Report Published: "Bosnia-Herzegovina Real Estate Report Q2 2013"

From: Fast Market Research, Inc.
Published: Fri Apr 26 2013

The Bosnia & Herzegovina Real Estate report examines the commercial office, retail, industrial and construction segments throughout the country, in the context of the struggling domestic and regional economy.

With a focus on the three principal cities of Sarajevo, Trebinje and Zenica, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in commercial real estate, while minimising investment risk and exploring the impact of the eurozone crisis on an already struggling market.

Our latest data collection, for full-year 2012, has revealed an uneasy stability industry-wide after a contraction in rental rates across all geographies surveyed in 2011 which undid much of the positive growth seen in 2010. The industrial sector has weathered the storm better than its counterparts due, in part, to the increased lease-length cycle, but in the medium term we expect the retail sector in particular to outperform, whereas the office sector is the most likely to suffer over 2013.

Full Report Details at

Key Points:

* Uncertainty over Bosnia & Herzegovina's economic and political fundamentals continues to impede investor confidence. Lacklustre growth in construction activity is expected to continue in the near term. Although the country remains fiscally sounder than its counterparts at the forefront of the debt crisis, the impact on the country will be determined by the longevity of investor concerns.
* The short-term economic outlook for Bosnia remains bleak, as political instability weighs on consumer and investor confidence, and regional headwinds undermine export-driven activities. We forecast growth of 0.8% in 2013, a modest recovery from the recession we expect to be confirmed in 2012 data. With economic activity accelerating from 2014, we expect average annual growth to move above 3.0% in the medium term. Ongoing eurozone weakness poses a downside risk to external demand and overall growth, as does the entrance of key trading partner Croatia to the EU.
* While considerable progress has been made to attract FDI into Bosnia, the country's dual entity structure continues to weigh heavily on the overall business environment. Indeed, the regulatory framework remains vague and often contradictory, with a web of complex registration processes in both the Muslim- Croat and the Bosnian Serb entities discouraging nationwide business development. Moreover, a burdensome and excessively high tax system keeps labour mobility and job creation subdued. While progress on ties with the EU is likely to provide a key policy anchor, Bosnia remains one of the least favourable environments for doing business in Europe, according to the World Bank.

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