In Q3 2023, real GDP growth stood at 3.6% year-onyear, and expectations for the entire year of 2023 is 2.5%. The projected GDP growth for 2024 ranges from 3% to 4%, with a medium-term expectation of returning to pre-crisis growth rates of 4% annually. Inflation returned to a single-digit level in October and further reduced to 7.6% year-on-year in December.
Offices
The fourth quarter of 2023 saw robust demand, resulting in approximately 64,000 sqm being recorded through 83 transactions. 2023 annual take-up surpassed 220,000 sqm, which represents a decrease of 4% compared to 2022. Nearly 60,000 sqm of new space is projected to be finalized in 2024, followed by an additional 120,000 sqm later on. As a result of strong demand, the overall vacancy rate declined to 7.25% at the year end, with the vacancy rate for Class A at 6.09%. Prime office yields now range between 8.25% - 8.75%, while the average asking rental values for Class A buildings stood between €15.5-17.5/sqm/month in Q4.
Retail
The retail market in Belgrade is currently undergoing rather limited development activity, marked by the construction of only two retail parks. This construction will result in a 40,000 sqm increase in the retail supply in 2024. The absence of new completions in Q4 2023 has kept the modern retail stock in Belgrade at the same level, maintaining a total of 580,000 sq m of GLA. The prominent shopping centres in Belgrade have maintained stable average rent levels throughout 2023, ranging from €23 - 28/sqm/month. The prime rents for the most appealing schemes have remained in the range of €48 - 50/sqm/month. In the Retail Parks segment, prime rents have remained steady in 2023, ranging from €8.5-12.0/sqm/month. Yields for premium Shopping Centres have contracted to the range of 8.00-8.50%, while Retail Park yields are in the range of 8.25-9.00%, while Retail Warehouse/Big Box format yields are in the range of 8.50-9.00%.
Industrial
While there has been progress in Serbia's industrial sector, the market still lags in terms of the modern offer designed for speculative purposes - most existing facilities are constructed either to suit the preferences of the property owner or are built to cater to specific tenant needs. In terms of the demand, new leases (excluding owner-occupation deals) in 2023 in Belgrade industrial zones amount to 200,000 sqm, representing a decrease of 7% compared to 2022. Rents of modern logistics space in Belgrade and neighbouring industrial zones remained stable in 2023, in the range of EUR 4.0-5.5/sq m/month. The vacancy rate in the wider Belgrade industrial area stands below 5%. Prime yields for modern logistics facilities (prime assets with blue chip tenants) in the Belgrade industrial zone stand at 8.25-9.00%, while modern production complexes command yields of 8.50-9.50%.