Market Overview H Slovenia

Transcription

1 MARKET OVERVIEW Slovenia H1 218

2 Market Overview H1 218 Slovenia RECENT TRENDS > Slovenian economy is showing signs of slowing down but real estate market is not losing momentum, especially in Ljubljana. > In Ljubljana, office market is in the focus. Buildings with high occupancy and long-term agreements prove to be attractive to investors. > Investment market has seen most of the activity from local players already present on the market. > Across Slovenia industrial market is very active but mostly related to bankruptcy and liquidation procedures. Economic Overview 3 Office Market 4 Retail Market 5 Industrial / Logistics Market 6 HTL Market 7 Investment Overview 8 Our Services 9 MARKET PROGNOSIS > Economic growth is set to continue in 218 and 219 but at more moderate pace than in 217. > New schemes are expected in retail and industrial segment. Office and hotel market lack new developments and activity is expected to come from brownfield investments. > Several real estate transactions are pending and investment volumes in H2 218 will increase in comparison to the first half of the year. Market Overview H1 218 Slovenia Colliers International 2

3 Economic Overview SUMMARY AND PROGNOSIS The economy experineced slowdown during the first half of the 218. Seasonally adjusted GDP increased by.6% over the previous quarter in Q1 and.8% in Q2 following four consecutive quarters of over 1% growth in % 5% 4% Economic Growth (GDP) GDP growth rates Seasonally adjusted data Changes on the same quarter of the previous year Q3 Q4 Q1 Q2 4.8% 6.2% 4.9% 4.3% Source: SURS 3% 2% 1% % In Q2 218 domestic expenditure increased by 2.3% whilst the final consumption expenditure grew by 2.2%. Imports grew slower than exports. Imports increased by 8.3%, while exports increased by 9.3%. Higher growth of imports than exports resulted in somewhat lower external trade balance. In H1 218 the consumer prices went up by 2.%, increase from 1.7% in the same period last year. Inflation reached its highest level since 212. The largest upward impact on annual inflation came from higher energy prices. Unemployment rate in Q2 218 decreased to 5.2% from 5.9% in Q1. Compared to Q2 217, unemployment rate fell by 1.4 percentage points (from 6.4%) and the number of employed persons increased by 29,. 5% 4% 3% 2% 1% % Private Consumption 1,8 1,6 1,4 1,2 Average monthly earnings ( ) 3% 2% 1% % Inflation 1, -1% H1 Net wage Gross wage Economic growth is set to continue in 218 and 219 but at a more moderate pace than in 217. Growth will be supported by private consumption while domestic demand and export are expected to slow down. Key Macroeconomic Indicators F 219F GDP 3.1% 4.9% 4.4% 3.4% Inflation (HICP) -.2% 1.6% 1.9% 2.% Private Consumption 4.% 1.9% 3.1% 3.3% Industrial Production 7.8% 8.3% 6.4% 5.% Unemployment 8.% 6.6% 5.6% 5.2% Source: Colliers International on Focus Economics 12% 1% 8% 6% 4% 2% % Unemployment Source: Colliers International on FocusEconomics Market Overview H1 218 Slovenia Colliers International 3

4 Office Market SUPPLY The majority of Slovenian office stock is located in Ljubljana where almost all foreign and domestic companies present on the Slovenian market have their headquarters. Total office stock in Ljubljana is around 1 million m² and consists of only a small number of high quality office premises. The majority of the current office stock is outdated and does not satisfy the requirements of international companies who are looking for modern office buildings. No substantial office schemes were delivered to the market in the last few years and the pipeline lacks quality projects. DEMAND Key office figures H1 218 Ljubljana Vacancy 15-2% Prime Monthly Rent /m² Class A Monthly Rent /m² Class B and C Monthly Rent /m² Average Office Monthly Rents in Slovenia Maribor /m² Celje /m² Kranj /m² Koper 8.-9./m² Demand was driven by relocations by companies already present on the market, as well as companies currently occupying lower standard offices. Most of the demand comes from companies operating in ICT, professional services and pharmaceutical sector. In H1 218 the total take-up amounted to approx. 45,5 m², while the total leased office area decreased for 4% over the same period year before as a result of low supply. RENTS AND VACANCY RATE The prime headline monthly rent in Ljubljana is currently in the range of /m. An average rent in competitive stock is stable and stands between /m²/month for class A premises and between /m²/month for the class B and C premises. Ljubljana office market shows that the monthly rents signed for the newer office stock average 11.5/m²/month for the buildings built in the last 7 years and average 1./m²/month for the buildings older than 1 years. Average vacancy rate for Ljubljana office market has continued decreasing because of improved demand and lack of new supply. The average vacancy rate is between 15% and 2%. A-class buildings have above 9% occupancy while the outdated buildings in secondary locations have high vacancy rate which affects the overall market s average. PIPELINE > Office building in Stegne district is the only significant office scheme currently under construction in Ljubljana and is expected to be finished in February 219. It will have around 6,6 m² of gross leasable area. Investor is Golden Palace d.o.o. > ILAG Tivoli acquired plot for Tivoli Development from Greenbay Properties in March 218. Luxurious mixed-use development worth 7m should also comprise 3,85 m² of A-class offices. Start of construction is still pending. 2, 15, 1, 5, 25, 2, 15, 1, 5, Ljubljana office take-up (m²) H1 Source: Colliers International on Trgoskop Floor area of new office construction in Slovenia (m²) Completed Issued permit Office building in Stegne Source: tosidos.si Market Overview H1 218 Slovenia Colliers International 4

