of Final Acceptance is issued from the local municipality or the Ministry of Transport and Communication after construction is fi nished and reviewed by special commission.
Utilization Permit
The construction will be put in use i.e. it will be a usable building following the issuance of the utilization permit;
The utilization permit is issued after a technical inspection which determines that the building has been constructed in accordance with the project design;
Issuance of the utilization permit does not take more than 30 days following the submission of the request for utilization permit;
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Taxes
As a measure for stimulating the economy and reviving the real estate market in a period of global fi nancial crisis, in the second half of 2009, the government reduced the value added tax on sale of new residential apartments from 18% to 5%.
This measure provided much needed stimulus for the construction companies, resulting in increase on the demand side and decrease of the average price of the residential square meter by around13%.
* Includes fi rst sale of residential apartments, computer software and hardware** Local municipalities are in charge of yearly property tax*** 2-3% for the taxpayer in the 2nd order of succession and 4-5% for the tax-payer in the 3rd order of succession or not related to the testator. The relatives of direct lineage up to the 1st order of succession are exempt from paying the tax.
TAX TAX RATE
Value added tax 18% general tax rate
5% preferential tax rate*
Property Taxes
Property tax 0.1%-0.2%**
Inheritance and gift tax 2-3% or 4-5%***
Tax on sale of real estate 2-4%
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REAL ESTATE MARKET SUMMARY
After several golden years in real estate in CEE the downside had to come even-tually. The positive aspect of the recession is that it will create a number of opportuni-ties we were unlikely to witness for at least another generation. The focus nowadays shifts to managing the downside and recognizing the benefi ts from the upside.
Not experiencing the same pace of rapid real estate development and avoid-ing creating own bubbles like its neighbours, puts Macedonia on the map as a potential virgin market in almost every segment. Although there are number of challenges ahead, one should bear in mind the mid and long-term growth sce-nario and the opportunity to catch up with Western Europe on GDP per capita base, thus creating strong demand of real estate.
Macedonia has maintained its macroeconomic stability, stable low infl ation rate and the currency did not weaken. The projections for 2010 are forecasting 2% GDP growth. The fi nancial sector was mainly unaff ected from the world crisis and it is mainly in condition to facilitate future economic growth.
EU and NATO perspective remains one of the biggest potential accelerators of growth adding on to the large educated and multi-lingual population having a huge low cost base potential.
2010 aim is to be well positioned in order to respond to an upturn in regional and world growth. Macedonia off ers a number of opportunities that can fi t into sustainable development strategies off ering stable returns.
Over the last 2 years offi ce market was very active. Almost all of previously an-nounced projects were completed delivering new high quality buildings that are changing the market landscape. Although on a short run it seems that there are no immediate eff orts for new developments, the market remains attractive pro-viding high potential with minimal vacancies.
The shopping malls interest in Skopje is continuously growing, mainly because of serious lack of modern buildings and potential of purchasing power growth. The trend is pushed not only by several international developers but also the increasing number of retailers trying to enter the market.
This is confi rmed with the recent investments of the supermarket chain Veropu-lus (Greece), Fashion group (a Macedonian-Austrian joint venture) and Gazit-Gloub (Israel) adding on to the recently build Ramstore shopping mall, an investment of Koc Holding from Turkey. The locations of the planned shopping malls gravitate to more yielding captive areas resembling the location patterns in the western countries.
The residential market is suff ering from chronicle disproportion of constant sup-ply and inability to diff erentiate the quality of fi nal products. The constraints coming from relatively high mortgage interest rates were off set by the recent government decision to lower the VAT rate from 18 to 5% for a period of 2 years.
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Prices are maintaining the same level as of 2009 mainly due to the lack of new substantial projects in pipeline. On the other side, prices for newly built buildings on the territory of Skopje in the downtown area and surroundings, which ranged from EUR 1,000 to EUR 1,200 per m2 during 2009, continued to rise and reached from EUR 1,300 to EUR 1,400 per m2 in the fi rst quarter of 2010. The high end niche of top quality apartments and gated communities near Vodno remains on top of the list of attractive prospects.
The entrance of large multinational corporations such as Johnson Controls, a global leader in automotive interior systems, and Johnson Matthey, leading global produc-er of catalysts, in the Technological Industrial Development Zone (TIDZ) Skopje sent a positive signal to the potential investors in industrial facilities in Macedonia.
