real estate market review

Transcription

BELARUS
REAL ESTATE MARKET REVIEW
ANNUAL REPORT, 2013
Accelerating success.
BELARUS REAL ESTATE MARKET CONTINUES
TO RECOVER
Dear Reader,
BELARUS
ANDREY PAVLYSHKO
Partner, Managing Director
Colliers International, Belarus
ANDREY ALESHKIN
Partner, Director
Brokerage Department, Belarus
2012 was a post-crisis year for the Republic of Belarus. Therefore, it was characterised by
an increase in economic activity of business entities, the recovery in household incomes,
which were eroded by the devaluation of the Belarusian ruble, and, as a result, the
recovery of the consumer market.
This was immediately reflected in the increased demand for commercial real estate. The
recovering labour market created the demand for new office spaces. Some companies
were looking for office spaces of 14-17 thousand sqm, while no interest in such spaces
had been reported on the rental market even during the pre-crisis period. The demand for
office premises exceeded the commissioning rate of new spaces. As a result, nearly all
premises available on the market, irrespective of their condition, were snapped up and the
vacancy rate decreased rapidly.
The situation on the warehousing market was the opposite of what had been reported
during the previous year: in 2011, many tenant companies were optimising their
warehousing spaces and reducing the number of rented facilities; meanwhile, 2012 saw a
considerable increase in demand and new objects were being snapped up after the
minimum market positioning. Professional logistics operators were the most active tenants,
and the demand was highest for large premises with areas starting from 5,000 sqm.
The retail real estate market development scenario was similar. The small number of newly
commissioned spaces amid the increased growth of retail chains and the entry of new
players onto the Belarusian market resulted in the decreased vacancy rate and the
increased rental rates for high-quality spaces.
2012 was a relatively moderate year for the hotel real estate segment in terms of the
commissioning of new objects, but the developers of new hotel projects remained active
and reported the completion of the preparatory works for the 2014 Ice Hockey World
Championship. 2012 also saw the opening of the first apartment hotel in Belarus; this
segment of hotel real estate had not been developed in the country previously. A number
of new projects and agreements with international hoteliers regarding the operation of
some objects were also announced.
REAL ESTATE MARKET | ANNUAL REVIEW 2013
| BELARUS |
CONTENTS
Economic Overview
4
Office Market
6
Retail Market
9
Hotel Market
14
Industrial Market
18
REAL ESTATE MARKET | ANNUAL REVIEW 2013 | BELARUS | ECONOMIC OVERVIEW
Economic Overview
2012 was the year of economic stabilisation for the Republic of Belarus following the
2011 crisis. Even though the inflation rate remained high, it was five times lower
compared to the previous year. After a nearly three-fold devaluation in 2011, the national
currency remained stable in 2012 and even strengthened somewhat against the main
global currencies: the Euro and the US dollar. GDP growth amounted to 1.5 per cent.
Foreign trade increased in 2012. Positive dynamics of export were observed throughout
the year, and despite a small decrease in the second half-year, the foreign trade balance
was positive in the end of the year.
Salaries and the real income of the population increased. As a result of the devaluation
of the ruble, the average salary in euros amounted to EUR 206 in November 2011.
Meanwhile, the figure went up to EUR 385 in November 2012 and exceeded the rate
reported in the pre-crisis period last year (EUR 351). This increase had a positive effect
on the development of the consumer market in Belarus.
Belarus ranked 58th in the Doing Business 2013 report prepared by the World Bank and
the International Finance Corporation (IFC). The country demonstrated especially good
results in the areas of property registration (3rd place) and registration of enterprises (9th
place). Belarus was included among the world’s leading reformist countries, ranking third
among the top ten reformists. Belarus also ranked 153rd in the Index of Economic
Freedom 2012, up from the 155th position in 2011. The international rating agency
Standard & Poor’s revised the country’s short-term and long-term sovereign credit
ratings from C to B-. The outlook on Belarus was revised to ‘stable’. The country
remained in the 54th position in the Legatum Prosperity Index 2012 rating.
