Market Overview

• Country and macroeconomic overview

• Market & competition overview
Market Overview: Country

 Serbia occupies a historically important geographic Country Map

crossroad between Eastern and Western Europe

 A country is characterized by one of the most exciting

expected growth trajectories in the coming years

 Serbia is the largest and most populous of ex-YU

countries

 EU accession negotiations have started in January 2014

 It is widely believed that EU accession will bring greater

prosperity for Serbia and its people

EU status Population

Serbia Candidate since 2012 7.2m

Croatia Member since 2013 4.3m

Bosnia Preparing application 3.8m
Montenegro Negotiations since 2012 0.6m
FYROM Candidate since 2004 2.1m
Albania Applicant since 2009 3.2m

Note: Estimated population of Kosovo is 1.8m (not included in the Serbia's population)

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Market Overview: Macroeconomic Indicators

 The Serbian government announced launching of an Country Information 2013 2014 2015* 2016*
ambitious economic reform program with aim to: Population (mil) 7.2 7.2 7.2 7.2
 consolidate public finance
Production
 create base for economic growth GDP (EUR bn, nominal) 34.3 33.1 32.1 32.7
GDP per capita (EUR, nominal) 4,783 4,626 4,495 4,573
 Reforms are based on liberalization, further
privatization and cutting public sector Workforce, Unemployment and Income Statistics
Employing Workers (mil) 2.4 2.4 2.4 2.4
 Efforts will be put on lowering tax burden, pension Unemployment (mil) 0.8 0.8 0.8 0.8
system reform and promoting free entrepreneurship Unemployment Rate 22.1% 18.9% 20.0% 20.2%
Average Salary (EUR, net) 388 366 362 360

Employment and Wages Foreign Trade

Export (EUR, bn) 13.9 14.5 14.8 15.2
26.0% Import (EUR, bn) 17.8 18.1 18.2 18.5
23.9%
440
24.0% FDI (EUR bn) 1.3 1.2 1.2 1.2
22.1%
420
20.2% 22.0%
20.0%
400 18.9% Public Finance
20.0%
Public Debt (EUR bn) 20.1 22.8 24.4 26.3
380
18.0% Public Debt (% of GDP) 58.8% 68.6% 76% 80.6%
360 16.0% Foreign Public Debt (EUR, bn) 13.2 14.2
Foreign Public Debt (% of GDP) 38.4% 42.9%
340 14.0%
Consolidated Fiscal Deficit -5.5% -6.7% -6.0% -5.5%
320 12.0%
Monetary Statistics
300 10.0%
1 2 3 4 5 CPI 2.2% 1.7% 4.0% 4.1%
2012 2013 2014 2015 2016
Monthly average gross wages (EUR) Exchange Rate
Unemployment rate (%) RSD/EUR (End of period) 114.6 122.1 126.3 129,8

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Market Overview: Belgrade Overview

 Belgrade is one of the largest cities in the South East Belgrade

Europe: Total population 1,659,440
 total population of 1.7 million Total urban population 1,299,995
Urban area (sq km) 360
 urban population of 1.3 million Urban population density (per sq km) 3611
 Belgrade is divided in 17 municipalities
Number of households 507,076
 Most densely populated Municipalities are in the city Average persons per household 3
center – Vracar (19k/sq km), Old Town (10k/sq km) Average persons per unit 2.7
and New Belgrade and Savski Venac (5k/sq km)
Average net salary (Oct 2014) EUR 460
Unemployment rate 17.3%

Belgrade Municipalities Housing units Number Area (sqm)

Number of housing units 548,045 33,989,287
Municipality Population Urban 439,670 27,528,235
New Belgrade 214,506
Suburban 108,375 6,461,052
Cukarica 181,231
Urban Municipalities

Palilula 173,521
Zemun 168,170 Household area (sqm) per person - share
Vozdovac 158,213
Zvezdara 151,808
> 60 sqm
Rakovica 108,641
Vracar 56,333 40 - 60 sqm
Old Town 48,450 30 - 40 sqm
Savski Venac 39,122
20 - 30 sqm
Grocka 83,907
Obrenovac 72,524 15 - 20 sqm
Suburban

Lazarevac 58,622 10 - 15 sqm

Mladenovac 53,096
Surcin 43,819 < 10 sqm
Barajevo 27,110
0% 5% 10% 15% 20% 25% 30%
Sopot 20,367

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Market Overview: Real Estate in Belgrade

 Development boom has been put to a complete Market Yields by Sector

standstill by the financial and economic crises that hit
10.00%
Serbia in 2009 9.00%
9.00% 8.50%

 As a consequence, the real estate market in Belgrade is 8.00%

hugely underdeveloped in all segments, compared to 7.00%

5.70%
almost all other capital cities in the region 6.00%
5.00%
 The large number of legal and regulatory challenges 4.00%
have been under the process of improvement to boost 3.00%
real estate development 2.00%
1.00%
 Most foreign investors have concentrated on office and 0.00%
retail segment in Belgrade Residential Retail Office