There is an intensive interest for building production facilities in the vicinity of the main highways, and there are facilities recently built near the ring-road around Skopje. One of the potential hot spots is the development of local and regional logis-tics hubs built on the favourable location of Macedonia and the importance of Cor-ridor 10 and 8. Recent government decision to off er state owned plots for a nominal 1 EUR/m2 starting bidding price is expected to add further boost to this segment.
Highest development potential is expected in the hotel and leisure segment. Due to the low quality of the current hotel supply and services off ered and the fairly attractive prices average, Skopje remains a very attractive location for high-end brand developments. There are several plots on several prime locations waiting on developers and the recent government decision to off er them on a public bid with a starting symbolic price will certainly create some urgency on the market.
Type of facility Price in EUR per m2
Offi ce space 1,000 - 3,000
Retail facilities 1,000 - 5,000
Industrial facilities 500 - 1,000
Residential apartments 600 - 1,600
Type of facility Price in EUR per m2
Offi ce space 5 - 20
Retail facilities 10 - 60
Industrial facilities 1- 6
Residential apartments 3 - 12
Prices for purchasing immovable property in Skopje
Rents in Skopje
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The price for construction per m2 varies from EUR 400 to EUR 700 and more, includ-ing the utilities fees. The amount of the expenses depends on the construction mate-rials used and the utilities fees that are determined by the municipalities.
The amount of the utilities fees in Skopje varies according to the construction zone and the type of facility, and ranges from EUR 80 to EUR 120 per m2 for resi-dential facilities and from EUR 100 to EUR 140 per m2 for offi ce and retail facilities.
The price of the construction land ranges from EUR 20 up to EUR 200 per m2 in the attractive parts of Skopje, which are located both in the central area but also in the peripheral area such as Zlokukjani and close to the Skopje ring-road.
OFFICE MARKET
Increasing stock of modern offi ce space Levelling demand and prime rents Decline in new projects pipeline - acquisitions on the horizon
The offi ce market is mainly located in Skopje, in the centre of the city and the sur-rounding of the central city area. In the past there was a period when residential buildings and fl ats were refurbished into offi ces, which resulted in a lack of purpose-built business facilities or build to suit buildings.
In the last 2 years several projects that were announced during 2007 and 2008 man-aged to deliver more than 20,000 m2 of modern offi ce space. This new supply is greatly infl uencing the immanent re-composition of the market thus levelling up demand forecasts and redefi ning prime rents. Although some experts remain pessi-mistic on new developments prospect, there is still a generally accepted opinion that offi ce market will diff erentiate itself and slowly develop over the next couple of years.
Vacancy rates are mainly at a reasonable 8-10% and expecting to rise once the new developments open ground.
The purchase prices of offi ce space in Skopje are pretty diverse, thus the price ratio between the most expensive and the least expensive offi ce creates huge range de-pendant mainly on location factors as well on construction quality factor. Several of the recent developments are true Class A buildings off ering amenities that were not present on the market before.
The lowest price for purchase of an offi ce space of 100 m2 or bigger is EUR 1,000 per m2 reaching prime ceiling at EUR 3,000 per m2. Higher category offi ce space rents are still above EUR 10 per m2 with primes around EUR 20 per m2. However due to ef-fects from 2009s meltdown and 2010 hesitance to implement planed relocations of several of the potential big tenants there is an expectation on short term drop in the prime market.
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Purchasing prices and rents for offi ce space in prime locations
50 m2 150,000 1,000 8% 3,000 20
100 m2 250,000 2,000 9.6% 2,500 20
150 m2 340,000 2,800 9.9% 2,267 20
Offi ce spaceCost (EUR)
Yield p.a.Price/m2 (EUR)
To buyTo buy Monthly rentMonthly
rent
Notably, prices and rents tend to be higher for larger offi ces due to the lack of supply. The annual return on the investment in prime offi ces ranges between 8% and 10%.
Prime Offi ce Rents - European Cities
City Rent in EUR/m2/month
Berlin 20
Frankfurt 33
Bucharest 20
Budapest 20
Prague 21
Source: JLL Offi ce Property Clock 2010
The offi ce market proved to be the most attractive segment of the real estate market. Major existing and planned offi ce facilities are located in the central city area and the surroundings. Due to the lack of parking space there is also demand for building of underground and multi-storey parking garages.