KEY MARKET INDICATORS / YEAR
2005
2006
2007
2008
2009
2010
2011
2012
2013f
24.2
29.4
33.0
41.0
35.8
41.2
42.6
49.2
52.5
9.4
10.0
8.6
10.0
0.2
7.6
5.3
1.5
8.5
Industrial Production, % yoy
10.5
11.4
8.7
11.5
-2.8
11.3
9.1
5.7
9.3
Unemployment Rate, % avg*
1.5
1.2
1.0
0.8
0.9
0.7
0.6
0.5
0.7
GDP current prices, bln EUR
GDP growth (real), % yoy
Total central government
debt, % of GDP
35.0
2.0
1.6
4.5
5.9
17.1
19.6
42.4
31.5
PPI, % yoy
12.1
8.3
16.2
12.8
14.5
13.6
149.4
21
11
CPI, % yoy
10.3
7.0
8.4
14.8
13.0
9.9
108.7
21.8
12
Fiscal deficit, % of GDP
-0.7
2.2
-1.5
1.9
-1.0
-2.4
-0.3
-0.1
0.0
Export, bln EUR
12.7
15.65
16.3
22.5
15.3
22.5
29.3
34.85
38.0
Import, bln EUR
13.3
17.7
18.5
27.0
20.6
28.1
33.3
35.15
37.6
Current Account, bln EUR
0.4
-1.2
-2.1
-2.5
-5.3
-5.60
-3.9
-1.9
-1.5
Current Account, % of GDP
1.7
-4.1
-6.6
-8.0
-9.76
1,635.
-11.7
1,069.
-8.3
-4.1
-2.7
362.3
596.4
960.0
1,559.1
0
6,121.
9
7,187.
1,095.8
11,699.
878.9
1,913.1
2,155.1
2,161.6
2,146.2
3,318.6
2,144.7
4,542.9
9
2,791.
5
2,979.
4
9,668.9
3
2,684.2
8
2,714.8
6
2,897.2
2,136.6
8
3,893.
5
3,954.
4,623.4
8,335.8
10,713.
9
8
8
3,143.0
0
1
6,432.0
0
FDI, mln EUR
Cumulative FDI, mln EUR
BYR/USD avg.
BYR/EUR avg.
1,500.0
12,000.0
9,150.0
12,000.0
Source: Colliers International; Central Statistical Bureau
* In Belarus, the unemployment data includes only those citizens who are officially registered at the labour exchange. The real unemployment rate
is higher, and the Ministry of Labour and Social Security has recently admitted this fact.
4 | COLLIERS INTERNATIONAL
| BELARUS ECONOMIC OVERVIEW
The Decree No. 150 of the President of the Republic of Belarus ‘On some issues related
to renting and gratis using of property’ came into effect on 1 April 2012. It fully liberalised
pricing in the privately owned commercial real estate rental market and introduced the
concept of the basic rental amount to be used in lease relations with state or municipal
real estate objects.
During the first ten months of 2012, the gross foreign debt of the Republic of Belarus
totalled USD 32.966 billion. This accounted for 58.6 per cent of the GDP. Meanwhile, the
external debt of the state administration bodies totalled USD 12.779 billion. The per
capita foreign debt amounted to USD 3,485, down by USD 110 compared with January
2012.
Gross inflows of foreign direct investment decreased by 21.8 per cent in 2012 compared
with 2011. Debt instruments were the main form of attraction of direct investments (88.8
per cent of the total amount of direct investments). Meanwhile, 47.3 per cent of direct
investments were made in trade.
| BELARUS | OFFICE MARKET
Office Market
OVERVIEW
BUSINESS CENTRES LAUNCHED IN 2012
Project
Port, 2nd
stage, 1st
start-up
facility
Nemigoff
Antares
Zebra
No name
Alliance
Offices in the
Galileo multipurpose
centre
GLA,
sqm
Class
Developer
В2
A1 Development
В2
В2
В2
В2
В2
В2
7,800
Parking
5,000
Freliajseksim
4,795
Lanex Plus
4,500
n/a
4,350
IDC Group
3,540
BNK-Holding
2,100
During 2012, only a quarter of all business centres scheduled that year were actually
launched: only 7 out of 23 objects entered the market. It must be noted that some
objects showed a high level of construction readiness by the end of the year, and they
may be launched in the first half of 2013.
Among the objects scheduled in 2012 by developers, some were expected to be
postponed because of low activity level at the construction sites.
The number of launched speculative business centre objects was small. Development in
the built-to-suit segment was more interesting. For example, the headquarters of
Belarusbank, with a total area of more than 35 thousand sqm, the largest office real
estate object, was launched in 2012.
SUPPLY AND NEW PROJECTS
Total:
32,085
Seven new objects with a total GLA of more than 32 thousand sqm were launched in
2012. There was a high probability of launching at least eight other office real estate
objects, but the developers did not manage to complete the projects by the end of the
year. Such objects are expected to be officially launched during the first half of 2013.
Source: Colliers International
In total, 28 objects are scheduled to be launched in 2013. Such objects include business
centres that were postponed from 2012, as well as those that were initially scheduled for
launch in 2013. If a considerable number of these projects are successfully launched,
then the amount of new office premises that may enter the market in 2013 could reach a
total GLA of up to 249 thousand sqm GLA.
DYNAMICS OF SUPPLY OF OFFICE
SPACES IN MINSK
Sqm
(000s)
800
700
Similar to previous years, most of currently implemented business centre projects
scheduled in 2013 are in the B2 class. The main reason for the lower rating quality of
such office objects is the construction method: developers usually use a shared-equity
construction scheme. As a result, objects have dozens or even hundreds of owners and
low levels of management and services.
600
500
400
300
200
100
Large projects with a GLA exceeding 10 thousand sqm constitute a considerable part of
projects scheduled for 2013. The GLA of two such projects exceeds 20 thousand sqm.
0
Built-to-Suit
New Construction
Total Stock
DISTRIBUTION OF COMMERCIAL OFFICE
SPACES IN MINSK BY CLASS
6,2%
During 2012, the structure of the office market in Minsk did not change significantly,
since only a small volume of new office space was commissioned, and they did not have
a serious impact on the market. With the exception of one office building, all
commissioned business centres belonged to B2 class. As a result, the share of A class
offices, which is the least developed segment in Minsk, decreased slightly, while that of
the B2 class, the most developed segment in the market, went up.
The market of built-to-suit objects was more dynamic and interesting in 2012. New large
office buildings were developed as a result of activity of banks. Two such objects
accommodated the headquarters of banks. Those objects represent high-quality office
buildings and, just like commercial business centres, correspond to B1 class.
Class A
31,4%
Class B1
62,3%
BelVEB Bank headquarters office is interesting in that it was initially planned as a
commercial business centre within the framework of the Slavianski Kvartal complex.
However, as the parent company of the developer, BelVEB Bank later made the decision
to use the object for its own headquarters.
Class B2
A number of built-to-suit objects are expected to be launched in 2013. Two of them,
namely the offices of the Belarusian Potash Company and the National Olympic
Committee, are considered important for the market.
DEMAND
The demand by companies for premises increased notably in 2012. After the 2011
financial and economic crisis, businesses started operating more actively and increased
their staff size, which had decreased as a result of job cuts and frozen vacancies.
STRUKTURE OF DEMAND FOR OFFICE
SPACES IN MINSK IN 2012
Under 100 sqm
19%
10%
100 - 250 sqm
22%
250 - 500 sqm
22%
500 - 1000 sqm
27%
1000 and more sqm
According to the number of requests, the share of companies that require spaces up to
100 sqm decreased in 2012, even though the demand for small spaces in Minsk was the
highest in the previous year. Demand for medium-sized offices of 100-250 and 5001,000 sqm was nearly equal. Demand for large spaces increased as well. Such changes
occurred despite the fact that the participation of companies in shared-equity
construction projects is typical for the Belarusian market. Companies that require offices
of several hundred or thousand sqm dominate in shared-equity construction projects.
Requests for office spaces of 10-12 and 14-15 thousand sqm that were submitted by
several companies last year may be mentioned as distinctive cases of unsatisfied
demand. At the current stage, the office real estate market in Minsk is unable to satisfy
the needs of such tenants.
RENTAL RATES
DYNAMICS OF RENTAL RATES
Rental rates for A class premises increased in H1 2012 as a result of the commissioning
of the new business centre Velcom in the end of 2011. As the object was outstanding
among other objects available on the market in terms of quality, its owners set the
highest rental rates in the city, which exceeded the previous existing highest rental rates
by 20 - 22 per cent.
50
45
40
Rental Rates (EUR)
35
30
25
20
15
10
5
0
2008
2009
Class B2
2010
Class B1
2011
2012
However, the market was not ready for such level of supply, and the demand for those
premises was very low. As a result, rental rates were reduced in Q3 2012. Hence, the
highest level of A class supply went down from EUR 45 per sqm in H1 2012 to EUR 37
in H2 2012. The lowest rental rates went down as well.
Class A
DYNAMICS OF VACANCY RATES OF OFFICE
SPACES
60%
50%
40%
Rental rates for offices in the categories B1 and B2 remained stable. This segment of the
market is less prone to hikes and possible exceptions. However, as a result of the limited
supply, a slight growth tendency was also observed here.
Rental rates in B class premises are expected to increase slightly in 2013. The rates in
B1 premises are expected to increase due to the small number of objects in this class,
as well as the intention to get closer to the lower level of rental rates in A class premises.
Rental rates in the B2 class are expected to increase because of the overall deficit in
office supply, especially in the lowest priced segment. Thus, the increased demand amid
the insufficient supply may be balanced by an increase in prices.
In theory, however, the growth of rental rates may be stopped by the actual
commissioning of all projects scheduled for 2013. However, developers operating in the
Belarusian market typically fail to meet announced commissioning deadlines. Therefore,
many objects are unlikely to enter the market in 2013.
30%
20%
VACANCY
10%
Vacancy rates of A class premises increased in 2012 due to the commissioning of a new
business centre of the mentioned class, as well as the presence of vacant premises at
another operating business centre. The volume of vacant rental spaces decreased by
the end of the year, which leads to the forecast that there will be a considerable
decrease in A class vacancy rates in 2013.
0%
Class A
Class В
SPECULATIVE BUSINESS CENTRES
SCHEDULED FOR LAUNCH IN 2013
Project
Class
Developer
GLA,
sqm
Projects implemented without use of shared-equity
construction scheme
В1
Biznes-Centr
No name
25,930
Stolitsa
В1
Grad Story
Futuris
15,394
Invest
В1
No name
IBA Group
11,000
No name
В1
RM-Investment
8,200
В1
Lekt
Sinar
7,700
5,992
No name
В1
Zalka
4,300
No name
В2
Minsk-City
2,500
No name
Farenheit
В1
Projects implemented using the shared-equity
construction scheme
В2
Royal Plaza
Rubyrose Int.
