Source: AG Nekretnine | Thursday, 01.01.1970.| 16:49
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(AG Real Estate) Commercial space market in Belgrade - March 2008

Grawe

The commercial office development market is the most active section in the real estate market at the moment and seems to be in the near future. There are many project in the preconstruction and construction stage. Serbia is still an immature market with only a few international developers testing the market. So far, the international developers have focused on developing the office building market first and it could be said that they are successful and eager to try more projects. Despite the fast pace of growth, Belgrade’s office stock is relatively low compared to other capital cities in Eastern Europe. Demand in the Belgrade office market has been modest, totaling approximately 25,000m² in 2006, with a number of international occupiers looking to get a foothold in the Serbian market.

Grawe

Class A office stock now totals approximately 118,000m². A further 200,000m² of office space is already under construction and due to be completed over 2007 and 2008, boosting stock to an estimated 334,500m². The majority of development activity is focused in New Belgrade.

Location The Serbian office market is solely focused on Belgrade. Office stock is mainly split into two locations: the traditional core of Old Belgrade, referred to as “downtown”, and New Belgrade across the river Sava. Demand and vacancy Demand is still strong for office space as many companies are expanding or upgrading the “apartment” offices to proper office standard stock. The main demand is coming from international companies. Domestic companies often opt to buy real estate or to use the “apartment” office stock.

SourceKing Sturge, January 2007

The amount of immediately available offi ce space on the Belgrade market is rising due to the amount of new development under way. We estimate that the vacancy is around 5 to 7% and will not rise above until a new large supply comes up for occupation. Rents Prime Class A rents stand at €21/m²/month in Old Belgrade, and €18/m²/month in New Belgrade. Developers are now starting to differentiate their product, which will be characterised by more balanced supply at varying rental levels.
GTC square
Supply - Class A Commercial Office Market The commercial office development market is the most active section in the real estate market at the moment and seems to be in the near future. There are many project in the preconstruction and construction stage. Serbia is still an immature market with only a few international developers testing the market. So far, the international developers have focused on developing the office building market first and it could be said that they are successful and eager to try more projects. GTC has built one office building in New Belgrade, is currently erecting an office/residential project at the end of Milentija Popovic and is in the planning stage of building another project office, GTC Square, on 3rd Boulevard. There are many smaller projects in various property types in the construction or planning stages by local developers but none of this type. Because the property development market is in its infantile stage we have included office developments even though they are not directly comparable.
Grawe
(Marina Dorćol)Most notable completed Class A projects are GTC House, Atrium, Airport City Phase I and II, Luk Oil/Monus, USCE, Napred/Grawe, European Business Centre, Hypo Plaza, Belgrade Office Park, and MPC building. In the projects in the construction stage are Airport City Phase 3 with projected finish time of March 2008, GTC 19th Avenue with projected finish date of February 2008, GTC Square with a projected finish date of May 2008, Sava Grad with a projected finish date of 3Q 2008, Atlas Project on Tosin Bunar Street in New Belgrade with no project finish date, and Mali Kolektiv in the centre.
Grawe
(Ušće)Projects in the preconstruction/planning period are Delta Hotel/Office project in Block 20 New Belgrade, Delta Autokomanda, Marina Dorcol, and Azzaro Business Centre. The projects in concept/pre-approval stage are Beko Site (hotel planned with probably office or retail component), MUP Knez Milosa (retail mall with hotel or office component depending on feasibility study), Stari Mlin (office component), USCE Office Tower II (office/hotel), and Port of Belgrade (residential/commercial with no details released).

Occupational Market Moreover, the European Business Centre was sold for 25 million euro in 2006 to NLB. NLB is using the building as their main headquarters in Belgrade. Although, they will use it as a main headquarters, they will have some extra space to lease. There beginning offer price is 22 euro/m2/month and it has been on the market for more than a year so far and they have not been so successful. Part of the reason, could be that they are not using a professional leasing agent and it may not be a top priority for them.

Investment Market There are two office buildings sold in the last year. Half of the Beopetrol/Lukoil which was owned by MR Gradjevinar was sold for about 8 million euro. A much smaller building on the outside of the Belgrade centre was sold for 4.6 million euro which has about 2500 m2 of leasable area. Invest Bank building, which is a “C” class building, was sold for 24 million euro in heart of the city. Half of the “Napred” development on Mihajla Pupina, consisting of two buildings, was sold to Grawe in 2006 for an undisclosed sum and it was sold in grey phase. Part of this building is for occupation by “Grawe” and the rest will be leased. Serbia is still an immature market with only a few developers testing the market. So far, the international developers have focused on developing the office building market first and it could be said that they are successful and eager to try more projects. GTC has built one office building in New Belgrade, is currently erecting an office/residential project at the end of Milentija Popovic and has started construction of another office project on 3rd Boulevard. The developer Africa/Israel has successfully finished and leased phase I and II of their office project and has started phase two in the same location. The developer, Durst, successfully finished and leased 100% of their project in record time. They are currently looking for land to develop a new project. There are many smaller projects in various property types in the construction or planning stages by local developers but none of this type. Developer European Construction, a division of the domestic firm MPC, has partnered up with Merrill Lynch and is considering their options for the use the twin tower at Usce. Because the property development market is in its infantile stage we have included office developments even though they are not directly comparable. In the past, GTC, Atrium and Usce had secured rents averaging around 19 to 21 euro/m2/month with Airport City averaging around 18 euro/m2/month. Recently, Airport City finished renting their second phase at an average of 17 eur/m2/month and GTC is expected to rent their “19 Avenue” building at an average of 18 eur/m2/month.
building across the road from Kalemegdan
In addition, Hypo Consultants sold their Serbian property portfolio to a Croatian at the beginning of this year and MPC Properties recently closed the sale of the same portfolio last month. Land sales this year are 55.8 million euro was paid for 4 hectares near Kalemegdan Zoo. However, this is not just land price as the site has a demolition cost. Moreover, the MUP site on Knez Milosa was sold for 28 million euros for 0.95 hectares of land near the highway entrance which has a semi-demolished building. The BIP site at Skadarlija was purchased by an Italian firm for 10 million euros and was 1.4 hectares and again is occupied with buildings. Yields are currently between 8.00% and 9.25% for Class A office buildings in Belgrade.author : Srđan Vujučić. King Sturge, Managing direktor

srdjan.vujicic@kingsturge.com

source:


Companies:
JLL Beograd
GTC Srbija
Ca Immo d.o.o.
M-INVEST INŽENJERING BEOGRAD
Airport City Beograd
AIRPORT CITY PROPERTY MANAGEMENT BEOGRAD
Lukoil Company Moscow
EC -European Construction (MPC Holding)
Napred a.d. Beograd
GRAWE osiguranje a.d.o. Beograd
Addiko bank ad Beograd
MPC PROPERTIES DOO BEOGRAD
Delta Real Estate d.o.o. Beograd
DELTA INVEST BEOGRAD-obrisano iz registra
Engel Marina Dorćol Beograd
Multicon inženjering d.o.o. Beograd
Delta Holding d.o.o. Beograd
Luka Beograd a.d. Beograd
EUROMARKET BANKA
Lukoil Srbija a.d. Beograd
MR GRAĐEVINAR BEOGRAD
Durst d.o.o. Beograd
Merrill Lynch & Co., Inc. New York
HYPO ALPE-ADRIA CONSULTANTS d.o.o. Beograd
AG Nekretnine / AG Magazin Beograd (Izoteh)
Cappotto build d.o.o. Beograd
AD BIP BEOGRAD
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Beko Site
building of Ministry of Internal Affairs
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Port of Belgrade
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