 Large number of retail projects has been in the Largest Real Estate Investors / Developers
pipeline for a very long time, but limited retail Investor Country Segment
developments have been realized Delta Holding Local Retail, Office, Residential, Hotel
 Most new developments, in all segments, are located in MPC Properties Local Retail, Office, Residential
New Belgrade area, because of urban planning and AFI Israel Office, Residential
infrastructure constraints present in the old part of the
NEPI Romania Retail
city
Immofinanz Austria Retail
 With some progress in regulatory issues and GTC Poland Office
improving economic conditions, significant growth can Ashtrom Israel Retail
be expected in the years to come
CA Immo Austria Office
PSP Farman Russia /Serbia Residential, Hotel

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Market Overview: Residential

 Total supply of new units has risen considerably since New units by year; Belgrade urban municipalities
2010, this has mainly been due to the large scale 8,000
government projects that were initiated in order to 7,000
stimulate construction industry and offer affordable 6,000

# of new units
residential units 5,000
4,000
 Since low end market was saturated, this forced
3,000
privately funded projects to target mid to high end of 2,000
the market focusing on higher quality of 1,000
accommodation and modern, integrated concept of self 0
sustainable settlements, offering all range of amenities 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
and services within the project Includes only urban municipalities: Vozdovac, Zvezdara, New Private investors
Belgrade, Cukarica, Palilula, Zemun, Savski Venac, Vracar, Government projects
Stari Grad, and Rakovica
 Because of good infrastructure and urban planning,
New Belgrade is the primary choice for these type of Mortgage Purchases (new and existing units)
projects, although recently we can see examples of the 7000 1800
same concept in other parts of the city (Central Garden 1600

Average price (EUR/sqm)

6000
in the City Center and Alpha City in Zvezdara) 1400
5000

# of units sold
1200
 Concerning demand, majority of purchases in the mid 4000 1000
to high end of the market are cash based and most of 3000 800
the projects have met healthy demand, selling most of 600
2000
their units prior to finalization of construction 400
1000 200
 This shows that there is a demand for better quality 0 0
units from cash buyers, either from the new money or 2007 2008 2009 2010 2011 2012 2013 2014
Suburban (# units)
from people looking to exchange their old but high Includes only insured loan transactions in urban
Central (# units)
municipalities. Avg price represents total
priced city apartments with more modern purchase price (including VAT, if due) Average Price
accommodation

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Competition Overview: Residential

Maxima Centar Galerija apartments

Obelisk (B11)
apartments Dunavske
West 65 Terase
Central
Garden
Savada
Blok 61
Dr Ivan Ribar

BW
 27 buildings

ABlok  7,416 units

Belville

Marmil Land

Alpha City

Stepa
Ambassador Stepanovic
Golf 8
Paunov Breg
6

Major residential projects include projects with over 100 units in total, that where delivered to the market in
recent period and pipeline projects on which construction has started. Size of the bubble indicates the size of the
Finished units
project (number of units) ranging from 100 (Galerija apartments, Paunov Breg) units to 4600 units (Stepa Under construction / pipeline
Stepanovic)

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Market Overview: Retail

 Retail market in Belgrade is largely underdeveloped, with

Total Retail Stock (m2) & Retail Stock m2/1000 residents
insufficient modern retail stock to meet the needs of the
capital’s residents 900,000 900

per 1,000 inhabitants

750,000 750
Compared to the surrounding capitals, Belgrade’s retail

Retail Stock (sqm)



supply is far lower, observed by both total modern retail 600,000 600
stock and modern retail stock per 1,000 inhabitants. 450,000 450

 Undersupplied Belgrade retail market has only three big 300,000 300
modern shopping centers to offer with total GLA of 104,500 150,000 150
sqm:
0 -
Prague Budapest Bucharest Zagreb Bratislava Belgrade Sofia
– Delta City
Retail stock sqm Retail stock sqm /1,000 inhabitants
– Ušće Shopping Center

– Stadion

 Regarding new projects entering the market, ABD/Ashtrom

Rent Level and Capitalization Rates
started the construction of Rajiceva Shopping Center (15,200
sqm). Delivery has been announced for the second half of
Average Shopping Center Rent 23 – 25 EUR/sqm
2016

 Furthermore, Plaza Centres has plans to develop a modern Shopping Center Vacancy Rate 0%
shopping center within municipality of Visnjica with GLA of
45,000 sqm
Prime High-street Rent 60 – 80 EUR/sqm
 Demand is reflected in vacancy rates close to zero percent,
average rents in prime shopping centers are EUR 23-25
Prime Shopping Center Cap Rate 8.5%
/sqm/month while cap rates stay at 8,75%

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Competition Overview: Shopping Mall
Catchment area of shopping centers and retail parks in Belgrade

(GLA 15,000 sqm) ( GLA 35,000 sqm)

(GLA 46,000 sqm)

(GLA 40,000 sqm)

BW MALL

(GLA 30,000 sqm) GLA 130,000 sqm

(GLA68,000 sqm)

(GLA 17,000 sqm)

