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What is happening in the commercial real estate market


“The hotel market is approaching its bottom, and the most promising segment is now the warehouse one,” Roman Aleinikov, commercial director of the consulting company Colliers Belarus, assessed the state of affairs in the Belarusian commercial real estate market. Read about what is happening in its individual segments and the effectiveness of investments in them in our material.

Roman Aleinikov Commercial Director of the consulting company Colliers Belarus
Roman Aleinikov
Commercial Director of the consulting company Colliers Belarus

– The market for investments in commercial real estate in Belarus is something that has remained without serious attention and analysis for quite a long time for a number of reasons. According to our observations, the size and volume of transactions with commercial real estate are insignificant, there are no professional investors on the market (funds, etc.).

At the same time, transactions with relatively large objects are being made, even if not all of them are bought as cash-flow objects. Debt financing is used to implement projects, and the market is slowly but developing.

If we consider the investment market as a transaction for the purchase of commercial real estate on the secondary market in size from 5 thousand sq.2 Regardless of the presence of a tenant in such objects, depending on the year, the amounts of such transactions varied significantly: from $ 20 million in the early-mid-2010s to $ 100 million in the best years (2018-2019).

Thus, the volume of transactions in 2020 decreased compared to 2019 (the best in the history of observing the investment market) by 17% in money. But at the same time it has grown significantly in the number of transactions. And the first half of 2021 is still comparable to 2020 in terms of the amount of transactions: almost $ 40 million in the first half of the year.

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Image courtesy of Colliers Belarus
Image courtesy of Colliers Belarus

At the same time, there are players who, to a significant extent, shape the investment market of commercial real estate, regularly making large transactions. These players include the “Tabak-Invest” company. According to the data of the Unified State Register of Real Estate, rights to it and transactions with it, the company bought out the Gorka DOM shopping center in 2021, acquired the Asstor West shopping center (Brest) in 2020, and in 2019 bought the former E -City”.

In addition to the aforementioned sale of the Gorka DOM shopping center, the most notable transactions of 2021 include the sale of the Europe shopping center (first stage). According to our data, the object was purchased by three companies for 1/3 of a share.

The rates of return on completed transactions vary, some of the properties are purchased without tenants. On average, the annual rate of return excluding borrowed funds is 8-12%.

From the point of view of the quality state of the investment market, the situation is heterogeneous in various segments of commercial real estate. More on this later.

“It is difficult to predict what will happen next”

So far, the most affected area is hotels. In general, we can say that the hotel market is approaching its bottom. It is not yet clear when to expect the recovery of this segment. But if hotels were sold in Minsk today as an investment asset, based on the cash flows generated by such facilities, the price would have to be at a tangible discount.

When assessing the situation in the segment, it should be borne in mind that a significant part of the room stock (about 50%) belongs to the state.

The office segment has also suffered significantly. Rental supply rates are down 20-40% compared to January 2020, and the outlook for demand is still dim. How far to the bottom is hard to say, but the office investment market is definitely in recession.

So, for example, the cost of renting class B1 offices ranges from € 8-20 per m22… Higher quality offices are rented at € 15-20 per m22/ month without VAT and without operating costs.

Vacancy in the market remains at the level of 2020 – 10-15%. Interestingly, in the high-quality segment, the number of transactions for the lease of large areas (more than 600-800 m2) Is the minimum. And tenants occupying large spaces are being replaced by companies whose budget allows them to rent an office in a higher class business center.

In general, there will always be demand for office space. Only the level of rental rates and, accordingly, the return on investment remains of fundamental importance.


The retail real estate market is feeling more confident. The solvency of some tenants has decreased, but many chains are developing and feel quite confident. Much depends on the further development of events in the economy, while the segment is in the stage of slowing growth and is waiting for what will happen next.

The most promising segment at the moment is warehouse. The demand for warehouses is high, the supply of objects near Minsk is very limited. The rates for high-quality warehouses did not decrease.

One of the factors, in addition to all the prevailing circumstances that negatively affect the investment market, is the inaccessibility of debt financing. Belarusian banks are reluctant to finance large projects in the field of commercial real estate. European financing, both directly to investors, and even more so through Belarusian banks, has become unavailable or accessible with great difficulty.

In general, it is rather difficult to predict what will happen next. We are observing a range of forecasts – from a complete collapse of the market to an abrupt growth when large investment players enter (for example, from the eastern directions).

In our opinion, while maintaining the current difficult situation, taking into account the indicators for 2020-2021, one should not expect bright dynamics from the commercial real estate market. But a complete collapse is also not expected. It is advisable to analyze for each of the segments separately.

The efficiency of investments in commercial real estate for 2020-2021 is presented in the Capital Markets Investment Report, first prepared for Belarus by experts from Colliers Belarus.

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Fidenge Pecold

My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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