Bosnia-Herzegovina Real Estate Report

Published 25 November 2014

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Bosnia-Herzegovina Real Estate Report

BMI View: The   outcome of October 2014's general election is likely to have done little to ease investors' fears surrounding the stability of the Bosnia-Herzegovina commercial real estate sector.   The country currently ranks bottom of BMI's Central and Eastern Europe Risk/Reward Index,   while economic growth has been largely stagnant over recent quarters. That said, we maintain that the real estate sector holds   long-term potential for foreign investors.  

The year 2014 has been difficult for the Bosnia-Herzegovina commercial real estate sector as a number of economic and political headwinds contrived to dent the country's already fragile reputation. First, severe flooding experienced during the middle of the year weighed heavily on output from the country's agricultural and industrial sectors. Added, to this, slowing growth in the country's main export markets including Germany, Italy, Croatia and Serbia, during the second half of the year placed further pressure on an already struggling Bosnian economy. Taking these factors into account, our Country Risk team estimate GDP growth to have been a slower-than-expected 0.2% in 2014, dashing expectations of an acceleration from 2013 levels.

Furthermore, it was hoped that the October 2014 general elections would bring some much-needed relief to the ongoing political tensions that have plagued the country over the past few years. As it stands, the country's political future hangs in the balance with a prolonged period of coalition forming between the main party winners in each ethnic community expected over the coming months. With little immediate upside to Bosnia's economic and political troubles, the country was ranked the worst country in Europe for doing business in the World Bank's 2015 'Doing Business' report. Meanwhile, Bosnia also remains the bottom ranked nation in BMI's Central and Eastern Europe (CEE) Real Estate Risk/Reward Index for 2015. Given the current state of play, it is...

Table of Contents

BMI Industry View
7
SWOT
9
Political
11
Economic
12
Industry Forecast
13
Office
14
Table: Forecast Office Rents, 2015 And 2016 (USD/sq m/month)
15
Table: Short-Term Forecast Office Net Yields, 2014-2015 (%)
15
Retail
15
Table: Forecast Retail Rents, 2014 And 2015 (USD/sq m/month)
16
Table: Forecast Short-Term Retail Net Yields, 2015-2016 (%)
16
Industrial
16
Table: Forecast Industrial Rents, 2014 And 2015 (USD/sq m/month)
17
Table: Forecast Short-Term Industrial Net Yields, 2014-2015 (%)
17
Construction And Infrastructure Forecast Scenario
17
Table: Construction And Infrastructure Industry Data (Bosnia-Herzegovina 2012-2017)
17
Table: Construction And Infrastructure Industry Data (Bosnia-Herzegovina 2018-2023)
18
Macroeconomic Forecast
23
Economic Analysis
23
Table: Economic Activity (Bosnia-Herzegovina 2009-2018)
28
Industry Risk Reward Ratings
29
Central And Eastern Europe - Risk/Reward Index
29
Table: Central And Eastern Europe Real Estate Risk/Reward Index
29
Bosnia & Herzegovina Risk/Reward Index
30
Rewards
30
Risks
30
Market Overview
32
Office
34
Table: Historical Rental Costs, 2012-2014 (USD/sq m/month)
35
Table: Historical Net Yields, 2012-2014 (%)
35
Table: Terms Of Rental Contract/Leases, H114
36
Retail
36
Table: Historical Rental Costs, 2012-2014 (USD/sq m/month)
37
Table: Historical Net Yields, 2012-2014 (%)
38
Table: Terms Of Rental Contract/Leases, H213
38
Industrial
38
Table: Historical Rental Costs, 2012-2014 (USD/sq m/month)
39
Table: Historical Net Yields, 2013-2014 (%)
40
Table: Terms Of Rental Contract/Leases, H114
40
Competitive Landscape
41
Commercial Real Estate Firms
43
Company Profile
44
BBI Real Estate
44
Delta Real Estate Group
46
GP Put dd Sarajevo
48
Strabag
50
Demographic Forecast
53
Table: Population Headline Indicators (Bosnia-Herzegovina 1990-2025)
54
Table: Key Population Ratios (Bosnia-Herzegovina 1990-2025)
54
Table: Urban/Rural Population & Life Expectancy (Bosnia-Herzegovina 1990-2025)
55
Table: Population By Age Group (Bosnia-Herzegovina 1990-2025)
55
Table: Population By Age Group % (Bosnia-Herzegovina 1990-2025)
56
Methodology
58
Industry Forecast Methodology
58
Sources
59
Risk/Reward Index Methodology
60
Table: Real Estate Risk/Reward Index Indicators
61
Table: Weighting Of Indicators
62

The Bosnia-Herzegovina Real Estate Report features BMI Research's market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's Bosnia-Herzegovina Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Bosnia-Herzegovina.

Key Benefits

  • Benchmark BMI's independent real estate industry forecasts for Bosnia-Herzegovina to test other views - a key input for successful budgeting and strategic business planning in the Bosnian real estate market.
  • Target business opportunities and risks in Bosnia-Herzegovina through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our company profiles (inc. SWOTs, KPIs and latest activity).

Coverage

BMI Industry View

Summary of BMI’s key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.

Industry Forecasts Outlook

Historic data series (2010-2013) and forecasts to end-2019 for the domestic real estate industry and for the local and global finance industry.

Indicators Include:

  • Real Estate: Office, retail and industrial real estate yields for all major cities (%); short term forecasts on minimum and maximum real estate rental prices by sub-sector (USD per square metre and local currency per square metre).
  • Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
  • economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).

BMI’s Real Estate Risk Reward Index

BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.

Market Overview

Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors

Market Analysis

Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc