Several Acquisitions Keep Skopje Office Market Alive Amidst Crisis - Report

“A total of 17 projects totalizing 69,900 square metres of office space are under construction in Skopje, of which five with more then 4,500 sqm,” Altitlan (www.altitlan.com) said in a Skopje office market report for the second half of 2009.

The new office projects in Macedonia's capital that are larger and close to Western standards, will create a large new offer of office premises, with more space than the market can absorb, it said.

“Nevertheless, the office activity in Skopje is subject to several large future moves (banking and telecom sectors) that could fit into the new delivered spaces.”

Main Skopje office project supply for H2 2009:

The recent shift toward a more professional and more structured real estate market is a positive sign for the future that could attract institutional investors in Macedonia, the report said.

The new office stock in Skopje at the end of the first half of the year was 409,000 sqm, an increase of 15% from a year earlier, of which 187,000 are related to Grade A and B office spaces, Altitlan said. This growth was supported by two large projects: Soravia (11,000 sqm) and NLB-Tutunska Banka (6,000 sqm).

According to the report, the buying prices of Skopje office space remain unchanged.

“Property rights for Grade A/B office spaces above 500 sqm can be purchased in the urban area from 1,400 euro ($2,076) to 1,800 euro per sqm and 1,500-2,000 euro per sqm in prime locations,” said the report.

No investment purchase has been registered for this period, it added.

Skopje office renting prices reduced by some 15% with the prime market being most affected (15-20 euro per sqm/month in the Central Business District (CBD) area). Large Class B office spaces can be found for 6-10 euro sqm/month in CBD and in the urban area. Following the price adjustment of the rents this year, no further rent price drops are expected in the future, the report noted.

Altitlan also said that the rental market in Skopje nearly disappeared in 2009, whilst tenants paying rents are mostly foreign companies that are affected by the financial crisis on one or another way. The relocation projects of many companies have been delayed or canceled and no improvement is expected before 2010.

Due to the overall collapse of the renting market and to the new supply of some large promotion buildings, the vacancy ratio grew to 9.48 % this year from 4.5% a year earlier, Altitlan said.

($= 0.6745 euro)