Serbia Key Facts Located in Southeast Europe, Serbia represents central part of the Balkan Peninsula, at the inter- section of Pan European Corridors N° 10 and N°7, on the way from Europe to Asia. The Republic of Serbia encompasses an area of 88,412 square kilo- meters. It is divided into 29 districts and the City of Belgrade. City itself is further divided into mu- nicipalities. To the East, Serbia borders with Bulgaria, to the North East with Romania, to the North with Hun- gary, to the West with Croatia and Bosnia and Herzegovina, to the South East with Montenegro and to the South with Albania and FYROM. Serbia in Europe Pan European Corridor N° 10 is one of the most important European highways passing through the country, leading from Salzburg through Bel- grade and Niš and branching to Athens and Sofi a. Another branch of the corridor links the Capital with Budapest. Belgrade Airport represents the main gateway for international air transportation with JAT Airways as major national courier and with 43 direct lines. The capital of Republic of Serbia, Belgrade, is situ- ated on the confl uence of rivers Danube and Sava, with population of 1,576,124 according to the Cen- sus 2002. Total surface of Belgrade area of 3,222 sq km is di- vided into 17 municipalities; among 10 of them be- longs to the urban zone (Vračar, Stari Grad, Savski Venac, Novi Beograd, Čukarica, Zvezdara, Palilula, Zemun, Rakovica, Voždovac), and 7 of them are suburban area (Surčin, Sopot, Grocka, Lazarevac, Mladenovac, Obrenovac, Barajevo). Belgrade’s urban municipalities It is one of the oldest cities in Europe and has since ancient times been an important focal point for traffi c, an intersection of the roads of Eastern and Western Europe. Belgrade is a large industri- al, commercial, tourist, cultural, educational and political centre and an important 1.7 million - cus- tomer market. Economy Key Facts Strong economic progress has been made since 2001, particularly in expanding private sector par- ticipation in the economy. The reform program has helped to strengthen the country’s strong economic performance and reductions in poverty. Serbia signed Free Trade Agreements (FTA) with: • CEFTA, with all neighboring countries, pro- viding market of 55 million people • FTA exists with the Russian Federation, of- fering access to market of 150 M people • FTA with Belarus and Turkey In 2008 Serbia signed SAA Agreement (Stabiliza- tion and Association Agreement) with EU which opens Serbia towards EU market. In particular, main economic and political focus in Serbia pres- ents improvement of economic stability and con- tinuing with EU Association process. Due to the global financial crises, in 1Q 2009 GDP growth recorded downfall to - 5.2%, while pre- dictions for the 2009 expected to be at -2%, with decrease in FDI from EUR 2.1 bn in 2008 to EUR 0.9 bn in 2009. In order to lessen the impact, Ser- bian government has reached for an agreement with International Monetary Fund (IMF) in March 2009, for a stand-by credit arrangement in amount of EUR 3 bn, as to fulfill budget deficit and cover public expenditure. Also, in accordance with IMF guidance, Serbian government is about to make a decision on VAT increase from current 18% to 19%, and will further-more cut public wages and employment, in order to bring new, rebalanced budget, in a balance. Most of foreign direct investments (FDI) comes from EU countries. The largest investment record- ed so far in Serbia came from Norway, Greece, Aus- tria and Hungary, but also from Slovenia, France, Great Britain, Italy etc. The largest portion of FDI is generated from privatization process, which is conducted in three ways: public auction, public tender and restructuring. Serbian Retail Market In past few years, Serbia experienced a rapid Merkur (Slovenia) – 2 shopping malls, total area of growth in demand for retail space, so therefore 19,600 sq m the construction of various types of retail prem- Veropoulos (Greece) – 3 shopping malls, total area ises also grew. The most concentrated retail con- of 17, 100 sq m cepts are still to be found along main-street loca- tions and within the expanding network of retail Most influenced domestic retailers are Delta Hold- warehousing. On the other way, numerous shop- ing, which holds: ping malls announced construction or are in the Delta City shopping mall (85,000 sq m) with Maxi planning phase. Belgrade and Novi Sad are the Hypermarket of 4,500 sq m main building centers, but in recent years many 27 supermarkets across Belgrade and 45 super- retailers expanded their presence in the cities like markets in Serbia, all with area between 1,000 and Sabac, Nis, Cacak, Kragujevac. Novi Sad encom- 2,000 sq m passes some 73,000 sqm of retail stock, while Kragujevac at the moment has 40,000 sq m and and MPC Properties which