23,000
Volna
Time
No name
Klever Park
No name
Domashevs
kiy
В2
В2
В2
В2
В2
В2
В2
Solo
ForumPlaza
Port, 2nd
stage, 3rd
start-up
facility
Tivali-Centre
No name
Park-Plaza,
2nd stage
No name
ValeoCentre
Pokrovsky
No name
Optima
Sigmapolius
18,345
IEPU
15,000
Ofisinvest
10,000
Offices in business centres of B1 and B2 classes were less prone to tenant turnover,
since the volume of the commissioned spaces was insignificant and did not keep up with
the growing demand. Nearly all vacant spaces in business centres in Minsk were
occupied during 2012. Therefore, vacancy rates may be estimated only with a
permissible error of 2 - 4 per cent, which includes unattractive premises that are
unacceptable to tenants. As most of B2 class objects were built using a shared-equity
construction scheme, many such premises are held by the owners, and are not available
on the free rental market.
TENDENCIES AND FORECASTS
•
•
•
•
•
The volume of commissioned office spaces will increase, due in large part to the
considerable number of projects that were postponed in 2012;
Rental rates in B2 class premises are expected to increase;
There is a high probability that the upper limit of rental rates in B1 class offices will
increase. Such rates will be moving closer to the lower rental rates of A class
premises;
Vacancy rates in A class premises will decrease;
New business centres will be filled as a result of deferred demand.
27
Fishman
Group
Ingrado
7
10,996
14
9,700
36
21
Belspetsproekt
Studencheskiy
Dom
19
4
9,525
1
9,200
8,300
11
A1
Development
В2
В2
В2
В2
В1
В2
9 32
29
15
5
31
20
33
40
7,800
27
6
16
34
11
24
24
10
В2
28
1 4
26
В2
В2
2
13
9
42
15
37
23
35
3
78
В2
Delorm
41
13
23
Festivalny
Centre
7,500
Techinmash
6,700
IV-Invest
6,000
HTP
Administration
5,200
IDC Group
3,850
22
6
44
18
12
30
2
3
6
5 5
16
2 39
46
22
17
8 2518
25
20
4
45
3,100
Lankorma
4,500
ElitStroyTechM
ontazh
2,500
В2
No
name
Source:
Colliers InternationalLeskomplekt
19
17
21
26
12
3
38
Map data (c) OpenStreetMap (and) contributors, CC-BY-SA
Existing Developments
7,400
10
14
43
7
Источник: Colliers International
Promstroy
Trust
1
Completions in 2012
Declared for Completion in 2013
| BELARUS | RETAIL MARKET
Retail Market
DYNAMICS OF RETAIL TURNOVER IN
REPUBLIC OF BELARUS
20
140%
18
120%
16
100%
14
billion EUR
12
80%
10
60%
8
6
40%
4
20%
2
0
0%
2005 2006 2007 2008 2009 2010 2011 2012
Percent of previous year
Billion EUR
Source: National Statistical Committee of the Republic
of Belarus
Ministry of Trade of the Republic of Belarus
DYNAMICS OF THE CHANGE IN
MODERN RETAIL SPACES IN MINSK
OVERVIEW
Unlike in the previous year, the consumer market was stable in 2012 and underwent
neither stages of consumer rush, nor periods of decreased consumption. Meanwhile,
market development was positive and the consumption of non-food products prevailed
over the consumption of food products, which shows an improvement in consumer
moods. The overall growth rate of the retail turnover demonstrated positive dynamics. In
part, this was determined by the recovery of the financial income of the population to the
pre-crisis level after the drop caused by the devaluation of the national currency in 2011.
The growth rate of the retail turnover in euros amounted to 12 per cent in 2012. The
volume of retail turnover through all market outlets was the greatest in the last few years
and exceeded EUR 19 billion.
The normalisation of the financial income of the population, the stability of the national
currency and the activity on the consumer crediting market had an effect on the positive
structure of consumer spending; the spending on non-food products exceeded that on
food products, though the difference was not significant. At the same time, the food retail
segment saw an increase in demand for higher quality products.
An important event last year was the coming into effect of the Decree No. 150 of the
President of the Republic of Belarus of 1 April 2012 ”On some issues related to renting
and gratis using of property”. The decree spelled out the concept of the basic rental
amount for state and municipal objects and, more importantly, waived the administrative
control of the formation of rental rates at privately owned retail real estate objects.
