2.1% 3.0% 12.9% Inflation December 2017 y-o-y. Retail Sales, November 2017 y-o-y

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1 City Report Q4 2017

2 2.1% 3.0% 12.9% GDP Growth Q y-o-y Inflation December 2017 y-o-y Unemployment rate Q3 2017, Belgrade % 5.5% Net Salary November 2017, Belgrade Retail Sales, November 2017 y-o-y Industrial production, November 2017 y-o-y Economy According to the Serbian Statistical Office, GDP grew by 2.1% in the third quarter of 2017, compared to the same period in Furthermore, according to Oxford Economics, the pace is set to rise towards 3% in the following years, as investment and exports drive output growth and infrastructural improvement. Progress towards a lower budget deficit gives more room for public investment in private and public capital spending. Improvement in credit ratings, financial stability and inflation control have made Serbia the fastest overall climber in World Economic Forum competitiveness rankings for the second successive year. In the World Bank s Doing Business list for 2018, Serbia ranks at 43 rd place on the ease of doing business compared to 47 th in last years report. Additionally, in late 2017, Credit rating agencies Fitch and S&P have increased the credit rating of the country to BB level, with a stable outlook for improving credit rating. Ratings are set to improve towards 2020 as progress on EU reform becomes more tangible.

3 Prime Yields 8.00% 8.50% 9.75% Shopping Centre Office Industrial Throughout 2017, the Serbian real estate market remained active. This has been supported with continual government reforms, improving market fundamentals as well as the high development activity noted in the previous 12 months. The existing developers on the market continued to expand their portfolios, yet new investors have been active as well. In the second half of the year, one of Belgrade s modern office buildings, Belgrade Business Centre, was acquired by GTC. The building is located in New Belgrade which has grown into the city s Central Business District. In addition, well known local investor MPC Properties continued the expansion of its portfolio and purchased one of the modern shopping centres in the capital, namely Mercator Centre. Recent Investment Transaction Sector Property City Seller Buyer Office Belgrade Business Center Belgrade Centrice Real Estate Gmbh Global Trade Centers (GTC) Retail Mercator Centre Belgrade Mercator MPC Properties

4 Office stock in Belgrade (sq m) 800, , , , , , , , Q Q Q Q Class A Stock Class B Stock Office completions in 2017 Property Submarket Size (sq m) Sirius offices phase 1 New Belgrade 14,500 N House phase 1 New Belgrade 5,800 Atrijum 63 New Belgrade 5,000 GTC Fortyone 3 rd phase New Belgrade 10,000 No new office completions in the fourth quarter of 2017 The total office stock increased by 6% in 2017 The first three quarters of the year recorded more activity with several office building delivered Construction activity to increase in the following period with several new projects announced NCR announced construction of its campus in New Belgrade Market activity was dominated by net take-up, mainly including relocations and expansions in New Belgrade The most active sector was IT, followed by the professional services and consumer goods sectors

5 Vacancy rate based on office building class 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Q Q Q Q Q Q Q Q Q Total vacancy rate Class A vacancy rate Class B vacancy rate Future office projects Prime rental levels ( /sq m/month) Project Size (sq m) Status Green Heart *46,000 Business Garden 16,000 Ziegel House 5,000 Under construction Under construction Under Construction Usce Tower 2 22,000 Planned Skyline Belgrade 30,000 Planned Navigator Business centre 2 Sirius Offices 2nd phase 27,000 Planned 10,000 Planned (*whole project size)

6 Modern shopping centre stock in Belgrade (sq m) 200, , , , , ,000 80,000 60,000 40,000 20, Prime Shopping centre density in Belgrade Retail deliveries in Serbia in 2017 Property Type Size (sq m) City 105 sq m Per 1,000 inhabitants Rajićeva shopping centar Capitol Park Rakovica Stop Shop Lazarevac Capitol Park Sombor Shoppi Smederevo Big Fashion Shopping centre 15,300 Belgrade Retail Park 21,000 Belgrade Retail Park 10,000 Belgrade Retail Park 5,600 Sombor Retail Park 9,200 Smederevo Shopping centre 32,300 Belgrade IKEA Big Box 30,000 Belgrade NEST Retail Park 5,000 Kraljevo

7 Future shopping centres in Belgrade Property Format Size (sq m) Completion year Ada Mall Shopping centre 34, Big Fashion Vidikovac Shopping centre 65, BW Galerija Shopping centre 93, Demand Rental levels ( /sq m/month) Increasing number of new retailers on the market KFC opened the first drive thru unit in Belgrade Major market entrants 2017 Location Brand Rajićeva shopping centre The Athlete s Foot, Lego Shop, Stokke, Armani Exchange, Miamaya Delta City Mango Man Shopping centres High street Ušće Shopping Center Under Armour Big Fashion Reserved, Funky Buddha, Tezenis Knez Mihailova Superdry, WYCON

8 Recent completions Property Type Location LIDL Distribution Warehouse Nova Pazova IPB phase 3 Distribution Warehouse Šimanovci CG Foods Europe Light industrial Ruma Industrial stock (sq m) 292, ,000 Higher levels of construction activity were recorded in the fourth quarter, mainly focused in the secondary cities and Vojvodina province Further activity noted in the Greater Belgrade area IPB finished construction of its third phase in Šimanovci LIDL delivered its distribution centre in Nova Pazova Construction activity will remain high with various announced and ongoing projects Belgrade Greater Belgrade

9 Future projects Project Type Location Zumtobel Light industrial Niš Tetra Pak Distribution warehouse Gornji Milanovac Healthcare Europe Light industrial Ruma Delphi Light industrial Leskovac Eyemaxx - LogMax Beta Distribution warehouse Stara Pazova Industrial Park Belgrade 4 Distribution warehouse Šimanovci Belgrade was chosen as the seat of the Transport Community of the Western Balkans The further expansion of the retail and logistics sectors will remain the main drivers of market expansion, which will further support the development of speculative schemes. Industrial production index 120% 100% Prime rents ( /sq m/month) Q % 60% 40% 20% 0% Source: Statistical Office of the Republic of Serbia,

10 Contacts Jana Golubović Senior Research Analyst - SEE jana.golubovic@eu.jll.com Andrew Peirson Managing Director - SEE andrew.peirson@eu.jll.com 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.