Source: Colliers International Serbia
In June of 2010, Colliers International Serbia revised its office database in accordance with the unified methodology of gathering office data in the south-central European region. In accordance with the new methodology, office supply data referred to in this report refers to gross leasable area (GLA), which is floor space contained within tenancy at each floor level measured from the outside of main faces of external walls. This includes internal inter-tenancy, partition and common area walls, but excludes features such as balconies, service areas, and non-exclusive public spaces.
In the first half of 2010, the Belgrade market recorded lessened activity than in previous years, due to lower office demand and a decrease in the number of sources available for financing. Due to the downward trend in the natural market cycle, the Belgrade office market recorded rising vacancies and lower rents, as well as fewer leasing transactions.
In the first half of 2010, the Belgrade market saw the delivery of GLA 43,663 sqm of Class A office space, with the opening of projects Blue
Center (27,000 sqm), Red Stripe (3,400 sqm), and VIG Plaza (13,200 sqm). In mid-2010, the total office inventory in Belgrade was GLA 626,972 sqm, including GLA 382,056 sqm of Class A office space and GLA 244,916 sqm of Class B office space.
Demand: In the first half of 2010, office vacancy rates for Class A and Class B office space in Belgrade increased from 14.1% and 17.1% at the end of 2009 to the current levels of 20.3% and 19.4%, respectively. In-mid 2010, the overall vacancy rate was 19.9%, an increase of 15.4% relative to mid-2009.
The total amount of vacant office space at mid-2010 amounted to around GLA 77,380 sqm of Class A and 47,600 sqm of Class B office space.
Rents: In the first half of 2010, Belgrade office net rents remained at similar values as recorded in the second half of 2009. At the end of 2009, the average achieved net rent for Class A office space was €13.9 sqm/pcm, while the rental price of class B office space €11.1 sqm/pcm.
In mid- 2010, achieved net rents for modern office space in Belgrade averaged €13.8 sqm/pcm for Class A and €11.0 sqm/pcm for Class B office space.
The average asking net rents for new office space in Belgrade are at €16.0 sqm/pcm for Class A and €13.0 sqm/pcm for Class B office space.
Compared to the rents recorded at end of 2009, the achieved net rents marked a 0.7% decrease for Class A and 0.9% decrease for Class B office space during the first half of 2010.
In the first half of 2010, the highest asking Class A rent in the CBD area was €17 sqm/pcm.
The central Belgrade area recorded an average achieved net rent of €14sqm/pcm for Class A and €12sqm/pcm for Class B space. The broader center area recorded the average rents of €13.0 sqm/pcm for Class A and €10.0 sqm/pcm for Class B. The average achieved rents in suburban areas marked €9.0 per sqm/pcm for Class A and €8.0 per sqm/pcm for Class B office space.
Forecast: In mid-2010, many office developments were in the final stage of construction as the effect of building momentum started in 2008-2009. Around GLA 70,000 sqm are set for delivery by the end 2010 in Belgrade.
The most distinguished projects under construction are Tri Lista Duvana (24,000 sqm), University Village (23,400 sqm). The Raiffeisen building is in the preparatory phase and is set for delivery in 2011. The building is intended to be occupied by its owner occupation and comprises a total area of GLA 14,400 sqm. It will be located in New Belgrade and in close proximity to the Airport City office park.
In the following six month period, supply levels are expected to continue to exceed demand, creating a moderate saturation in the Belgrade office market. Further corrections in vacancy rates are expected, with overall vacancy increasing from the current 19.4% to an estimated 22.0 – 23.0% by the end of 2010. Rents are expected to remain at present until the end of 2010. This could mark the beginning of rising market activity in 2011, since the market is more tenant-driven, and because lease terms are currently quite favorable for prospective tenants.
