baltic states and belarus real estate market review - Colliers

Real Estate Market Review 2011 | Belarus Office Market
Rental Rates and Trends in
Minsk
*asking rental rates EUR/sqm/month excluding VAT
operating expenses
- stable, - slight decrease.
Source: Colliers International
Class
Rental Trends for
Rates* 2011
A existing 22 - 31
B1 existing 15 - 28
B2 existing 10 - 18
Dynamics of rental rates *
*asking rental rates EUR/sqm/month
excluding VAT operating expenses
Source: Colliers International
Rental Rates (EUR)
50
45
40
35
30
25
20
15
10
5
0
2007
2008
2009
Class A Class B1 Class B2
Dynamics of Vacancy
Source: Colliers International
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
June 2005
June 2006
Class A
June 2007
Class B
June 2008
June 2009
2010
June 2010
DEMAND
The demand structure for office space did
not change considerably during 2009 - 2010.
Belarusian companies still provide a major
part of demand and mostly need areas below
100 sqm. In Q1 - Q3 2010 a slight increase in
demand for such offices was apparent.
Demand for office spaces of 250 sqm and
more area led by stable Belarusian and
International companies. Properties of such
size are the most popular among IT, auditors
and consulting companies. A downward
trend in rental rates has contributed to
increasing the number of companies moving
into a new office in 2010.
Corporate requirements of many international
companies still prefer open space. Modern
office supply is limited to 3 or 4 properties.
As not all the planned business centres were
completed in 2010 (4 of 13 planned buildings)
and newly entered ones were not able to let
considerable amount of leased areas, demand
for modern and larger office space remains
unsatisfied.
Increasing demand is being seen from
international companies for office areas over
500 sqm. During 2009 - 2010 Colliers
International brokers concluded a number of
significant lease agreements with office
areas from 500 to 5,000 sqm.
RENTAL RATES
The first two quarters saw stabilization of
rental rates. In Q3 a slight decrease was
seen in some of high quality properties.
Landlords showed less flexibility to offer
discounts on face rents. Stabilization of
rental rates has been supported by an
increase in economic activity and at the same
time a minimal increase of new office area
supply (7 per cent).
It should be noted that most administrative
buildings in Minsk are held by multiple
owners, in some cases several dozen.
Therefore premises within one building have
different levels of finishing and equipment.
As a result significant differentiation exists in
rents for similar premises located in the
same business centre held by different
owners.
In spite of increase in demand owners
continued to give discounts actively in 2010.
Biggest discounts were provided to
companies leasing over 400 sqm in A and B
2 class offices. Median value of discounts in
these deals was 14 per cent of face rents
without VAT. Discount rates fluctuated
between 8 and 25 per cent, depending on
the area being leased.
VACANCY
In 2009 saw vacancy increases due to a
significant amount of new office area being
putting into operation of significant amount
of new office areas coupled with the general
economic crisis. During 2010 absorption of
new office area took place in these vacant
business centres. Filling of new office
centres by tenants and limited supply
increase during 2010 resulted in a decrease
in total vacancy levels.
New office premises have been filling due to
a rotation of tenants and the entrance of new
companies into the market, which was not
seen in 2009.
TRENDS AND FORCASTS
◊
◊
◊
◊
Vacancy rate increase in 2011 due to the
entry of new objects onto the market.
Stability of rental rates.
Increasing demand for office premises
over 500 sqm.
Fulfilling new business centres due to
deferred demand.
CONTACTS: ANDREY PAVLYSHKO - a.pavlyshko@colliers.by l ANDREY ALESHKIN - a.aleshkin@colliers.by
Colliers International | p. 81