"Bosnia-Herzegovina Real Estate Report Q4 2014" Published

Although there has been an improvement in economic data from Bosnia, with the country returning to growth in 2013 on the back of strong manufacturing and exports, the commercial real estate sector continues to be affected by low demand and high vacancy rates.

However, over the long term there is significant potential in the market, which is one of Europe's relatively few untapped real estate markets. We believe that in the longer term interest from international retailers, manufacturers and real estate developers will lead to the development of the market. As consumer spending rises and unemployment falls, considerable demand for modern retailing should develop, and as transport and other infrastructure projects make trade and logistics easier, we see significant scope for the development of industrial real estate.

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However, there are downside risks to this optimistic long-term picture. The political situation is unstable, and there are difficulties in operating across Bosnia's two administrative areas, the Federation of Bosnia & Herzegovina and the Republika Srpska. Meanwhile, governmental paralysis means important reforms are not being undertaken, leading to criticism from the EU.

Rental rates across the board tend to be higher in Sarajevo, the capital city and economic hub of the country. However, we note that a number of retail developments in the city are still suffering from vacancies, and our in-country sources point out that interest from international firms has waned.

The real estate sector as a whole has been seeing increasing investment from the Middle East, however. Notably the Sarajevo City Centre shopping mall was built by a Bahraini and Saudi Arabian joint venture (JV).

We have given Bosnia a score of 50.9 out of 100 in our Real Estate Risk/Reward Ratings for Central and Eastern Europe. The country benefits from a good industry-specific longer term risk profile, but its score is dragged down by a very poor country risk outlook, at only...

The Bosnia-Herzegovina Real Estate Report features Business Monitor International (BMI)'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.

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