5 in billions EUR Retail Market SUPPLY AND DEMAND Slovenian retail market is close to saturation, especially in Ljubljana but there are still opportunities for retailers expansion in secondary and tertiary cities. Ljubljana shopping centre stock comprises of four shopping malls / retail parks totalling 272, m². Majority of Ljubljana retail stock (around 6%) is located in BTC. Ljubljana s high-street, Čopova, also holds important part of retail offering. Currently, there are two substantial retail schemes under construction in Ljubljana; Spar shopping centre in Šiška (SES) and Ikea in BTC. They will deliver 66, m² of new retail space to the market. Petrol, leading Slovenian energy company, is expanding to retail business. First five Petrol HopIN stores which are not part of filling station opened in Ljubljana, Celje, Kranj and Maribor. Stores are located in city centres and offer consumer goods. RENTS AND VACANCY RATE The average rents in shopping malls and retail parks are stable and no significant changes were recorded in comparison with previous year. We expect it to remain stable or slightly increase in prime locations. Weighted average rent in shopping malls and retail parks ranges from 8.5 to 15. per square metre per month. Rents on high street depend on the micro location and the size of the premise. In Čopova Street in Ljubljana monthly rents range from 2/m² to 8/m. For retail parks in Slovenia, the average vacancy rate stands at 4.% while in shopping malls it is slightly higher at approximately 5.%. Locations and sizes can play a large role in the vacancy rate; therefore the vacancy rate can vary between centres. Shopping centres in Ljubljana have on average above 9% occupancy. PIPELINE Key retail figures H1 218 Ljubljana Total Shopping Centre Stock 272, m² Average SC Monthly Rent Average High Street Monthly Rent Average SC Monthly Rents in Slovenia Maribor Kranj Koper Novo Mesto /m² 35./m² 1./m² 15./m² 1./m² 13./m² Source: Colliers International on Trgoskop Turnover from the sale of goods by commodity group in retail trade Motor vehicles Fuels Non-food products Food, beverages and tobacco > SES Spar European Shopping Centers is developing new shopping centre in the city district of Šiška in Ljubljana. 9 shops, restaurants and service providers are planned on 32, m² of leasable area and accompanied by 1,6 parking places. Gastro component will have share of 1%. Opening is scheduled for Q > Swedish furniture giant IKEA is planning to invest close to 1m in its first store in Slovenia in BTC, Ljubljana. A 34, m² store will be built on an 84, m² plot. The terrain has been cleared but the construction is on hold while the road access problem resolves. Development will take one year and opening is expected in 22. > The unfinished commercial section of the Stožice (sports and commercial complex) was acquired by businessman Izet Rastoder in August 217 for 15m. The sports facilities were built and opened in 21, while the commercial part of the complex was never completed. The shopping and entertainment centre is supposed to have around 5, m² GLA but the project is still pending Shopping centre and retail parks stock Total stock (' m²) Stock per capita (m²/capita) Source: Colliers International Market Overview H1 218 Slovenia Colliers International 5