Soravia Centre Skopje
EXISTING PROJECTS IN SKOPJE
Soravia Centre Skopje
With more than 8,000 m2 of premi-um offi ce space as well as 4,000 m2 of fi rst class retail area connected with the central City Shopping Mall, the Soravia Centre is among the largest and most sophisticated of-fi ce and retail buildings in Macedo-nia. The Soravia Group, an Austrian retail development, properties and investments holding, completed the Soravia Center Skopje in 2008, for a total investment of around EUR 29 million.
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Hyperium
One of the fi rst investments of Aus-trian Hypo Alpe Adria in Macedo-nia, combining 13,000 m2 of prime class offi ces aiming to be the best quality off er in town.
This fi ve fl oors modern building is introducing a lot of open spaces with own garages, open parking and full service package. The in-vestment of more than EUR 17 mil-lion is setting the very high bar for other developments to reach.
Megi Business Centar
Modern and aff ordable. This brand new 8,500 m2 business centre off ers great architecture and outstanding amenities very near Skopje main railway station. Situated on the Vardar river bank, this Macedonian-Bulgarian EUR 10 million joint ven-ture investment is an excellent fi t for large call centres and business processes outsourcing companies.
Business-Trade Centre Aluminka
Located near to administration of Municipality of Karposh, Aluminka has offi ce space with an area of 4,000 m2 and retail and warehouse of 1,500 m2. Purchase price per m2 is between EUR 1,250-1,300 and rent price ranges from EUR 5 to EUR 10 per m2.
Grawe Center
Disciplined and effi cient. This pe-tite, 6 fl oors glass building is off er-ing 2,000 m2 brand new high qual-ity offi ces.
Grawe Center
Megi Business Centar
Hyperium
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Equest Offi ce Building
The newly fi nished seven-fl oor of-fi ce building with an area of 3,870 m2 in downtown Skopje, built by a domestic company GE-MA, was sold to Equest Balkan Properties (EBP), a British Investment Fund, for EUR 7.8 million.
Business-Trade Centre Mavrovka
Mavrovka has offi ce space with an area of 7,000 m2. Purchase price per m2 is around EUR 1,500 and rent price is between EUR 7 - 10 per m2.
San MarcoSan Marco
Equest Offi ce Building
San Marco
State of the art, class A offi ce tower, adjacent to Skopjes main square, off ering 4,000 m2 open space offi ces with a perfect view on the hearth of the business district. One of the landmark developments in the past two years becoming perfect fi t for bank or telecommunication company.
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PLANNED PROJECTS IN SKOPJE
Era City Skopje
In February 2008, the ERA group from Slovenia laid the foundations for a business building, as the fi rst new building within the Era City Skopje proj-ect which aims to be the largest and the most modern business, entrepre-neur, trade and fun centre in the region. The project will be realized on a site of 155,000 m2.
The total investment value is estimated at EUR 150 million and the construc-tion should be fi nalized by 2012. The business building inside the Era City Skopje complex will have a total surface area of 33,600 m2, ten fl oors and three underground garages. Its architecture will be modern and recogniz-able with the latest IT and communication infrastructure. ERA Group is a ma-jority owner of Skopje Fair.
Luna
Paloma Bianca
Located in the very centre of Skopje, the facility has business space of over 2,000 m2.
Luna The recently fi nished six-story business centre on a surface area of 1,500 m2 off ers 2,300 m2 of of-fi ce GLA. Located in the centre of the city, this domestic investment serves as an example for modern archi-tecture complimented by high quality offi ce space.
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RETAIL MARKET
3 new shopping malls breaking ground Strategic battle for new locations
The retail market is mainly located in Skopje and it is attractive both for do-mestic and foreign investors. The planned shopping malls show gravitate to more yielding captive areas resembling the location patterns in the western countries, which provides more fl exibility in implementing optimal design solutions. In the near future, it is expected that there will be a rising trend in suburban shopping malls and big box retailers.
One fact that clearly illustrates the market potential is the proportion of GLA (gross leasing area) retail area per capita. Some of the recent developments of Ramstore, Veropulus and City Gallery and few other smaller ones are com-bining for round 40,000 GLA and there are virtually no other western style shopping malls.
For a captive population of more than 600,000 people in Macedonias capi-tal city and close to a million people in 40-50 km radius with a clear linkage potential to markets such as Kosovo, the proportion in the range of 10 m2 per 1000 inhabitants sounds tempting enough. It is expected that bearing in mind the recent announcements of G-mall and Fashion group mall, the over-all supply can double in the next 3-4 years, but it is obvious that the market is still in the initial stage of development.
