baltic states and belarus real estate market review - Colliers

Real Estate Market Review 2011 | Belarus Retail Market
Rental rates
* - asking rental rates (EUR/sqm/month) excluding VAT
and operating expenses
Source: Colliers International
Area
Rates*
under 50 sqm 16 - 80
50 - 100 sqm 14 - 65
100 - 500 sqm 10 - 40
more 500 sqm 8 - 18
Shopping centres planned for completion in 2011
*renovated DIY “Decorum”
Source: Colliers International
Name Address GLA, sqm Developer
Avtovokzal Central'nyj Bobrujskaja St. 6 19,500 BNK Engineering
Gippo Alibegova St./Rafieva St. 14,000 BelVillesden
No name (2nd phase) Nemiga St. 9,900 Fart i V
Europa (2nd phase) Surganova St. 57B 8,500 Rubirous Int.
Beemart* Nezavisimosti Ave. 171 5,100 Stavkom
Slavjanskij Nemiga St. 3 5,000 Parking
No name Gamarnika St. 4,900 Lankorma
Radiomarket Timirjazeva St. 4,500 TD Zhdanovichi
Impuls (2nd phase) Very Horuzhej St. 2 4,300 Fart-Pljus
Zebra Surganova St. 2,500 Laneks Pljus
Total 78,200
Distribution of retail space
in Minsk by size
Source: Colliers International
2
24
22
Number of Units
Distribution of new
projects’ area in Minsk
that are planned for 2011
Source: Colliers International
2
4
4
Number of Units
10,000 and more sqm
14.5%
65.0%
20.5%
% GBA, sqm
0 - 5,000 sqm 5,000 - 20,000 sqm
20,000 and more sqm
42.8%
36.5%
20.7%
% GBA of Units
0 - 5,000 sqm 5,000 - 10,000 sqm
Therefore, risks of inflation were to be
carried by owners of premises. To minimize
inflation and other Belarusian currency risks,
owners usually concluded short-term
(11-month) contracts.
The Decree also lays down rules for setting
rental rates for state-owned administrative
buildings and both state and private shopping
centres. These rules prescribe the maximum
profit of the lessor and expenses that may be
covered by rent, such as depreciation costs,
taxes and state fees, costs of shopping centre
operation and maintenance.
Rent rates in 2010 in the retail segment were
relatively stable. Fluctuations of rent rates
were mostly due to changes in the Euro rate
against the currency of the lease - the
Belarusian ruble. Another factor affecting the
growth of rental rates are the strict laws that
make it a necessity to justify and register
new rates with the local municipality, and
restrictions on maximum profits.
Face rental rates were reduced in Q1 2010.
This trend was typical for shopping centres
without concept that were vacant in 2009.
In 2010, the total number of registered retail
lease contracts decreased by 29 per cent
compared with 2009. The reason is that 12
months and longer lease contracts are liable
to state registration and subjects of statics
while owners prefer to conclude short-term
leases (usually 11 months) due to increased
currency risks. This situation is unfavourable
for both lessor and lessee: for a lessor it
becomes more difficult to forecast revenue
from the lease and a lessee has no guarantee
of renewal contract in the future.
VACANCY
Recovery of consumer activity, increase in
turnover and new foreign brands entering
the market has had a positive impact on
occupancy of retail properties. Decrease in
vacancy rates has even been seen in
conceptually weak objects that had vacancy
as high as 40 - 50 per cent in 2009.
A characterising feature of new constructions
in 2010 is that more than 44 per cent of the
total volume was built-to-suit projects. This
means that it wasn’t necessary to search for
tenants for the more than 22,000 square
meters of retail space of new built-to-suit
properties, which had a 100 per cent
occupancy rate. However, 4 of 8 new
shopping centres (49 per cent in area terms
of newly commissioned objects) have no
obvious anchor tenant. These new shopping
centres, as a rule, have no consistent concept,
and therefore face problems in attracting
new tenants. This factor had a negative
impact on the overall vacancy rate.
The demand in the pre-crisis period (up to
2008) grew dramatically and allowed for
absorption of new properties by tenants
quickly.
The major growth in vacancy appeared at the
end of 2008 and in the beginning of 2009,
caused by the appearance on the market of
several new shopping centres. The presence
of a number of objects currently under
construction implies that vacancy can grow
after the completion in 2011.
A very limited amount of new speculatve
retail facilities available for lease appeared in
CONTACTS: ANDREY PAVLYSHKO - a.pavlyshko@colliers.by l ANDREY ALESHKIN - a.aleshkin@colliers.by
Colliers International | p. 85