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H2 2012 www.cbre.rs

BELGRADE RETAIL MarketView

BELGRADE RETAIL MARKET ATTRACTING NEW

INTERNATIONAL BRANDS

Hot topics

One of the most recognized fashion brands in the world, Swedish H&M will enter Serbian market in September 2013, by opening stores in Delta City and Stadion shopping center

Rental levels remained mostly stable, during entire 2012

Serbia retail scene was greatly affected during 2012 due to the opening of few retail schemes

Serbia essentials

SHOPPING CENTER STOCK The total shopping centre stock of in Belgrade remained unchanged at the end of 2012, standing at 200,000 sq m of GLA, which includes all types of retail schemes: western-style shopping centres, neighbourhood malls, department stores and secondary SC schemes. After the opening of the renovated Mercator shopping center on September 1st, new tenants, such as Swedish brand Lindex and Italian kids brands Monnalisa and Hitch-hiker now are available in the market. The vacancy rate as a ratio in a total of 200,000 sq m of all types of retail schemes dropped to a level below 9%, thanks to reshuffling of the present tenant mix in smaller-scale retail schemes. More specific, the vacancy rate in western-style modern shopping mall remains close to 0%.

Source: Statistical Office of the Republic of Serbia

Belgrade essentials

Population (Census 2011)

7,186,862

Average salary (EUR) November 2012

375

Average Household Expenditure (EUR) Q3 2012

438

Unemployment rate (Labor Force Survey -October 2012)

22.40%

GDP Q3 2012 (y-o-y)

-2.5%

CPI December 2012 (y-o-y)

12.2%

CHART 1: Serbia shopping center stock (sq m GLA)

Source: CBS International, part of the CBRE Affiliate Network

Population (Census 2011)

1,659,440

Average salary (EUR) November 2012

456

Average Household Expenditure (EUR) Q3 2012

535

Unemployment rate (Labor Force Survey -October 2012)

20.10%

122 103 110

320

487

154

104 98

0

100

200

300

400

500

0

50,000

100,000

150,000

200,000

250,000

Belgrade Novi Sad Nis Kragujevac Indjija Pancevo Cacak Sabac

Stoc

k

Western-Style Shopping Center Neighborhood Mall Department store

Secondary SC schemes Retail park Stock in sq m/1,000 inhabitants

The local DIY company Uradi sam opened 5,000 sq m large store in Roda centre in New Belgrades block 64, while Point center offer was enriched by Deichmann, dm-drogerie markt and Duki Daso. Danish brand JYSK opened a 1,200 sq m large store in Karaburma shopping centre. DIS hypermarket Zmaj now hosts sports store Djak and will offer more fashion brands in the future, since the share of the hypermarket has been reduced. The only on-going project in Belgrade is a mixed-use project of 75,000 sq m of GBA, being developed at the location of Sports Center FC Vozdovac. Shopping centre Stadion will comprise app. 30,000 sq m of GLA and is planned to be completed in March 2013. The shopping center will include a number of renowned retailers, such as Roda hypermarket on 4,100 sq m, C&A, H&M, New Yorker, Lilly, Takko Fahion, Intersport.

H2 2012

Source: CBS International, part of the CBRE Affiliate Network

BELGRADE RETAIL MarketView

One of the most recognized fashion brands in the world, long-awaited Swedish H&M will enter Serbian market in 2013, by opening stores in Belgrade in September 2013. The first store will be opened in Delta City, holding 2,500 sq m , while the second one will be in Stadion shopping center. Although Belgrade retail scene marked modest development, the other cities in Serbia were active during 2012. Once regional center of Serbia, Kragujevac welcomed 22,000 sq m-large shopping mall Plaza Kragujevac in March 2012 developed by Israeli investor Plaza Centers. A local developer opened Fashion Park in Indjija, holding 15,000 sq m, while Israeli BIG CEE finished and opened the first phase of the retail park in Novi Sad, totaling 10,000 (including brands such as C&A, Deichmann, Takko fashion, New Yorker and Home centar), while another 30,000 sq m are envisaged to be finished in the first half of this year. Another Israeli developer Aviv Arlon expanded Aviv Park Pancevo, currently comprising 19,000 sq m of fully leased retail park. The construction of the last phase of Aviv park already commenced and retail park should offer additional 4,500 sq m. The company Mercator S completed and opened its 20,000 sq m of GBA large Roda Center in Krusevac in August. In mid-2012, the construction works on the shopping center Vivo of 10,000 sq m in Jagodina commenced. Recently, several brands already have chosen Vivo, such as JYSK, NewYorker, Sport Vison, Lilly, etc. Throughout the previous years, the most active of all development sectors in Serbia was the retail park segment, a trend that will continued in the forthcoming period. In terms of future offer, Israeli investor IBC is planning to develop the tail park Power center in Zemun, whereby the first phase will include the development of 15,300 sq m, expected to be delivered in 2014. Slovenian company Toming targets Cacak to open its first retail scheme of 7,000 sq m, while Supernova intends to develop its first retail park in Zrenjanin, of 5,500 sq m. In addition, Poseidon Group and Yu Kapital are aiming to construct the first retail park in Sabac, Capitol Park, totaling 10,000 sq m, while Dayland Group plans to build Roses Designer Outlet Park in Stara Pazova, totaling 24,500 sq m. Yet, the completion dates of these projects are uncertain at the moment. HIGH STREET RETAIL After the slight slowdown in the demand for Belgrade high street units in the first months in 2012, the previous few months brought a positive trend in this market segment. The good value for money fashion brands have been among the markets strongest performers in 2012, offering quality products at more acceptable prices. The rental levels remained within the same price range during the whole year.