The purchase prices in the oldest downtown city Shopping Mall (GTC) built in 1970s range from EUR 1,500 per m2 up to EUR 5,000 per m2 for the best locations. Similar prices are off ered in high streets shopping areas, mainly on the famous pedestrian street Macedonia. The prime rents are in the range of EUR 40-60. Outside city centre, prices start from EUR 1,000 per m2, while rents range from EUR 10-20 per m2.
50 m2 250,000 3,000 14.4% 5,000 60
100 m2 450,000 5,000 13.3% 4,500 50
150 m2 600,000 6,000 12.0% 4,000 40
Costs, prices and yields for retail facilities in prime locations
RetailCost (EUR)
Yield p.a.Price/m2 (EUR)
To buyTo buy Monthly rentMonthly
rent
MAJOR EXISTING MALLS
GTC City Shopping Mall
Located right next to the main square in Skopje, City Shopping Mall has GLA of 40,300 m2. It is the oldest and the largest mall in the country.
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Ramstore Mall
Ramstore, the fi rst modern shop-ping mall opened in 2005 close to the city centre. This EUR 20 million mall was built by Turkish Migros, part of Koc Holding. It spreads on 25,000 m2, with open and closed parking lots and includes 2,600 m2 of food space, 2 cinemas, children recreation areas and various services.
SP Planet - Skopski Pazar
Shopping centre with European quality and modern design. With an area of around 8,000 m2, 20 brand shops from diff erent areas of interest are represented. The shopping cen-tre is a domestic investment located in the municipality of Gjorche Petrov.
Veropulos Shopping Centre
Over EUR 40 million investment in the new modern shopping mall right in Skopje downtown. Located on three levels with total area of 40,000 m2, this shopping centre is off ering a variety of new brands on the mar-ket. This ultra modern shopping cen-tre was built by Greek supermarket chain Veropulos.
Ramstore Mall
Shopping Mall Biser, Skopje
Veropulos Shopping Centre
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PLANNED PROJECTS IN SKOPJE
G-Mall
A shopping mall, an offi ce tower and a luxurious hotel are going to be built by the Israeli company Gazit-Globe on the location of the former Skopje fac-tory Alumina. The planned area of the shopping mall is 60,000 m2, and the hotel and the offi ce space should reach 90,000 m2. The project value is esti-mated at EUR 100 million.
Fashion Group Mall
On an area of 32,000 m2 in the municipality of Karpos a new modern shop-ping centre is to be built. The shopping centre, a joint venture Macedonian-Austrian investment, will have four movie theatres, fi tness centres, a hyper market and a multi-storey garage.
Skopje Skyscraper
One of the worlds leading shopping centre developers, the Turksih Cevahir holding, is to design and construct a new modern shopping mall in the city of Skopje with more than 40,000 m2 retail area. The shopping mall is to be constructed within the municipality of Aerodrom, and will complement the three residential skyscrapers built in its vicinity.
Zebra
City Gallery
In 2008, City Gallery with 6,350 m2 GLA was opened. Located on the main square of Skopje, this EUR 13 million, Italian investment, repre-sents a modern shopping centre with prime retail spaces.
Zebra
Mixed use development in one of the most attractive neighborhoods in Skopje. This EUR 8 million do-mestic investment off ers interesting blend of retail, offi ces and a car park fi t in more than 3000 m2.
PROJECTS IN OTHER CITIES
Trade Centre Global, Strumica
The interest of the investors begins to broaden outside of Skopje. In Strumica a new shopping centre was opened with a total area of 40,000 m2 (20,000 m2is intended for retail shops and the remaining 20,000 are planned for offi ce space) built by domestic investors.
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Engro TUS Retail Chain
The Slovenian company Engro TUS has announced building of more than 20 markets in all Macedonian cities with more than 20,000 citizens. The project will be realised over the next 4 years for a total investment value of EUR 90 million. The fi rst supermarkets combining more than 6,000 m2 are already operational and further developments in secondary cities like Stip, Prilep and Kumanovo are in the pipeline.
RESIDENTIAL MARKET
Prime market: Skopje Trend: rising sale prices
The residential market in Macedonia is continually expanding. The construc-tion of residential buildings and apartment blocks is the leading type of real estate investments in Macedonia. According to the Census of population, households and dwellings in Republic of Macedonia in 2002, there have been approximately 700,000 dwellings with a total area of 49.7 million m2, thereof 164,000 dwellings with a total area of 11.3 million m2 on the Skopje territory.