Previously, the state controlled the pricing and owners of shopping centres were required
to justify the prices. On some occasions, the state had to intervene in order to artificially
prevent the price growth.
Retail chains were developing actively in 2012. For example, Euroopt chain, one of the
leaders of the Belarusian food retail segment, increased the number of outlets from 68 at
the end of 2011 to 123 at the end of 2012. Other chains were also increasing the number
of outlets and entering new formats. For instance, the largest format of stores of the
Sosedi chain before 2012 was the supermarket. In 2012, the chain launched a pilot
hypermarket as an anchor tenant at the ALL shopping centre. The market saw the
process of chain consolidation and several facts of mergers and acquisitions were
reported. As a result, the Ministry of Trade of the Republic of Belarus made the decision
to take seriously the issue of applying anti-monopoly measures in the retail market.
According to preliminary information, chains will be prohibited from holding a market
share of more than 30 per cent in one residential area.
800
700
600
(000) sqm
500
400
300
SUPPLY AND NEW CONSTRUCTION
200
100
0
2006 2007 2008 2009 2010 2011 2012 2013
(f)
Total stock
New construction
Forecast
Nine new retail real estate objects important to the market were commissioned in 2012.
Among them was Zamok, a large shopping and entertainment centre. Another launched
object was the shopping and entertainment centre Galileo. However, the Galileo centre
has not started functioning yet, as tenants are still preparing to open their shops. The
first stage of the Zamok shopping and entertainment centre was commissioned in 2012:
it includes 31.8 thousand sqm out of a total GLA of more than 93 thousand sqm. Only
the first floor is currently functioning, where a food hypermarket and a domestic
appliance supermarket are located.
It should be noted that the Nemigoff shopping centre was commissioned and launched in
2012 as a part of the shopping and office complex at 3 Nemiga St; this object, which had
been initially announced under the name of Slavianski, was expected to enter the market
back in 2008. Therefore, the format of the object was already outdated by the time of
launching.
DISTRIBUTION OF NEW PROJECTS
SCHEDULED FOR COMPLETION IN
MINSK IN 2013 BY AREA
Another important event of 2012 was the construction readiness of the shopping and
entertainment centre Galileo (the object had been initially announced under the working
name of Avtovokzal Centralny). However, since the object will be fully functioning only
after the shops will be opened in Q2 2013, this object is not included in the 2012 data.
The object is planned to accommodate shops of new retail chains that are not yet
present on the Belarusian market.
Among other retail real estate objects of modern formats launched in 2012, the
commissioning and launch of two objects is worth mentioning: namely, the ALL shopping
centre, the anchor tenant at which is the Sosedi chain with a pilot hypermarket, and
Hippo hypermarket.
11
A large-scale reconstruction of the Stolichny Shopping Centre, former Stolichny
supermarket, which was closed in 2008, was successfully completed in December. With
a GBA of 2.3 thousand sqm, it is not a very large object, but it has been a significant and
symbolic object in the history of the Minsk retail market since the 1960s.
80,0%
>10,000 sqm
2013 is expected to be rich in terms of retail real estate development in Minsk. Apart
5,000-10,000 sqm from the beginning of full-scale functioning of shopping and entertainment centres
Galileo and Zamok, a third large shopping and entertainment centre, Arena City, will be
under 5,000 sqm
launched. It was initially expected to enter the market in 2012. The total area of the
object is nearly 88 thousand sqm, while the GLA of the shopping and entertainment area
exceeds 33 thousand sqm. The object had a high level of construction readiness in the
end of 2012.
5
15,2%
4
4,8%
Number of projects
Share in total
projects' area
The probable completion of a number of large retail objects that were initially scheduled
to enter the market in 2013 is quite high. More than 10 neighbourhood and district
shopping centres are likely to be commissioned. In general, new retail spaces with a total
GLA of more than 250 thousand sqm are expected to enter the market in Minsk in 2013.
