Belgrade Retail Market

www.cbre.rs

RESEARCH REPORT
Q2 2013

HOT TOPICS
During Q2 2013, Belgrade shopping center stock grew to the level of 230,000 sq m of GLA One of the most recognized fashion brands in the world, Swedish H&M is entering Serbian market in September 2013, by opening stores in Delta City and Stadion shopping center Serbian retail scene enter into more positive phase with the several on-going projects announced for the forthcoming period

SHOPPING CENTER STOCK

The second quarter of 2013 brought the opening of Stadion shopping center of 30,000 sq m, being developed at the location of Sports Center FC Vozdovac in Vozdovac municipality, as part of large project of 75,000 sq m of GBA. This modern retail scheme enriched the retail offer of this part of Belgrade for a number of renowned brands, such as Tom Taylor, Takko Fashion, C&A, New Yorker, H&M (as of September 2013), Koton, Lindex, Tally Weijl, Deichmann, Orsay, Parfois, Legend, Carpisa, Julia & More... At the end of H1 2013, Belgrade shopping center stock reached the level of 230,000 sq m of GLA, or 140 sq m per 1,000 inhabitants, which includes all types of retail schemes: western-style shopping centres, neighborhood malls, department stores and secondary shopping center schemes (hypermarkets with retail gallery). Although Belgrade lags behind other regional centers, which mark the average ratio of 475 sq m per 1,000 inhabitants, Belgrade has not been developed in the same pace. Location-wise, New Belgrade area holds 60% of the shopping center stock, amounting to more than 500 sq m per 1,000 inhabitants. At the same time, Belgrade downtown remains undersupplied, with less than 30,000 sq m of shopping center schemes available for the tenants. BELGRADE SHOPPING CENTRE STOCK PER CAPITA
250,000 200,000 150,000 100,000 50,000 0 2006 2007 2008 2009 2010 2011 2012 2013 Stock of shopping centers Stock per 1,000 inhabitants 150 120 90 60 30 0

Serbia essentials Population (Census 2011) Average salary (EUR) Jan-May 2013 Average Household Expenditure (EUR) Q1 2013 Unemployment rate (Labor Force Survey April 2013) GDP Q1 2013 (y-o-y) CPI June 2013 (y-o-y) Belgrade essentials Population 1,659,440 (Census 2011) Average salary (EUR) 467 Jan-May 2013 Average Household 588 Expenditure (EUR) Q1 2013 Unemployment rate (Labor Force Survey 19.0% April 2013)
Source: Statistical Office of the Republic of Serbia

7,186,862 381 465 24.1% 2.1% 9.8%

sq m GLA

BELGRADE SHOPPING CENTRE STOCK PER TYPE OF SCHEME

Secondary SC schemes (hypermarkets with retail gallery) Department Stores 35,100 35,476 54,700 106,650

Neighborhood Malls Western-style Shopping Center 0 20,000 40,000

60,000

80,000

100,000

120,000

Source: CBS International, part of the CBRE Affiliate Network

2013

RESEARCH REPORT Belgrade Retail Market

Q2 2013

Rental demand for shopping centres comes mostly from international retailers with established regional presence, however domestic brands and retailers also show the significant interest. The two most renowned retail destinations in Belgrade, western-style shopping malls Usce shopping centre and Delta City continue to record high footfall and keep vacancy levels to the minimum, with stable rents. During Q2 2013, Usce shopping center saw the opening of Desigual mono-brand store, Tommy Hilfiger and Levis store. In addition, several brands became available in Delta City mall, such as Levis, Women Secret, domestic shoe brand Labrador, kids brand Ciciban, while Italian shoe brand Bagatt choose Delta City to open its first store in Belgrade. Also, the buyers have the well-known brand in the field of business cases and travel luggage Ambest Dubai at their disposal in Zira shopping center. Moreover, one of the most recognized fashion brands in the world, H&M will enter Serbian market in 2013, by opening the stores in Delta City and in Stadion shopping center, in September 2013. The vacancy rate as a ratio in a total shopping center stock of all types of retail schemes slightly rose to the level of 8%, due to the opening of Stadion shopping center. However, the strong demand that characterizes he previous period in this property segment will continue, influencing further drop in vacancy levels. In terms of the planned future offer in Belgrade, Israeli investor IBC plans to develop the retail park Power center in Zemun, estimated to cover approximately 28,000 sq m on 80,000 sq m of land. The construction of the first phase commenced recently and will include the development of 15,300 sq m, which expected to be delivered in 2014. The interest of both international and local developers in Serbian retail market is constantly increasing which reflects the number of shopping centers planned for construction. Israeli developer Aviv Arlon completed the latest phase of its retail park Aviv Park in Pancevo, currently comprising 23,000 sq m of fully leased retail park. Israeli BIG CEE plans to open another 30,000 sq m in late 2013 within its recently opened BIG CEE center in Novi Sad. After the completion, the whole complex should comprise 40,000 sq m of GBA.