The price of the residential space, particularly in Skopje, is permanently on the rise. According to the experts estimate, due to the approximation of Macedonia to European Union the prices will continue increasing.
The purchase price and the rent of apartments depend on the location, the number of fl oors and partially on the year of building. The demand is largely focused on the central area of Skopje, resulting in higher prices for residences located there.
Residential Area of Skopje
The supply of new residential units has been pretty steady over the last 5 years, with around 5,000 new units being delivered on an annual basis.
In the fi rst half of 2010, 2102 dwell-ings were delivered, a 9% fall com-pared to the corresponding pe-riod in 2009. The supply dropped, among others, because of the market stagnation period during which the possibilities of obtaining fi nancing for new residential proj-ects were largely limited.
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Skopje Downtown
Residential Area of Skopje
Center 1,000-1,400
Vodno 1,400-1,600
Karposh 1,000-1,200
Aerodrom 1,000-1,100
Kisela Voda 800-1,000
Novo Lisiche 800-1,050
Gjorche Petrov, Avtokomanda 750-950
Madzari, Chair, Hipodrom 500-800
Asking prices of residential space in diff erent settlements in the city of Skopje (EUR/m2)
Over the last years the demand for residential units has been relatively strong and largely focused on the broader central area of Skopje with a registered increase in demand for apartments in the city of Ohrid in the last 2-3 years. Smaller mid-end apart-ments sized between 45 and 55 m2 are typically more interesting and in much larger demand compared to larger apartments.
The governments measure from 2009 for reducing the value added tax on sale of new apartments from 18% to 5%, provided an additional incentive for increase in the demand.
A recent analysis of the National Bank, showed a staggering increase in the price of the residential space for about 50% over the last decade.
Asking prices have continued the slight upward trend. Prices of m2 in the central business district of the capital for mid-end apartments range between EUR 1,300-1,400.
The prices of new apartments on av-erage are higher by about 10-20% in comparison to the apartments in the older buildings.
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Completed construction works and delivered residential units in buildings built in 2009
Source: State Statistical Offi ce
Number of construction works: 5,937
Dwellings completed 4,710
Total residential area built in m2 404,710
Average fl oor area in m2 86
Value of completed constructions works (in million EUR) 374.2
Sale prices for residential buildings in Skopje (m2 in EUR)
CENTER NEAR CENTER PERIPHERY
1,000-1,400 1,000-1,100 600-900
Sale prices for residential buildings in the South-East Europe region (m2 in EUR)
SKOPJE BELGRADE BUCHAREST SOFIA
600-1,500 1,000-3,000 1,500-4,000 1,000-2,500
Costs, prices and yields for prime apartments in Skopje
50 m2 75,000 500 8.0% 1,500 10.0
100 m2 130,000 1,000 9.2% 1,300 10.0
150 m2 180,000 1,300 8.7% 1,200 8.6
ApartmentsCost (EUR)
Yield p.a.Price/m2 (EUR)
To buyTo buy Monthly rentMonthly
rent
Costs, prices and yields for prime houses in Skopje
50 m2 180,000 1.200 8.0% 3,600 24
100 m2 350,000 2,000 6.9% 3,500 20
150 m2 450,000 2,500 6.7% 3,000 16.7
HousesCost (EUR)
Yield p.a.Price/m2 (EUR)
To buyTo buy Monthly rentMonthly
rent
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Average rent rates remained steady. Demand is primarily oriented towards the city of Skopje and the municipalities of Centar and Karposh, proven to be most attractive for employees of foreign embassies and international organizations.
Rental rates depend primarily on the location of the property, quality of con-struction and fi nishing works, quality and level of furnishing, accessibility, se-curity and parking availability.
The prime rents, range between 8-10 EUR/m2, while on average the rent rates vary between 3-6 EUR/m2.
PLANNED PROJECTS
Soravia Resort
Redeveloping the former 25,000 m2 location of the Olympic village, one of the fi rst high-end gated communities in Skopje delivers 200 fashionable and artistic apartments. This new EUR 30 million development of the Austrian Soravia Group, is also introducing a small hotel and panoramic restaurant ad-jacent to a unique spa centre.
The size of the apartments varies from 75 m2 to 190 m2, including duplex apartments on two fl oors. Most of the apartments share a breathtaking view, both over Skopje and towards Vodno.