holds: Subotica with 36,500 sq m of retail stock. Usce shopping center Immocenter Modern shopping centers/retail big boxes have Shopping Center in Nis been built in past few years and most of them are in Belgrade: Merkator, Rodic, Super Vero, Delta Other local retailers who continuously expand their City, Zira etc. Estimate is that in the next few years network is DIS hypermarket chain, as well as newly approximately 400,000 sq m of commercial area founded Familija supermarket chain as a main super- will be constructed. market operator in Department Stores “Beograd”. The biggest international retailers in Serbia are: Key players are concentrated in Belgrade and Novi Metro (Germany) – 5 shopping malls, total area Sad, however in recent years many retailers expand- of 46,730 sq m ed their presence in secondary cities like Sabac, Nis, Idea (Croatia) – 2 shopping malls, total area of Cacak, Kragujevac and Subotica. 22,500 sq m Mercator (Slovenia) – 5 shopping malls, total area of 152,300 sq m Table: Shopping Malls in Belgrade Project Type Location Developer GLA (sqm) Parking Opened Mercator SC II New Mercator, Slovenia 20,000 916 2002 Immo Center SC II New MPC Properties 8,000 170 2006 IDEA SC II New Konzum, Croatia 2,000 550 2006 Rodic SC II New Rodic, Serbia 23,000 769 2007 Zira SC II Palilula Verano Invest 7,000 450 2007 Delta city SC II New Delta Holding, Serbia 30,000 1,700 2007 Usce SC II New MPC Properties 40,000 1,300 2009 Source: Beobuild Agenda: SCI – Large Hypermarkets with retail shops, SCII – Modern concept of Shopping Malls Belgrade Retail Market As a capital city with almost two million inhabit- At the end of March 2009 Belgrade saw opening of the ants, Belgrade offers a great potential to retail largest shopping mall in Serbia, Usce shopping mall developments. Due to the recognition of the Bel- with 120,000 sq m of GBA and 43,500 sq m of GLA on grade market potential among the local and for- four aboveground and two underground levels. Usce eign shopping center’s operators and retailers, shopping mall presented to retail market additional the market competition is about to rise on the brands such as: Stiefelkoeing, Koton, Brown Shoe, mid-term period, positioning retail real estate mar- U.H.S. Taubner, Mandarina Duck and many more. ket as currently the most effective and prominent market segment in Serbian real estate industry. In 2009, major activity in this segment was reflected with the opening of third modern shopping cen- ter in Belgrade: Usce (40,000 GLA sq m) – located in New Belgrade. Supply of new generation of shopping centers in Belgrade started to develop more intensively in 2002 with the opening of two neighborhood shopping concepts - Greek Veropoulos (supermar- ket with adjoining retail units) and Slovenian Mer- cator (shopping center) at New Belgrade. These centers have recorded a huge success, especial- ly the Slovenian Mercator: total built-up area of 52,400 square meters, located in New Belgrade, it encompasses a hypermarket with a shopping ar- Shopping Center stock in Belgrade, in sq m cade located on two levels. 300,000 The “first generation shopping centers” being de- 250,000 veloped were the ImmoCenter, IDEA and Rodić, 200,000 all of which located in the emerging area of New 150,000 100,000 Belgrade. During 2007 opening of “second gen- 50,000 eration” shopping centers, such as Delta City and 0 Zira in Belgrade, increased the shopping centers 2004 2005 2006 2007 2008 2009e stock by almost 70,000 sq m of GLA. Source: Danos Serbia Table: Projects in the Pipeline Project Location Developer GLA (sqm) Status Immo Center Cerek Cerek MPC, Serbia N/A Under construction (Deadline 2010) Plaza Center Downtown Plaza Centers 100,000 Approved (Deadline Unknown) Visnjicka Plaza Visnjica Plaza Centers 48,000 Approved (Deadline Unknown) Delta Planet Autokomanda Delta Invest, Serbia 80,000 Approved (Deadline Unknown) Source: Beobuild Belgrade Street Retail Market Downtown of Belgrade represents main shop- Major shopping streets ping and pedestrian zone, with great number of domestic and foreign brand tenants. Prime re- tail streets are Knez Mihaila, Cika Ljubina, Vase Carapica, Zmaj Jovina, Kralja Petra, Kolarceva, Terazije, Kralja Milana, Makedonska, Svetogorska KALEMEGDAN and Nikole Pasica Square, while main secondary streets are Bulevar Kralja Aleksandra, Pozeska, Knez KraljaMihaila Petra Balkanska, Blvd. Despota Stefana, Nusiceva, De- canska and Slavija Square. Trg Republike Blvd. Despota Stefana Makedonska An elite shopping street is Knez Mihaila with 113 Terazije outlets, from which main tenants, such as Tim- Nikole Pasica eOut, Morgan de Toi, Zara, Escada, Miss Sixty, Square Terranova, Legend, Hugo Boss, Replay, Diesel, Kralja Milana VIP Mobile, Telenor, Nike, Adidas, Bata, Benneton etc., have leased areas from 500 – 1,000 sqm, while Blvd.