CHART 3: Prime yields Q4 2012 (%)

Source: CBS International, part of the CBRE Affiliate Network,

TABLE 2: Prime rents (EUR/sq m)

Location Size of units

150 sq m

Knez Mihailova Street Up to 100 40-60

Terazije Square/Kralja Milana Street/Kralja Aleksandra Blvrd

45-70 30-40

Secondary high street (Pozeska, Gospodska)

25-40 20-30

Modern Shopping Centres 50-70 15-60

Project Investor Location GLA (sq m)

Visnjicka Plaza Plaza

Centers Visnjica 42,000

Rajiceva Ashtrom Downtown 19,000

Skadarlija Key Stone Downtown 42,000

Delta Planet Delta Autokomanda 70,000

Ada Mall GTC Cukarica 30,000

IBC Power center IBC Zemun 28,000

Table 1: Selected retail schemes planned in Belgrade

7.5 8.0 8.5 9.5

Prime High street Secondary High street Shopping Centres Retail Warehouses

Source: CBS International, part of the CBRE Affiliate Network,

122

886

334

540

183

788

632

0

120

240

360

480

600

720

840

960

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Belgrade Bratislava Bucharest Budapest Sofia Warsaw Zagreb

stock

per

1,0

00 in

habi

tant

s

sq m

of G

LA

Shopping Center Stock in sq m Stock in sq m/1,000 inhabitants

CHART 2: Shopping centre per capita (end Q3 2012)

Source: CBS International, CBRE

H2 2012

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CONTACTS

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

Disclaimer

CBS International doo (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.

+ VISIT US

www.cbre.rs www.cbre.rs/properties/

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

Only in prime pedestrian zone Knez Mihajlova street, the market noted several transactions and new entrants, as of beginning of 2012, such as the entrance of New Look in Q1, Guess by Marciano in Q2, Italian shoes brand Cinti in Q3, Luna fashion, BOMAR watches and Vapiano restaurant chain. In addition, Dutch well-known brand Scotch & Soda is now available to the customers in recently opened store in Kralja Milana street, Fly London can be found in its store at Terzije Square, while a small-scale Chinese trade centre La Sorella of 1,400 sq m is also opened at Terazije Square. In addition, C&A opened its second store in Belgrade, in Delta City, the first Sketchers mono-brand store has been opened in Usce, while Greek men fashion brand Ivergano is available in Fashion Park Indjija.

BELGRADE RETAIL MarketView

CHART 4: The retail warehouse stock (sq m GBA)

Source: CBS International, part of the CBRE Affiliate Network

Definitions

Total Shopping center stock represents the stock of all modern centrally managed retail formats of minimum 5,000 sq m of GLA, including the types: Western-style shopping centers (retail schemes of minimum 20,000 sq m of GLA, with included

entertainment/food corner) Neighborhood malls (retail schemes of minimum 5,000 sq m of GLA, without entertainment

corner) Department stores (retail formats with various goods, organized into separate departments) Secondary SC schemes (centrally managed stand alone objects of minimum 5,000 sq m with

large share of hypermarket and retail gallery of minimum 10 retail units Retail parks (retail development usually situated out of town or in the suburban area of a town) Retail warehouse stock represents the stock of all stand-alone properties that hold more than 1,000 sq m (only these properties are considered as big box facilities).

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

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

sq m

Total Serbia (incl. Belgrade)

Belgrade

RETAIL WAREHOUSE The second half of 2012 recorded the openings of small-scale schemes in Serbia. German wholesale trade chain Metro Cash & Carry opened the store called Metro po meri of 2,000 sq m in Pozarevac, French Intermarche opened its second store in Belgrade Interex, at the corner of Ustanicka and Vojislava Ilica street, while Greek retail chain Veropoulos opened its fifth store in Belgrade, in Vozdovac area. The local company DIS will open the store at the location of Frech DIY chain Mr.Brickolage in Nis in April 2013. In terms of new entrants, German Lidl is looking for proper locations for their market positioning, planning to open several stores across the country. At the moment, Zrenjanin, Subotica, Novi Sad, Nis and Valjevo are listed as the possible locations. Also, French Carrefour actively searches for new locations to enter Serbian market.