SERBIA PRIME SITE ONE SERBIA PRIME SITE ONE Jan Schoch plans to realize the CHF 100 million project Serbia Prime Site One through a Swiss corporation. This will expectedly represent, after Holcim, the second largest foreign direct investment from Switzerland in Serbia’s history. This document is based on a detailed Valuation Report and a Real Estate Market Study conducted by CBRE in Belgrade, Serbia. INTRODUCTION “With this presentation, I would like to introduce you to my newest developments that I am planning to realize in Belgrade, the capital of Serbia. Over the last few years I have implemented various real estate developments across Switzerland through my own real estate platform Valastone. In my home village of Appenzell alone, I have successfully built high-priced developments in both the residential and hotel market with a value of over CHF 70 million. Through my most recent business activities and partnerships, I have decided to enter Serbia’s real estate market by opening Valastone’s new branch in Belgrade. The country’s development over the last decade shows continuous growth, espe- cially in the real estate market. Furthermore, the current COVID-19 crisis has been Jan Schoch recognized as favourable in terms of the demand for purchasing real estate. The Serbian Government has even initiated a program to subsidize purchases of first apartments.” – Jan Schoch 4 WHY INVESTING IN SERBIA Serbia is a South-eastern European country and is lo- For the last year, the world has been struggling with cated in the central part of the Balkan Peninsula and the novel coronavirus, which has provoked a global the southern part of the Pannonian Plain. The country economic slowdown affecting activities, tourism, bus- spreads over around 88,300 square kilometres and inesses etc. Overall, the global spread of the coronavi- borderson Hungary in the north, Romania and Bulga- rus has caused containment measures and disrupted ria in the east, Macedonia and Albania in the south, supply chains, weaker trade, lower consumption as and Croatia, Bosnia and Herzegovina and Montene- well as delayed investments in the first half of 2020. gro in the west. In terms of population, Serbia is one The effect has been direct in Serbia seen in an increa- of the largest countries in the region and is also one sing number of COVID 19-cases, and indirect due to of the main regional destinations in terms of foreign the slowdown in economic activity across Europe. direct investment inflows. The attractiveness of Serbia as an investment destination has further growth poten- However, last year ended on a high note and the tem- tial due to more extensive reforms, which are being po extended into January 2021. Fourth quarter invest- implemented in order to make the country eligible for ment growth was notably strong, followed by a dynamic accession to the European Union. Serbia‘s Stabilizati- construction sector. Construction permits seem to be on and Association Agreement with the EU was ratified levelling off after a multiyear record. In addition, retail in 2010, entered into force in 2013, and EU accession sales reported strong results, with slightly weaker data negotiations began in January 2014. in January 2020. Serbia’s low-cost, and technically trained labor force and improving infrastructure should The global economic recession did not bypass Serbia continue to attract new investment. More regulatory and the effects of the financial crisis lingered for seve- and tax reforms are planned to boost the digital eco- ral years. However, starting in 2014, the Government nomy, as the Government targets e-delivery of public began to implement extensive reforms, which already services to cut costs and corruption. Given an announ- showed results during 2015. As a result, Serbia has cement of substantial rises in both public sector wages seen a steady inflow of foreign direct investment. In and pensions and an 11% hike in the minimum wage, the 2019 Doing Business list, Serbia ranks 44th out of consumer demand is set to experience steady growth 190 countries. in the mid-term, making growth of the large domestic market a further attraction for investment. 5 RESIDENTIAL MARKET SUPPLY The residential real estate market in Serbia is most of construction activity, which is also at a lower level. developed in its capital, Belgrade. The territory of the During the crisis, many people took the opportunity to city is divided into 17 municipalities, out of which 11 buy real estate at lower prices. In general, the crisis municipalities are considered urban, and these are and falling sales prices in the market have been re- Voždovac, Vračar, Zvezdara, Zemun, New Belgrade, cognized as a favorable moment for purchasig real es- Palilula, Rakovica, Savski Venac, Stari Grad, Čukarica tate. However, this also applies to apartments that are and Surčin. Historically, the overall supply of residen- less attractive and of lower quality with lower prices, tial units in urban municipalities in Belgrade has been as the Serbian Government has initiated a program developing in line with urbanization trends and the to subsidize the purchase of first homes. When con- increase in the number of residents in the city. New sidering the number of sold units within all Belgrade Belgrade is one of the newest municipalities, during municipalities, during 2019, the highest number of sold the development of which modern building techniques apartments was noted in Zvezdara, followed by New have been implemented with more efficient land use. Belgrade and Voždovac. At the beginning of 2020, with In addition, by increasing the height of buildings, the the onset of the pandemic, the number of transactions population density in the municipality was increased on the residential market recorded a decrease, which as well. was most evident during the State of emergency which was in effect between March and April. However, ac- Residential Real Estate Market – Demand tivity significantly improved later during the year, with Apartment sales in Serbia have risen, but are still lo- transaction levels nearly reaching the previous year. wer than before the crisis, which is in line with the level Total number of registered transactions for Number of registered transactions in Belgrades apartments in Belgrades 11 urban municipalities urban municipalities 6 Residential Real Estate Market Price Analysis While a small contraction in residential prices was Over the past years, housing prices have stabilized. expected due to the COVID-19 pandemic, the initial This is especially true for new construction, where results for the first half of 2020 show that residential prices for residential units recorded an increase of prices for new build apartments recorded an increase over 25% compared to the initial price. across all Belgrade municipalities. Average prices and price ranges for apartments in Belgrade in Q4 2020 Municipality Old Buildings New Bulidings Average price Price Range Trend Average price Average Price Trend (EUR/m2) (EUR/m2) Min Max Min Max (EUR/m2) (EUR/m2) (%) (EUR/m2) (EUR/m2) (%) Stari Grad 2’182 1’000 4’452 4 2’703 1’500 3’836 16 Vračar 2’021 904 3’474 7 2’047 1’075 3’252 4 Savski Venac 1’761 900 2’605 9 3’194 1’2610 8’754 10 New Belgrade 1’649 534 3’243 7 2’158 1’000 3’583 -1 Palilula 1’399 611 2’596 9 1’689 920 2’955 10 Zvezdara 1’526 701 2’417 5 1’676 793 2’550 2 Voždovac 1’362 673 2’391 5 1’667 763 2’418 -1 Čukarica 1’347 647 2’172 9 1’579 1’000 2’787 13 Zemun 1’453 781 2’294 8 1’740 732 2’451 9 Stara Rakovica 1’100 694 1’480 4 1’389 1’008 1’662 18 7 SERBIA PRIME SITE ONE PROJECT INTRODUCTION The Serbia Prime Site One project will be located The planned complex will be constructed in in the block 65 between Heroja sa Košara Boule- four phases. The overall project will compri- vard and Tadije Sandomajera Street. se around 750 residential units. The size of the apartments is planned to be between 41 sq.m to 189 sq.m. This investment project includes phases 2-4 of the whole complex, where Jan Schoch owns 100% of shares and voting rights. 8 SERBIA PRIME SITE ONE PROPERTY DETAILS MACROLOCATION The property is located in Belgrade, the capital of Ser- the territorial organization of Serbia, the City of Bel- bia and its largest city. Belgrade is located in the cen- grade has a special administrative status with its own tral part of Serbia and is situated ca. 380 km to the autonomous government. The total urban area of the south of Budapest, capital of Hungary, ca. 390 km to city is 360 sq. km., while the Belgrade metropolitan the east of Zagreb, capital of Croatia, and ca. 390 km area covers 3,223 sq. km. Currently, Belgrade has the to the northwest of Sofia, capital of Bulgaria. Belgra- best traffic connections with Zagreb and Budapest to de is the political, financial and administrative center which it is connected by highways. of Serbia. According to the last census, Belgrade has an urban population of around 1,150,000 inhabitants, In terms of river transportation, Belgrade lies on the while the wider administrative area has population of confluence of two international waterways, Danube ca. 1,640,000 which makes Belgrade the fourth largest and Sava. Both rivers enable passenger transportation city in South-eastern Europe, after Istanbul, Athens (tourism) as well as cargo transportation. The Danube and Bucharest and the largest city on the territory of connects Belgrade with Vienna (Austria), Bratislava former Yugoslavia.