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H2 2017

City Report

Zagreb City Report H2 2017COPYRIGHT © JONES LANG LASALLE IP, INC. 2018

According to Oxford Economics, the Croatian economy grew by 3.2% year-on-year in the third quarter of 2017, driven by consumption. The solid performance reflects another record season for tourism, rising real wages and an improving regional trade. These trends are likely to continue in 2018, and the country is set to grow faster than the EU average in the near term underpinned by the improved absorption of EU funds.

Following debt refinancing problems, the biggest company in the region Agrokor, was put under state management in April and its restructuring plan could increase the vulnerability of the banking sector and weaken confidence. However, the tourism season appears to have been stronger than the record 2016 season. Tourist arrivals were up over 12% year-on-year in the period from January to September. Given extensive investment in hotel capacity, services export volumes are forecast to rise 3% in 2018.The government has made an important step in the country’s euro-entry plan, by setting a target of 2020 to join the exchange rate mechanism, where it will stay for two years to show the required currency stability before formally adopting the euro.

Economy

Unemployment rate,December 2017,

Croatia

GDP Growth, Q3 2017 y-o-y

Net Salary September 2017, Zagreb

Inflation, December 2017 y-o-y

Retail Sales, November 2017 y-o-y,

Croatia

Industrial production, December 2017 y-o-y,

Croatia

3.2% 1.2% 12.2%

€935 5.7% -2.5%€


Prime Yields

Notable Recent Investment Transactions

IndustrialShopping Centre Office

7.25% 8.25% 9.25%

Sector Property Location Seller Buyer

RetailGarden Mall, retail parks Koprivnica and Sisak, Požega land

Various cities Heta Asset Resolution Supernova

Retail Centar Cvjetni Zagreb HOTO group Supernova

Retail Branimir and Kaptol Centar Zagreb UniCredit Bank Supernova

Retail King Cross ZagrebAberdeen Asset Management

Spar European Shopping Centres

Office Mani Business Center Zagreb Mani d.o.o M7 Real Estate

The appeal of the Croatian market was confirmed by numerous transactions throughout 2017. The majority of transactions involved retail assets, however a few transactions in both the office and industrial segment were also noted, making Croatia one of the most active markets in the SEE region during the past year.

Retail parks and shopping centers were subject to one of the largest expansions on the market by Supernova, which purchased retail centres in Koprivnica, Sisak and Požega - in project stage, as well as Garden Mall, Cvjetni, Branimir and Kaptol Centar shopping centres in Zagreb, making it the leading company in Croatia in terms of retail space. In addition, King Cross shopping centre in Zagreb was purchased by Spar European Shopping Centers. Within the office segment, M7 Real Estate acquired Mani Business Center, spread over 13,900 sq m, located in the Buzin area of Zagreb while the industrial segment was marked by the acquisition of Magma logistics centre in Jastrebarsko.

Source: JLL, 2018


Zagreb office stock and supply (sq m)

Office completions in 2017 • Increase in construction activity in the first half of 2017 with the delivery of two schemes – VMD Kuniščak and Fabrika in Zagreb

• Slowdown in the second half of the year

• New projects on the horizon

• Market activity was driven by relocations and new occupation

• The most active sectors have been manufacturing, IT, consumer goods and pharmaceuticals

Property Location Size (sq m)

VMD Kuniščak Črnomerec 10,000

Fabrika Trešnjevka 6,500

Source: JLL, 2018

Source: JLL, 2018

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1,000,000

1,050,000

1,100,000

1,150,000

1,200,000

1,250,000

1,300,000

1,350,000

1,400,000

2010 2011 2012 2013 2014 2015 2016 2017

Stock Supply


Vacancy rate in Zagreb

Prime rental levels (€/sq m/month)Future office projects

Project Location Description

Centar 2000 phase D3Radnička

StreetHotel and Office

Crystal Tower Ilica StreetResidential,

Commercial and Hotel

Euro DausRadnička

StreetSports, Office,

technical facility

HOKRadnička

StreetOffice and Hotel

MatrixSlavonska

StreetOffice

€14 - € 15

Source: JLL, 2018

Source: JLL, 2018

0%

5%

10%

15%

20%

25%

2010 2011 2012 2013 2014 2015 2016 2017


Shopping centre evolution in Zagreb (sq m)

Prime Shopping centre density in Zagreb

500 sq mPer 1,000 inhabitants

• No new shopping centres delivered in Zagreb throughout 2017

• Importanne Galleria in Zagreb reopened as Galleria Business Centre

• Increased activity noted in secondary cities

• Marisa shopping centre opened in Trogir

• Mercator Split reopened as Salona Mall

• Construction of IKEA’s Designer Outlet Croatia in Zagreb in progress

• Arena Centar in Zagreb announced its expansion

• The city of Zagreb announced the construction of an open market place

• Existing supermarket chains continue to expand on the market

Source: JLL, 2018

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2009 2010 2011 2012 2013 2014 2015 2016 2017

Shopping centre stock New supply


Future retail schemes in Croatia

Demand Rental levels (€/sq m/month)

Shopping centres

€20 - €22

High street

€60 - €70

Property Location Size (sq m) Completion year

Designer Outlet Centre 1st phase Rugvica 15,000 2018

Max Stoja Pula 30,000 2018

Supernova Požega 18,000 2018

• Existing retailers continue with their expansion plans

• American fast food chain Subway re-entered the market and opened a restaurant in Zagreb

Market entrants in 2017

Source: JLL, 2018

Source: JLL, 2018

Location City Brand

Arena centar Zagreb Subway

Point shopping centre / Supernova Buzin

Zagreb Pepco

Frankopanska Street ZagrebHeraldi for Women

Supernova Garden Mall/ Supernova Buzin

Zagreb TEDi


Recent completion

Industrial stock (‘000 sq m)

Scheme Type Size (sq m) Location

Heineken

WarehouseWarehouse 5,200 Karlovac

• Low construction activity noted in 2017

• Heineken Croatia opened a new warehouse in Karlovac

• Industrial market growth driven by the growth of the retail industry

• Lack of speculative projects pushes the construction of industrial schemes intended for owner occupied purposes

Source: JLL, 2018

Source: JLL, 2018

-

200

400

600

800

1,000

1,200

2010 2011 2012 2013 2014 2015 2016 2017


Future industrial projects

Industrial production index Prime rents (€/sq m/month)

H2 2017

€5

• Market activity predominantly driven by the retail, manufacturing and shipping sectors

• Number of schemes on the market insufficient to meet growing demand

• Shortage of speculative schemes caused low vacancy levels

Source: Statistical Office of the Republic of Croatia, 2018

Project Type Location

Croatian Post Distribution centre/ administrative building Velika Gorica

Source: JLL, 2018

0%

20%

40%

60%

80%

100%

120%

Jan

-14

Ap

r-1

4

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5

Jul-

15

Oct

-15

Jan

-16

Ap

r-1

6

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7

Jul-

17

Oct

-17

www.jll.rs

© 2018 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.

Jana GolubovićSenior Research Analyst - SEE

+381 11 785 [email protected]

Andrew PeirsonManaging Director - SEE


Tomislav GregurićManaging Director


Contacts

city report - renova nekretnine doorenova.hr/pdf/zagreb_city_report_h2_2017.pdf · • onstruction...

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