Soravia Resort
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The complex also provides parking spaces and garage, with direct connec-tions (elevator and stairs) to the apartments.
The construction is to be completed by 2014.
Skopje Skyscraper
Located on a very attractive 21,150 m2 plot in one of the biggest and young-est municipalities in Skopje, Aerodrom, this bold and ambitious project envi-sions construction of three, thirty-fi ve story residential towers combining for over 100,000 m2 of high quality space.
Chevahir holding, one of the biggest Turkish developers with extensive expe-rience in EMEA region is aiming to develop a new true landmark of the capital city, certainly a very unique project for the years to come.
INDUSTRIAL MARKET
Specifi c zones: Technological Industrial Development Zones Exemptions for paying taxes and fees Starting bidding price of only 1 euro per m2 in order to accelerate
economic growth
Industrial buildings market remains generally underdeveloped, especially in comparison to the more developed economies in Europe. Foreign entities can build industrial buildings with no limitations. Special incentives pack-ages can be tailored depending on the type and size of the investment. For more details contact Invest Macedonia prime governmental organization dealing with foreign direct investments.
Although there are industrial buildings and zones in many cities in Macedo-nia, the Technological Industrial Development Zones (TIDZ) are specifi c areas designated for investors off ering standard incentive packages.
Investors in TIDZs are entitled to a 10-year profi t tax and personal income tax exemption. Investors are exempt from payment of value added tax and cus-toms duties for goods, raw materials, equipment and machines.
WAREHOUSE
FACTORYP=139,28 ha
Urban plan of FEZ Bunardzik
Plan of TIDZ Skopje
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Other benefi ts include completed infrastructure that enables connection to natural gas, water, electricity and access to a main international road net-work. Investors are also exempt from paying a fee for preparation of the con-struction site. Fast procedures for business activity registration are provided in TIDZ that further reduce the costs of setting up. The land in the zone can be leased to a foreign investor for a period up to 99 years.
As a measure for stimulating the development of this segment of the mar-ket, as of recently, the government began off ering state owned plots for a nominal 1 EUR/m2 starting bidding price. This should provide huge boost to the development of the industrial real estate market as well as the overall economy in general.
Currently, there are 4 TIDZ in Macedonia:
Skopje I, with a total surface area of 140 ha. TIDZ Skopje I occupies a fi rst class location - 10 km east of the capital Skopje, on the crossroad of the cor-ridors 8 and 10, just 3 km away from Airport Alexander the Great and 500 meters away from the national rail network station.
Johnson Controls factory in the TIDZ Skopje I was offi cially open for com-mercial production in December 2007 on an area of 54,000 m2. Johnson Mat-they state of the art facility had its offi cial opening in April 2010. This EUR 65 million investment from UK spreads out on 13 ha with an overall build out area of more than 12,000 m2.
The Skopje Zone will be expanded for further 100 ha as part of the Skopje II project.
The Zones in Stip and Tetovo combining for more than 300 ha are in the fi rst stage of development of the infrastructure and are expected to be fully operational by the end of 2011.
Other incentives include: - free connection to utilities;- lease at concessionary rate for a period of up to 99 years;- construction subsidies of up to EUR 500,000.
Fiscal Benefi ts
Corporate tax
Personal income tax
Value added tax
Property tax
Excise taxes
Raw materials
Equipment
0%for the fi rst 10 years 10%
10%
18%
0%for the fi rst 10 years
0%
0%
0%
Up to 15%
5% - 20%
0%
0.1% - 0.2% 0.1% - 0.2%
5% - 62%
TAXTax Rates
ProductCustoms Duty
TIDZsTIDZs Outside TIDZsOutside
TIDZs
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HOTEL MARKET
High growth in tourist spending Two top destinations: Skopje and Ohrid Government incentives Casino cluster near Greek border
Most popular tourist destinations are Skopje, being the capital city and busi-ness and political centre, and Ohrid, a city included in UNESCO World Heri-tage List, admired for the unique beauty of the Ohrid Lake and the invaluable historical and cultural heritage.
The highest number of tourists comes from the neighbouring countries, fol-lowed by the tourists from the other countries in South-East Europe and EU.
In the fi rst half of 2010, there were 221,252 tourists, which represent a slight drop of 4% compared to the corresponding period in the previous year. In the same period there were 523,280 nights spent, which compared to the fi rst half of 2009, represents an increase by 4.1%.