(GLA 11,500 sqm)

(GLA 28,000 sqm)

Exiting projects
Pipeline
Note: catchment area includes people located 20 minutes (lighter) and 45 (darker) minutes away from the project

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Market Overview: Office

 Supply of quality office space in Belgrade did not change over

Total Class A & B Stock (sqm)
the last four years with major stock comprised of following
modern office space: Airport City, Usce Tower, Blue Center, 700,000
Atrium Belgrade Offices, VIG Plaza and Danube Business 600,000
Center. All of the mentioned offices are located in the new
part of the city, leaving old part hugely under-supplied 500,000

400,000
 During the last quarter of 2014, the office market has 300,000
witnessed the completion of New Mill office tower (3,700
200,000
sqm) located at the old part of the city
100,000
 In the course of next twelve months, the class A office is 0
expected to increase by approximately 13,000 sqm with 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
completion of the first phase of GTC’s FortyOne and Deneza
Class B Class A
office buildings, both located in the new part of the city
Rent Level, Vacancy Rates & Capitalization Rates
 High demand for modern office space is reflected in
18 25.0%
decreasing of vacancy rates as well as increasing of rent
17 23.0%

Office Cap Rate / Vacancy

levels which are currently at 7% and EUR 15-16/m2/month

Prime rent (EUR/m2/m)

21.0%
respectively 16
19.0%
15 17.0%
 Furthermore, high demand is also supported by pre-let
14 15.0%
figures as the future GTC project has already been more than 13.0%
13
60% pre-leased 11.0%
12
9.0%
 The most active sectors on the market were insurance and 11 7.0%
telecom followed by strong IT sector, public and consumer 10 5.0%
goods sectors 2008 2009 2010 2011 2012 2013 2014
Average Rent (EUR/sqm)
 Yields for prime offices in Belgrade are at 9.00% Prime Office Cap Rate
Vacancy Rate

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Competition Overview: Office
Location of the existing stock and pipeline of class A office space in Belgrade

V.I.G. Plaza
Danube Business Center (GLA 16,000 sqm)
(GLA 10,000 sqm)
Usce Tower
Atrium Offices (GLA 22,500 sqm)
(GLA 15,000 sqm)

Airport City Blue Center

(GLA 186,000 sqm) (GLA 30,000 sqm)

GTC FortyOne
(GLA 68,000 sqm)
GLA 160,000 sqm
MPC Blok 43
(GLA 19,400 sqm)
New Mill
(GLA 3,700 sqm)

Exiting projects
Pipeline

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Market Overview: Hotel

 Belgrade hotel market is witnessing a steady development

Hotels in Belgrade (4* and 5* hotels)
over the last couple of years, with a healthy number of new
properties being brought to the market, mostly in the 4*
segment
Old Town
 Since 2012 number of units in Belgrade has increased by
more than 1,300 rooms (almost 50% increase in to 4* and 5*
segments)

 In contrast with office and retail market, old part of the city New Belgrade
is still the dominant location when it comes to hotel
developments.
0 500 1000 1500 2000
 With large hotel developments in pipeline, in the New Rooms
4* 5*
Belgrade area (Intercontinental and Kempinski Jugoslavija),
this relation can be reversed in the coming years Number of arrivals and overnight stays
 In 2014 five new 4* hotels have been opened in Belgrade: 1,800,000
Crowne Plaza (416 units), Radisson Blu (236 units), 88 1,600,000
Rooms (88 units), Jump Inn (49 units) and Constantine the 1,400,000
Great (40 units). In 2015, Zepter Hotel in the city center has 1,200,000
added 32 more units to the market
1,000,000

 The pipeline developments include Courtyard by Marriott 800,000

(114 units), scheduled for completion by the end of 2015. 600,000

Delta Holding, following the opening of Crowne Plaza in 400,000
2014, has announced the construction of 5* Intercontinental 200,000
Hotel with 220 units on the same location in New Belgrade
-
2010 2011 2012 2013 2014 2015*
 Number of tourist arrivals and overnight stays shows steady Arrivals Overnights
growth of average 5% YoY since 2010

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 Competition Overview: Hotels
Location of the existing hotels in Belgrade

Kempinski Jugoslavija Central Park Residence

Falkensteinter
(270 Keys)
(170 Keys) Nevski Hotel
(40 Keys)
Square 9 Ctd By Marriott
(45 Keys) (114 Keys) 88 Rooms
BAH Majestic (88 Keys)
(88 Keys)
Srbija Garni Zepter
Hyatt Regency (37 Keys) (32 Keys)
Jump Inn
IN Hotel (302 Keys)
(49 Keys)
(187 Keys)
Holiday Inn
(140 Keys)
Intercontinental Constantine The Great
(220 Keys) Hotel Moskva (40 Keys)
(126 Keys)
Life Design
Crowne Plaza (59 Keys)
(416 Keys) Metropole Palace
(239 Keys)

 719 Keys
Exiting projects  4 Hotels
Pipeline New Mill
(236 Keys)

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Project Overview: Overall Master Plan

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