6 Industrial and Logistics Market SUPPLY AND DEMAND Slovenia has excellent geographical position but industrial and logistics sector remains the least developed real estate sector in Slovenia. It is characterized by small scale, outdated properties. Around 7% of the existing modern logistics and industrial properties in Slovenia are owner occupied and build-to-suit warehouse facilities. Large proportion of warehouses, located in business zones, are outdated and do not meet the requirements of modern logistics practice. Main industrial centres are Ljubljana, Koper and Novo Mesto. Novartis completed its pharmaceutical logistics centre in Brnik near airport (2 km north from Ljubljana). It is the biggest Novartis distribution centre in Europe and complex has total of 9, m² (4, m² are warehouses). Building is waiting for the usage permit and it is expected to start operating in September 218. The investment was 5m. Demand is driven mostly by international companies requiring large, modern properties which are scarce. Occupiers seeking expansion are confronted by shortage of suitable space. Thus, currently there is a lot of new stock under construction in industrial and logistics sector. RENTS AND VACANCY RATE Average rents across Slovenia are at stable levels. Rents for industrial and logistics space in Ljubljana range between 3.5 and 7.5/m²/month depending on exact location, size and quality. Vacancy rates on Slovenian modern industrial warehouse market are estimated at very low levels due to the lack of larger available surfaces. Current market vacancy rate stands below 1%. Majority of new pipeline will be owner-occupied properties. Nevertheless, we expect increase of vacancy in outdated industrial and logistics centres Key industrial and logistics figures H1 218 Slovenia Vacancy <1% Prime Headline Monthly Rent Secondary Monthly Rent Average monthly rent per m² /m² /m² Ljubljana Koper Kranj Maribor Celje Source: Colliers International on Trgoskop Indices of industrial production (Ø 215 = 1) PIPELINE > Magna Steyr, one of the world s largest auto parts manufacturers will open factory in Hoče-Slivnica near Maribor. Total investment in the project is estimated at 45m. First phase is expected to be finished soon and test production should start in January 219. > Lidl Slovenia is building 57, m² logistics centre near Celje on 13 ha plot. It will be one of the largest logistic centres in Slovenia. Development value is 7 m and opening is planned by the end of 219. > Mercator logistics centre will be built in BTC and, although delayed, project finalisation is announced for 22. Investment is estimated at 1m. Complete with offices, the centre will comprise approximately 88, m². > Austrian logistics company Cargo-partner started development of distribution centre in Brnik on 52, m² land plot. Modern logistics centre will service central and southwest Europe. It will have 25, m² of warehouse and 4, m² office areas. Announced investment is 25m and development started in August , 2, 15, 1, 5, Floor area of new industrial construction in Slovenia (m²) Completed Issued permit Market Overview H1 218 Slovenia Colliers International 6

7 HTL Market SUMMARY Following a record year, in H1 218 Slovenia continued with strong growth with 15.9% increase in tourist arrivals and 18.% in overnights compared to same period in 217. According to Statistical Office of the Republic of Slovenia (SURS), more than 2.2 million tourist arrivals and almost 5.7 million overnight stays were recorded. Strongest destinations were Kranjska Gora (mainly because of the skiing season), Ljubljana and Piran. Almost 7% of overnights were generated by foreign tourists while key markets still remain Italy, Austria and Germany. Tourist arrivals and overnights (in mln) Arrivals Overnights Key markets in H1 218 By arrivals By overnights Italy 14.3% Italy 12.5% Austria 1.4% Austria 11.3% Germany 9.7% Germany 1.9% Croatia 6.9% Croatia 7.% Korea (Republic of) 4.5% Serbia 4.7% Majority of hotel accommodation in Slovenia is 3-star and 4-star category and less than 5% hotels have 5-star category. According to Eurostat, occupancy of hotels in Slovenia in 217 was around 55%. In January 218 AccorHotels group opened two hotels in Maribor under the brands Mercure (4-star) and ibis Styles (3-star). The investment in renovation totalled around 6,. Total hotel accommodation capacity in Slovenia increases slowly, on average by 1% per year, whilst market lacks high quality hotel properties Tourist overnights in 217 (in millions) Share of accomodation units per accomodation type in 217 Hotels Demand comes from international brands looking to expand into Slovenia, especially through brownfield investments. 28% 42% Camping sites PIPELINE > Zlatarne Celje are planning is to invest 4m into a 4* hotel Atower with 18 rooms in Slovenska cesta near Ljubljana city centre. Hotel should be finished in % 17% Private accommodation Other > Modern 3* city hotel with 151 rooms will be developed near Congress Square in Ljubljana. Hotel will be a part of mixed-use complex Šumi. The construction is expected to start this autumn and the planned cost of this construction is around 35m. PROGNOSIS In 217 total contribution of tourism to GDP was 11.9% and it is forecasted that it will reach share of 14.5% by 228. We do not expect significant increase of overall supply since relatively low occupancy shows that there is room for improvement within the existing stock. Main issue on the hotel market is seasonality and the potential lies in improving quality of existing hotels and their offer. Mercure Maribor City Center Source: Market Overview H1 218 Slovenia Colliers International 7

8 Investment Overview SUMMARY Office sector in Ljubljana is in the focus of the investors, especially properties with high occupancy and long-term agreements. Across Slovenia, industrial sector recorded the highest transactional volumes in H1 218, although most of the properties are old outdated complexes. The strongest demand is expected to continue in office. Investors are looking for income-generating properties and many opportunities still arise from distressed properties market, especially in industrial sector. Tourism growth could shift investors focus to hotel properties in coastal Slovenia and Ljubljana. TOP TRANSACTIONS OFFICE > KD Group bought Tivoli Center from VB nepremičnin for 13m ( 1,625/m²). Property has 8, m² of leasable area and 135 parking places. Occupancy stands at 97%. > Office building in Miklošičeva 12 was sold at public auction for 5.2m ( 1,185/m²). Property has 4,387 m² of NLA and it is currently leased by Ljubljana District Court. > Durs Kranj was sold for 5.9m ( 1,7/m²). Leasable area of 5,5 m² is occupied by FURS (Financial administration of the Republic of Slovenia). HOTEL > Hotel Elizabeta in Lendava was sold at auction for.5m. Buyer Sicom Invest renovated hotel and reopened it as 3* Hotel Cubis with 24 keys. INDUSTRIAL > Old industrial complex in Bežigrad, Ljubljana, was sold for 3.7m. Complex was built in 1965 and has GLA of 11,9 m². DEVELOPMENT LAND > Land with building permit for residential development in Zelena Jama, Ljubljana, was acquired by Kostak development company. Plot of 12,687 m² was bought for 4.1m ( 326/m²). Total of 34 apartments are planned in two phases. First phase with 12 units should be finished in 22. > Tivoli Development (9,932 m²) near Ljubljana city center was acquired by Turnauer family (ILAG Tivoli) from Greenbay Properties for 16.2m ( 1,631/m²). Site has planning permission for 127 apartments and multifunctional cultural hall. OTHER > Garage parking house Šentpeter in Ljubljana with 472 parking places was bought by Pokojninska družba from Jože Anderlič. Transactional price was 14.5m or 3,5 per parking place Yields Slovenia Prime Office Yields 8.% Prime Retail Yields 8.% Ljubljana High-street Yields 5.5% *Yield is calculated as NOI/Price excluding taxes and transaction costs Real estate sales volume in Slovenia Value of transactions (in billion EUR) Number of transactions (in thousands) Source: Report on the Slovenian Real Property Market Share in overall value of transactions in Slovenia in commercial real estate per main market segments, H % 14% 26% 19% Office Retail Industrial Tourism Source: Colliers International on Trgoskop Market Overview H1 218 Slovenia Colliers International 8

9 Our services SUMMARY Colliers International Group Inc. (NASDAQ:CIGI, TSX:CIGI) is an industry-leading global real estate services company with more than 15,4 skilled professionals operating in 69 countries. Colliers International provides specialised services to owners and occupiers on a local, regional, national and international basis. The foundation of our service is the strength and depth of our specialists. Our clients depend on our ability to draw on years of direct experience in their local market. Our professionals know their communities and the industry inside out. Whether you are a local firm or a global organization, we provide creative solutions for all your real estate needs. LANDLORD REPRESENTATION VALUATION & ADVISORY TENANT REPRESENTATION REAL ESTATE MANAGEMENT COLLIERS SERVICES CORPORATE SOLUTIONS PROJECT MANAGEMENT TECHNICAL DUE DILIGENCE WORKPLACE SOLUTIONS Market Overview H1 218 Slovenia Colliers International 9

10 w 413 offices in 69 countries on 6 continents United States: 145 Canada: 28 Latin America: 23 Asia Pacific: 86 EMEA: billion in annual revenue 13 billion completed transactions in million square meters under management 15,4 professionals and staff COLLIERS INTERNATIONAL CROATIA, SLOVENIA AND BOSNIA AND HERZEGOVINA Petrinjska 3, Zagreb croatia@colliers.com Colliers International Croatia AUTHOR: Petra Mann, Valuer petra.mann@colliers.com Investment, Valuation and Advisory Services About Colliers International Group Inc. Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 15,4 skilled professionals operating in 69 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 1 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 11 consecutive years, more than any other real estate services firm. Copyright 218 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. 1 Research and forecast report 217 Slovenia Colliers International