SERBIAN REAL ESTATE MARKET REPORT H1 2010 Danos Group: SERBIA: CYPRUS: LIMASSOL BELGRADE NICOSIA 69, Gladstonos Str., 3040 6, Vladimira Popovica Str. 35, I. Hatziosif Av. 2027 Acropolis Centre (Shop 10) Tel.: +381 - (0)11 260 06 03 Tel.: +357 - 22 31 70 31 Tel.: +357 - 25 343934 Fax: +381 - (0)11 260 15 71 Fax: +357 - 22 31 70 11 Fax: +357 - 25 343933 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Web: www.danos.rs Web: www.danos.com.cy Web: www.danos.com.cy GREECE: ATHENS THESSALONIKI CRETE 1, Eratosthenous Str. & 3 Iroon Polytechniou Street, Vas. Konstantinou, 116 35 3, Ionos Dragoumi Str., 546 25 731 33, Chania Tel.: +30 - 210 7 567 567 Tel.: +30 - 2310 244962-3 Phone: +30 - 2821 0 57040 Fax: +30 - 210 7 567 267 Fax: +30 - 2310 224 781 Fax: +30 - 2821 0 57040 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Web: www.danos.gr Web: www.danos.gr Web: www.danos.gr ALBANIA: BULGARIA: TIRANA SOFIA Blvd. Deshmozet e kombit 28, Blvd. Hristo Botev Str. Tel.: +355 - 4 22 80 488 Tel.: +359 - 2 953 23 14 Fax: +355 - 4 22 80 192 Fax: +359 - 2 953 23 99 E-mail: [email protected] E-mail: [email protected] Web: www.danos.al Web: www.danos.bg SERBIA - KEY FACTS In Serbia 1H of 2010 was character- ized by several important facts that contributed with modest improve- ment of Serbian macroeconomic per- spective. Latest IMF report predicts that Serbi- an GDP will increase for 5% in 2012 and 5.5% in 2013 due to successfully completed third revision of IMF stand-by credit arrangement - during first half of 2010. Serbia's rating at the Organization for Economic Cooperation and Develop- ment (OECD), entity that is relevant Picture: Europe map for business risk insurance evaluation, risk (DB4d) referring to overall gener- ing political elite insists on EU integ- increased and passed from category al positive economic and political ration targeting future membership sixth to fifth, positioning Serbia as trends. candidate status, improving interna- the only country whose rating im- tional community and investor's per- proved during this period. In 1H EU Council decided to unblock ception towards Serbia and process of the Stabilization of Associ- attracting additional portion of FDI. Also, international agency Dun & ation Agreement (SAA) with Serbia. BradStreet increased Serbia's rating Although this process could be long, After one year of constant decline from DB5a (high–risk) to a moderate- it remains important that Serbian rul- for the most important indicators of economic activity, GDP finally recor- General demographic indicators ded increase of 1%. This growth must be observed carefully due to a low comparison base. During 1H 2010 volume of industrial production was higher for 2.8% com- paring to the same period in 2009. Largest impact on improvement of industrial production was for the fol- lowing industries: manufacturing of basic metals, production of motor vehicles, extraction of crude oil and Source: Statistical office of Republic of Serbia gas derivates. Danos Serbia SERBIAN REAL ESTATE MARKET OVERVIEW H1 2010 | 2 | Deficit of payment balance increased to 9.8% of GDP, as a primary con- sequence of lower level of net cur- rent transfers during fiscal period H1 2010. With 15.6% of GDP, deficit of bal- ance for goods and services was the same as for 2009 level, where offi- cial trade export recorded growth (14.9 %), while import continues with decrease (- 5%). External debt reached 23,278 M EUR which is 70.5% of estimated GDP, while share of public debt in GDP was 23%, reaching amount of M EUR 7.582. FDI recorded inflow of M EUR 283, presenting significantly lower level than initially expected for first half of 2010. Modest acceleration of inflation oc- curs during 1H 2010, initiated due to a growth of the electric energy GDP Growth, in % prices, tobacco products, petrol and gas derivatives increase of the value. Nominal exchange rate between EUR and RSD depreciated for 4% and real exchange rate for about 1% in 1H 2010. In order to provide fiscal relief, NBS decided to continue with cutting 2W rep rate which currently amounts 8%. Important note regarding central monetary institution is that current governor of National Bank of Serbia steps from his duty, with already Source: NBS known successor - Mr. Dejan Soskic | 3 | SERBIAN REAL ESTATE MARKET OVERVIEW H1 2010 Danos Serbia working as NBS vice-governor for Inflation rate, by years many years. It is likely to expect that general financial policy of Serbia will not be significantly changed before next regular parliament elections in 2012. Indicators for labor market in 1H 2010 continued to deteriorate, with employment rate reaching 19.5 %, while net salaries and wages in- creased during 2009 in nominal terms for 5.7%, while in real terms