Boston, MA -- (ReleaseWire) -- 06/05/2014 -- The Bosnian commercial real estate sector is in a transition period following the economic recession and downturn in rental rates during 2012-H113. A lack of development and investment means there is potential for long-term growth, and the country's strong potential has not gone unnoticed by international investors looking to explore one of Europe's few relatively untapped real estate markets.
With a focus on the three principal cities of Sarajevo, Trebinje and Zenica, the Q314 Bosnia and Herzegovina Real Estate report covers the property fundamentals of the commercial real estate market rental market, and examines the office, retail and industrial segments throughout the country.
A fast-recovering economy is expected to be one of the main drivers of growth in the real estate sector over the next few years, with the country's GDP forecast to expand by 2.1% in 2014. That said, the immediate effect on demand for commercial real estate space is expected to be relatively limited, with the industry still experiencing high levels of oversupply and vacancy rates in much of the country. How the general election scheduled for October 2014 will affect the status of the real estate sector remains to be seen; however, it is feared that the result may ignite tensions between the various ethnic groups, which could upset the country's recent economic growth momentum.
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Over the long term we expect Bosnia's property market to benefit from growing interest in Central and Eastern Europe as a whole, with Bosnian real estate attracting interest from investors as far afield as the Middle East. However, much will depend on whether the market continues to enjoy the stability it has shown in recent months and whether this stabilisation translates into growth.
- Sweden-based investor East Capital is reportedly considering Bosnia & Herzegovina as its looks to extend the reach of its East Capital Balkan Fund, which currently invests in real estate and other assets in Romania, Bulgaria, Croatia, Serbia, Turkey and Slovenia.
- The government of the Federation of Bosnia & Herzegovina revealed privatisation plans which includes listing a number of public-owned industrial assets for sale over 2014. These include tobacco factories in Sarajevo and Mostar, and several metals plants, which the privatisation agency values at a combined BAM517mn.
- The Daily Avaz has reported increased interest by foreign nationals in Bosnian real estate assets, with particular interest from Russian and Middle Eastern buyers. According to the publication, real estate agents across the country are seeing growing international investment across a range of sub-sectors, including residential, office and industrial.
Key BMI Forecasts
- The retail sector will continue to outperform both office and real estate in terms of rental rates.
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