4.5% 1.4% 14.3% Inflation March 2018 y-o-y. Retail Sales, March 2018 y-o-y

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1 City Report Q1 2018

2 4.5% 1.4% 14.3% GDP Growth Q y-o-y Inflation March 2018 y-o-y Unemployment rate Q4 2017, Belgrade % 4.1% Net Salary February 2018, Belgrade Retail Sales, March 2018 y-o-y Industrial production, March 2018 y-o-y Economy According to Oxford Economics, GDP growth slowed to an estimated 1.9% in 2017 due to subdued EU/Russian export markets and fiscal restraint aimed at lasting deficit and inflation reduction. Progress with these reforms and an agricultural rebound after last year s weather issues, have created conditions for a recovery to 2.7% growth in 2018 and then about 3% in the period between 2019 and Growth is set to be more stable in the forecasted period, with the reduced budget deficit helping to improve the trade balance and keep the current account deficit small enough to be financed by FDI and remittances, ensuring a more stable exchange rate that further tightens control over inflation. Lower inflation can allow a continued decline in interest rates, sustaining the growth of investment, which will drive medium term growth along with rising exports and recovering household expenditure as real incomes slowly rise.

3 Prime Yields 8.00% 8.50% 9.75% Shopping Centre Office Industrial Stable economic growth, government reforms and other incentives have secured a stable influx of investments in Belgrade s real estate market. The appeal of the market has been confirmed by the continuous expansion of investors already present on the market. Such an example is the acquisition of Mercator Center, one of Belgrade s modern shopping centers, by well-known local investor MPC Properties in the first quarter of Previously, during 2017, international investor GTC acquired Belgrade Business Center, one of the city s modern office buildings located in the central business district. With this acquisition, GTC s portfolio in Belgrade totals nearly 100,000 sq m of Class A office stock. 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 Class A Stock Class B Stock Previous office completions 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 large-scale office completions in the first quarter of 2018 More active period expected ahead with several projects in the pipeline Most active submarket remains to be New Belgrade with increasing activity recorded in the city center Secondary cities, particularly Novi Sad, note higher levels of construction activity Market activity was dominated by net take-up, driven mostly by relocations in New Belgrade The most active sector was IT, followed by the construction industry

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 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, Q Prime Shopping centre density in Belgrade Latest retail deliveries in Serbia 105 sq m Per 1,000 inhabitants Property Type Size (sq m) City Stop Shop Retail Park 7,200 Požarevac Stop Shop Retail Park 8,200 Vršac

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) Several brands are interested in entering the market Retailers present on the market remain active Retailer activity in Q Location Brand Zemun Park, NEST Kraljevo Maxi Supermarket Novi Pazar, Aviv Park Zvezdara Stadion Voždovac Nefa Furniture Meli Melo, Women Secret Shopping centres High street Ušće Shopping Center Gagliardi Big Fashion Tehnomanija Capitol Park Sombor Intersport Vivo Shopping Park Jagodina LC Waikiki Capitol Park Šabac H&M

8 Recent completions Scheme Type Location Yumco Light industrial Bujanovac BizLink Light industrial Prokuplje Agromarket Distribution warehouse Inđija Prva petoletka-namenska Light industrial Trstenik Leoni Light industrial Niš Industrial stock (sq m) 292, ,000 Construction activity in the first quarter of 2018 was mostly focused within secondary cities Numerous new projects and project expansions to be completed in secondary cities Several speculative schemes in the pipeline for the Greater Belgrade region Local municipalities continue to invest in infrastructure and offer incentives Belgrade Greater Belgrade

9 Future projects Project Type Location Mei Ta Light industrial Obrenovac Yura Light industrial Leskovac Albon Light industrial Ruma Leoni Light industrial Kraljevo Essex Europe Light industrial Zrenjanin ZF Friedrichshafen Light industrial Pančevo Vorwerk Autotec Light industrial Čačak Caminada Light industrial Subotica Tai Group Light industrial Kraljevo LogMax Beta Distribution warehouse Stara Pazova Industrial Park Belgrade 4 Distribution warehouse Šimanovci Several leasing transactions and acquisitions have been recorded on the market Demand in the first quarter of 2018 was mostly driven by the automotive sector Industrial production index 106% 104% Prime rents ( /sq m/month) Q % 100% 98% 96% 94% 92% Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb Source: Statistical Office of the Republic of Serbia, 2018

10 Contacts Jana Golubović Senior Research Analyst - SEE jana.golubovic@eu.jll.com Vesna Kićović Research Analyst - SEE vesna.kicovic@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.