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| High demand drives real estate growth in Minsk The yearly RE market overview presented by the international commercial real estate consulting company, Colliers International, reveals the growth tendencies for the supply in all the commercial RE sectors in Minsk, the capital of Belarus. The office sector, however, is the leader. According to Colliers International, the supply of modern offices will triple in 2008–2009. The retail market shows great potential for the growth of modern retail centres in Minsk, growth that will also shift to other regional cities. Belarus, as the leading European country in terms of vehicular freight transportation, shows promise in attracting new investment in the construction of large scale logistics facilities. In 2007, the office market became one of the most active commercial property sectors in Minsk. It was characterized by a sharp increase in sale prices and rental rates, especially in the first 6 months of the year. This was caused by the high demand for modern office space and the small supply. According to Mikhail Gradovich, Colliers International Managing Director in Belarus, rent rates soared in 2007, jumping 25-30%. The vacancy rate is nearly zero. Over 30 facilities are currently at different stages of construction. In 2008–2009 the supply of modern (class A and B) offices will jump by 233 150 sq.m, increasing from 92 200 sq.m to 325 350 sq.m. Among the largest projects planned for the next two years are a 13 580 sq.m office building being developed by local company StromInvest and a 10 000 sq.m office being developed by Belarus High Tech Park. However, the modern facilities that are expected to open this year will quickly be absorbed into the market, thus paving the way for more price increase opportunities. Most of the business centres commissioned up until 2007 are Class B2, some of which are built-to suit projects. Only two class A business centres were in operation by the end of 2007. The retail market is one of the most dynamic RE sectors in terms of turnover. Before 2007 very few modern retail facilities exceeded 5 000 sq.m. Larger modern retail centres with anchor tenants started to appear in the market in 2005 and mainly house Russian retailers. 2005 saw a record peak in rent rates, which jumped to 100–120 EUR/ sq.m/month, leading to state intervention, which reduced rent rates 10–30%. They are still high, however, compared to those in the neighbouring countries. Minsk has a population of 1 798 000. The stock per capita (sq.m) is 0.2 and so great growth potential exists in this sector. In the immediate future the retail sector will see the introduction of multifunctional complexes, the construction of retail centres further from the city centres, and a growth in the total market volume not only in the capital but also in other regional cities. Last year 111 000 sq.m of retail space was available on the market with the biggest retail centres being Stalitsa (60 000 sq.m.), developed by the municipality, and Globo (25 000 sq.m), developed by BelTsiazhmash. In 2008-2009 the market will grow by 109 000 sq.m of retail space. A significant contribution will be made by the Preston Plaza retail centre (40 000 sq.m.), which is being developed by Arvitfood and which is expected to open in 2008. Like the office and retail sectors, the industrial sector has a shortage of modern warehouse facilities with growing demand pushing for a greater supply. Before 2007 mainly small (2 000–3 000 sq.m) built-to-suit facilities existed. Only one 5 000 sq.m project existed in the Minsk market. The planned supply of 132 000 sq.m for 2008–2009 will not change the situation considerably as the demand is growing. In recent years the demand was for facilities that were located between 20 and 40 km from the city and close to a main road, a railway, and large open sites. The shortage in the supply of warehouse premises substantially affected the rental rates. A further increase in rent prices is expected due to the gradual introduction of the projects. The majority of the warehouse facilities will be constructed in 2009. 'Belarus, as Europe's leading country in terms of vehicular freight transportation, requires modern warehouse facilities. With the commercial real estate sector in Minsk in an active growth phase, investors are paying more attention to those sectors, such as the warehouse sector, that are potentially more profitable. The Government has also made some decisions to attract foreign investments to this real estate sector by allocating development sites to those investors interested in constructing large logistics facilities, ' said Mikhail Gradovich. write your comments about the article :: © 2008 Construction News :: home page |