increase was 1.1 %. Source: NBS Hotel Continental Net FDI in Serbia, in EUR/bn PC Usce Source: NBS Danos Serbia SERBIAN REAL ESTATE MARKET OVERVIEW H1 2010 | 4 | Major Developments for Construction Industry Construction industry in Serbia recor- due to major fiscal risks in Serbia. basis, from the average level that is ded a decrease of its activity for 15% Therefore investors still hesitate to projected to range between 9 % and in comparison to the same period last borrow funds from commercial bank, 10%. year. In accordance with data from using their own capital for new devel- Statistical office of Republic of Ser- opments, which caused lack of bigger In March 2010 regulation for con- bia, value of completed construction commercial and infrastructural pro- struction land at the price which is works was lower for 23% than last jects. under the market value or without year. any fees was put in effect. In accord- Key Real Estate Drivers for 1H 2010 ance with the new Construction and Although forecasts for construction Spatial Planning Law, the building industry still are not too optimistic, At the beginning of this year the Gov- land that local self – government State prepares several investment in- ernment of Serbia adopted regulation can sell or rent under these condi- centives in order to contribute to sec- for subvention for low-price apart- tions must be intended for construc- tor’s improvement. ments, with fluctuated price between tion of properties of social EUR 695 and EUR 1,595 for square importance, with precondition to in- Representative samples of named ini- meter, depending on location and in- crease number of employees for 1% tiative is acceleration of works on in- frastructure. minimum. frastructure projects for Corridor X, Belgrade by-pass highway, Ostruznica First low-price apartments with state Ministry of Spatial planning adopted Bridge, reconstruction of Ibarska road subvention will be built in Nis, Novi regulations on governing the phase towards Central Serbia and Sad, Kragujevac and Belgrade. Addi- construction that enables more effi- Montenegro. tionally, Government of Serbia alloc- cient issuing of building permits for ates special funds for this purpose the residential projects whose sur- Bank’s loans needed to boost con- from the budget, subsidizing part of face exceeds 800 square meters. struction industry are still expensive, the interest rate of 7% on annual Pre-condition for this faster way of building permits issuance is that leg- al-ownership relations for the parcels No. of issued building permits in Serbia are resolved, without any legal or restitution claims. Regulation for Conversion from right- of-use to the ownership title of building land is officially adopted, which after various issues that oc- curs, brings regulation back to be re- defined in order to provide adequate practical use. Source: Statistical office of Republic of Serbia | 5 | SERBIAN REAL ESTATE MARKET OVERVIEW H1 2010 Danos Serbia Belgrade Retail Market First half of 2010 didn’t bring any in- Super/Mega/Hypermarket stock Serbia (in sq m) crease in total stock of modern shopping centers in Belgrade, stay- ing on the same level alike in 2H 2009. On the side of supply about 150,000 sq m of GLA stock is cur- rently at the market, which is the same as 2009 level. Usce Shopping center was opened last March and has remained the largest shopping mall opened in Belgrade. During last quarter of 2009, as well as in the first six months of 2010, we can confirm that previously Big box stock in Belgrade (in sq m) opened Delta City center (November 2007) and Usce maintains to har- monize their market share and keep strong operations. However, effects of the global economical turmoil was also reflected to major retail centers, mainly effecting rent reduc- tions, following vacancy increase within both major malls and centers. Many of them also took initiative in regarding keeping tenants by reliefs in rent free periods, free parking spaces etc. Regarding new retail supply, during Shopping center stock in Belgrade (in sq m) May 2010 Israel investor Aviv Arlon opened first Retail park in Pancevo, with first construction phase consist- ing of large supermarket “DIS” as an- chor, compromising area of 4,500 sq m of NLA. In addition to the com- pleted supermarket, future phases of retail park will offer fashion units, services, D-I-Y store along with res- taurants and children content. Also, Delta Maxi continued with develop- ment with their network, by opening new unit comprising 900 sq m of NLA in town of Cuprija. Source: Danos, Serbia Danos Serbia SERBIAN REAL ESTATE MARKET OVERVIEW H1 2010 | 6 | High Street shopping areas are loc- of retailer chains alike Kika, Merkur, renegotiate current rental levels.