Most of the tourists have visited the city of Ohrid, which is the major tourist cen-tre in the country and has the biggest lodging capacity of around 30,000 beds.
Category Number of hotels Total number of rooms
Five star 5 >400
Four star 5 >200
Three star 5 >120
Hotels in Skopje
In the coming years the number of foreign tourists is expected to rise. Name-ly, the government is putting a lot of eff ort and resources in promoting the country as an attractive tourist destination through its proactive media cam-paign. At the beginning of 2010 as part of the plan for supporting and devel-oping the tourism, subsidies to tour operators that will bring foreign tourists to Macedonia are also being off ered.
The hotels in Skopje are mostly located in the downtown area and near the centre. The prices depend on the type of the room and boarding as well as the size of the room. The prices for a bed and breakfast start at EUR 30-40. The average price for accommodation in a standard room in hotels with 4 and 5 stars is in the range of EUR 120-150.
There are several plots on several prime locations waiting on developers and the recent government decision to off er them on a public bid starting with a symbol-ic price of only 1 euro per m2 will certainly create some urgency on the market.
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The southern city Gevgelija, placed right next to the border with Greece, is the most developed casino centre in Macedonia owing to the great infl ux of visitors from Greece, which counts for about 5,000 visits per week. There are already two hotels with fi ve stars with 103 rooms which operate in the city of Gevgelija and its surroundings.
Hotels in OhridCategory Number of hotels Total number of rooms
Five star 1 133
Four star 12 >800
Three star 4 >150
Hotel Aleksandar Palace
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PLANNED PROJECTS
Marriott Skopje
International hotel group Marriott will build a EUR 46 million hotel. The ho-tel will cover 20,000 m2 and will have 180 rooms, 16 luxury apartments, one presidential suite and a spa centre. The hotel is scheduled to open in 2013 in the citys downtown area.
Radisson Sas Skopje
International hotel group Radisson will build a EUR 68 million hotel in the broader central area, opposite the old railway stations. The hotel will off er 210 beds, 16 and is scheduled to open in 2012.
Sheraton Gevgelija
Located near the Greek border, the Turkish company Princess is fi nishing with the construction of a luxurious 5 star hotel . On an area of 30,000 m2 the hotel will off er 128 elegant and well designed rooms, 2 executive suites, one presidential suite, casino and accompanying objects. The total value of the investment is EUR 30 million.The hotel will operate under the brand Sheraton.
Ski Centre Kozuf
Ski Center Kozuf
Ski Center Kozuf
The Ski Centre Kozuf, worth EUR 130 million, is designed to be the largest and most attractive year round mountain resort in South-East Europe. The centre is currently under construction and should be fully operational by 2011. It covers an area of 505 ha, thereof ski slopes of 450 ha.
The ski village covers 55 ha and will include hotels, weekend area with 710 houses, sport terrains etc., and will off er a total lodging capacity of 6,000 beds. The mountain resort is situated at 1,500-2,200 m above the sea level, nearby Gevgelija.
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AT YOUR SERVICE
Invest Macedonia, the offi cial govern-ment Agency for foreign investments, is looking forward to servicing your needs throughout your investments decision-making process: from an-swering initial questions and arrang-ing an appropriate itinerary to visit Macedonia, to objectively evaluating the business climate and the prospect for the success of your project.Should you decide to locate in Mace-donia we will work on your behalf with national and local governmental au-thorities and help you fi nd suitable lo-cal partners with whom you can open an exploratory dialogue.As your operation grows in Macedo-nia, we will continue to work closely with you to understand your require-ments to grow faster and to ensure that Macedonia can fulfi ll your busi-ness needs to facilitate that growth.
Useful Links: www.fi nance.gov.mk www.economy.gov.mk www.mtc.gov.mk www.nbrm.gov.mk www.stat.gov.mk www.mse.org.mk www.mchamber.org.mk www.exploringmacedonia.com www.macedonia-timeless.com
Agency for Foreign Investments and Export Promotion of the Republic of Macedonia
St. Nikola Vapcarov 7, 1000 SkopjeRepublic of MacedoniaPhone: +389 2 3100 111Fax: +389 2 3122 098E-mail: [email protected]
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DisclaimerAlthough all reasonable eff orts have been made to ensure the reliability of the infor-mation presented in this document, the Agency for Foreign Investments and Export Promotion of the Republic of Macedonia does not assume liability for its complete-ness or accuracy.
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On behalf of