The industrial segment has stood out as the most resilient sector to the crisis and the markets Serbia, Croatia, Slovenia and Bulgaria present a huge opportunity for further growth. Boško Tomašević MRICS, Managing Director SEE at CBRE talked to Property Forum about investment market expectations and shared the company’s expansion plans for the Balkans region.
You took over as Managing Director at the beginning of this year, in a period where I image most of your colleagues are working remotely. How would you describe the transition process?
So far, the transition to Managing Director of CBRE’s SEE business went well and smooth. I have been engaged in this position a few months before I officially took over and therefore it made the entire process much easier. The entire business in SEE is extremely healthy and I was lucky to inherit a good and running business from previous Managing Director Andrew Peirson. All our business lines are performing well, and my colleagues and I are looking forward to a solid 2021.
How was the year 2020 for you? How have pandemic-related restrictions impacted the advisory business?
2020 was a strange and very stressful year for all business lines and I believe to most of businesses in general. We were able to secure some large mandates at the beginning of the year and therefore it made the entire year much more relaxed and stable.
While the initial wave in the second quarter of the year saw a large decline in overall activity, the following quarter showed some signs of improvement, before an increased number of cases throughout the region and a milder slowdown in the final quarter of the year. However, the widespread vaccination and immunisation efforts have sent positive signals to the market and I am highly optimistic that 2021 will be a very strong year for the region.
Have you observed any major changes in what clients are looking for now compared to a year ago?
Since the beginning of the pandemic, most occupiers applied work from home models in order to curve the spread of the virus and protect their employees. As most companies have been hugely successful in the implementation of remote work, we have noted a larger demand for more flexible office solutions which would accommodate the new working models. While some major companies did announce keeping a share of their employees on a work from home basis, the demand for office space is not expected to experience any radical changes as markets in the region continue growing, with existing companies expanding their businesses and new ones entering the market.
The SEE investment market remained relatively resilient in 2020 and recorded only a 17% decline in the annual transaction volume. What were the main trends driving the market last year?
The investment market remained somewhat stable in terms of overall achieved volumes, however, most of the larger-scale deals were agreed in the previous year and closed in 2020, therefore a more cautious approach by investors was not immediately evident. Considering overall investment volumes, the office market occupied the largest share, which has also been the fastest-growing segment in the region, with retail still occupying a significant share of investor interest. While the shopping centre segment has been more active in the previous years, retail parks have been attracting a larger share of investments in the recent period. This trend is expected to continue in the near term as well, as retail parks have been more resilient to the recent pandemic than compared to shopping centres and other closed space retail formats. However, a new trend which marked the previous year was an increased level of investment activity in the industrial sector which recorded a significant improvement, following years of low activity.
While not counted in the commercial property investment volume, the residential market is booming as well and we are seeing a large number of investors looking to develop residential projects all over the region. Belgrade is leading the way in this sector as the city has tremendous growth potential in this sector.
What are your expectations for 2021 on the investment market? In which locations and asset classes do you expect to see the strongest activity?
We are expecting that the industrial segment will really become an important driver of growth in the region as lots of companies from Western Europe and Asia are looking to develop in SEE, most notably in Serbia, Croatia, Slovenia and Bulgaria. The strategic location of these four countries is excellent and occupiers are recognizing this opportunity to position themselves properly. In addition, the industrial segment has stood out as the most resilient sector to the outbreak, with some landlords even benefiting from the recent surge in online purchases. With increased interest from both investors and developers, this sector is expected to gain even more importance in the years to come.
At the moment you cover the region from two offices and have a team of over 40 people. Do you plan any expansion in 2021?
CBRE SEE currently employs close to 50 people in two offices in Belgrade and in Sofia. In March this year, we are opening our Croatian operations with an office in Zagreb to support our clients. We will have all business lines operating in Zagreb, however focusing on property management, office and industrial leasing in 2021. The next office we are planning to open is Ljubljana and the plan is to have this completed in 2022. Sofia is our largest market and we will invest heavily to establish ourselves as market leaders in this country in near future.
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