IBC Power Centar

SELECTED RETAIL SCHEMES PLANNED IN BELGRADE

Project Visnjicka Plaza Rajiceva Skadarlija Delta Planet Ada Mall IBC Power center (1st phase) Investor Plaza Centers Ashtrom Key Stone Delta GTC IBC Location Visnjica Downtown Downtown Autokomanda Cukarica Zemun GLA (sq m) 45,000 19,000 42,000 70,000 30,000 15,300

Source: CBS International, part of the CBRE Affiliate Network

RETAIL STOCK AND SPACE UNDER CONSTRUCTION IN MAJOR SERBIAN CITIES

250,000 200,000 sq m GLA 150,000 100,000 50,000 0 Belgrade Kragujevac Novi Sad Nis Indjija Pancevo Sabac
Source: CBS International, part of the CBRE Affiliate Network

Shopping center stock

Retail space under cosntruction

PRIME YIELDS Q2 2013 (%)

9.5

In mid-2012, the construction works on the shopping center Vivo of 10,000 sq m in Jagodina started, of which the realization is expected in autumn 2013.
Furthermore, Poseidon Group and Yu Kapital have begun the construction works on the first retail park in Sabac, Capitol Park, holding 10,000 sq m in June 2013, set for completion in March 2014.

7.5

8.5

Prime High street

Secondary High street

Shopping Centres

Retail Warehouses

Source: CBS International, part of the CBRE Affiliate Network

2013

Belgrade Retail Market

www.cbre.rs

RESEARCH REPORT
Q2 2013

HIGH STREET RETAIL

The lack of shopping centre space in Belgrade downtown drives retailers to the high street locations, which remains important retail environment for market positioning. The previous period saw the renewed interest of the tenants for the high street locations. The good value for money fashion brands are among the markets strongest performers, offering quality products at more acceptable prices.

PRIME RENTS (EUR/SQ M)

Location Knez Mihailova Street Terazije Square/Kralja Milana Street/Kralja Aleksandra Blvrd Secondary high street (Pozeska, Gospodska) Modern Shopping Centres Size of units <150 sq m Up to 100 45-70 25-40 50-70 > 150 sq m 40-60 30-40 20-30 15-60

Source: CBS International, part of the CBRE Affiliate Network

RETAIL WAREHOUSE
The retail warehouse segment entered the phase of deceleration, with limited number of recently opened projects or projects currently under construction. As of beginning of 2013, only two small-scale schemes are completed, which brought app. 10,000 sq m of the new supply to the market. Nevertheless, Serbian market is considered to be very attractive among the international chains, proven by the few well-known retailers who are actively looking for the proper locations for their market positioning, such as German Lidl and French Carrefour. After a longer search for appropriate locations, Swedish IKEA selected the location for their first store in Belgrade, situated near the wholesale market in New Belgrade, close to Highway E75. THE RETAIL WAREHOUSE STOCK (SQ M GBA)
700,000 600,000 500,000 400,000 sq m 300,000 200,000 100,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: CBS International, part of the CBRE Affiliate Network

Total Serbia (incl. Belgrade) Belgrade

Dragan Radulovic Managing Director CBS International doo Beograd Part of the CBRE Affiliate Network Airport City Belgrade 88b Omladinskih Brigada Street 11070 Belgrade, Serbia t: +381 11 22 58 777 e: dragan.radulovic@cbre.rs

Goran Zivkovic Deputy Managing Director CBS International doo Beograd Part of the CBRE Affiliate Network Airport City Belgrade 88b Omladinskih Brigada Street 11070 Belgrade, Serbia t: +381 11 22 58 777 e: goran.zivkovic@cbre.rs

Tamara Kostadinovic Head of Market Research CBS International doo Beograd Part of the CBRE Affiliate Network Airport City Belgrade 88b Omladinskih Brigada Street 11070 Belgrade, Serbia t: +381 11 22 58 777 e: tamara.kostadinovic@cbre.rs

DISCLAIMER
CBS International (part of the CBRE Affiliate Network) confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBS International clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBS International.

2013