According to the NBS, Serbia’s GDP recorded real growth of 1.7% y/y in Q2 2023, while the NBS continues to expect GDP growth to be in the range of 2.0% to 3.0% on an annual basis. Although inflationary pressures have weakened, the NBS does not expect a return to the target range before Q2 2024.
Approximately 49,000 sq m of offices were transacted in Q3 2023. The first 9 months of the year recorded take-up of 156,000 sq m, representing a decrease of 9% y/y. Development activity is still strong, with construction and refurbishment of more than 50,000 sq m of office space to be completed in the remaining quarter of the year. The arrival of new supply increased the overall vacancy rate to the level of 7.97%, while the vacancy rate for class A amounts to 6.75%. Although significant number of office buildings are announced for completion by the end of 2023, the vacancy rate is likely to remain in single digits due to large share of pre-lettings. Prime office yields now range between 7.75- 8.25% (+0.25 pp), while Rents remained stable in Q3, with the average asking rental values for Class A buildings standing between €15.5-17.5/ sq m/month.
On the supply side, the market is driven by retail parks and their expansion. The third quarter of 2023 brought the opening of retail park in Bor, and expansions in Sremska Mitrovica and Vrsac. With no new deliveries in Belgrade, modern retail stock remained at the level of approx. 580,000 sq m of GLA. The leading Belgrade shopping centres maintain a stable level of average rents during the first three quarters of 2023, ranging between €23-28/sq m/month, while the prime rents for most attractive schemes range between €48-50/sq m/month. Prime rents in the segment of retail parks, which witnessed upward trend in the final quarter of 2022, remained stable during 2023 and amounted to €8.5- 12/sq m/month.
In the first half of 2023, Belgrade wider industrial area was boosted by new 73,000 sq m of industrial space, with logistics space accounting for 95% of this area. Belgrade industrial stock, along with the neighboring municipalities Stara Pazova and Pecinci, reached 2.7 million sq m in Q2 2023, while Belgrade alone features 1.2 million sq m of modern industrial supply. In terms of demand, new lettings (excluding owner-occupation deals) concluded in the H1 2023 in Belgrade industrial zones amount to 105,000 sq m of warehouse and logistics space. Rents of modern logistics space in Belgrade and industrial zones in its close proximity slightly remained stable at 4.0-5.5 €/sq m/month, as the result of stronger demand, increased construction costs and higher energy prices. The vacancy rate for modern logistics in Belgrade wider industrial area stands below 5%.