Two multi-purpose shopping and entertainment centres will undergo the active
construction stage in 2013. These will be Galleria Pobediteley 9 in the centre of Minsk
and Green City in one of the most populated suburbs.
MODERN RETAIL REAL ESTATE
MARKET IN REGIONAL CITIES OF
THE REPUNLIC OF BELARUS
Objects of large formats with GLA exceeding 10 thousand sqm are prevailing among the
projects scheduled for completion not only in terms of the total number, but also in terms
of the total area.
250 000
GLA sqm
Projects expected to be completed in 2013 reflect the tendency observed during the past
three years; the geography of such objects is gradually shifting from the city centre to
suburbs. This is caused not only by the increasing deficit of land plots suitable for project
implementation in the city centre, but also by the growing interest of developers in
residential districts where most of the population resides.
200 000
90 800
150 000
100 000
REGIONS
66 400
49 824
114 700
50 000
68 400
22 000 28 600
60 450 59 200 64 500
0
Brest
Vitebsk Gomel Grodno Mogilev
Total stock
New construction
The retail real estate market was developing very actively in some regional cities during
the last few years. Such areas mostly included cities and towns with more than 100
thousand inhabitants.
The rate of development of the modern retail real estate market in regional cities is
comparatively uniform. Retail spaces are slightly bigger in Vitebsk as a result of the
commissioning of large objects like the Korona shopping centre and the Marko-City
multi-purpose complex. Other large objects are currently being constructed in Vitebsk.
Compared with the overall situation in the regions, the retail infrastructure in Brest is well
developed. Large new shopping centres Korona and Euroopt are operating in the city.
Sovetskaya Street in Brest has probably the most developed segment of street retail in
the entire country. The Grand Fashion House company is expected to launch its
shopping complex on Kuibysheva Street this year. In terms of its format, the object is
very similar to a fashion centre. A number of other projects are currently in various
stages of implementation.
STRUCTURE OF DEMAND FOR SPACES
IN MODERN SHOPPING CENTRES BY
THE NUMBER OF APPLICATIONS
In 2012, the city of Gomel was leading in terms of large purchase and sales transactions
in the retail real estate market. For instance, Eurotorg company acquired the Liniya
shopping centre, the total area of which exceeds 13.5 thousand sqm, from Russia’s
Liniya GRINN group. NP-Service acquired a 29.5 thousand sqm shopping centre with a
multi-level parking facility from the local development company Novy Standart.
DEMAND
under 50 sqm
3%3%
22%
50 - 100 sqm
39%
100 - 300 sqm
300-500 sqm
33%
>500 sqm
The demand for small areas in retail galleries (up to 50 sqm and 50 to 100 sqm) still
remains high. Individual entrepreneurs and domestic retailers from the category of small
enterprises are interested in such areas. Such areas also attract chains selling
expensive items, e.g. watch shops, jewellery shops, mobile phone shops and some
others.
Meanwhile, the development of the most successful chains present on the market as
well as the entry of new market participants has increased the interest in areas of 300 to
500 sqm and larger, depending on the standards adopted by the companies. The
number of applications for such areas is gradually increasing.
Food retail chains became more interested in rental spaces. Such companies are
interested in areas starting from 700-800 sqm and up to the hypermarket territory areas.
RENTAL RATES
Rental rates in rubles went up in 2012 due to the coming into effect of the Decree No.
150 of the President of the Republic of Belarus. For objects owned by the state or
municipalities or of equivalent form of ownership, rental rates went up due to the
introduction of the basic rental amount (BYR 54 thousand) instead of the previous basic
amount used to set rental rates, which amounted to BYR 35 thousand by 1 April 2012.
Since the exchange rate of the Belarusian ruble against the Euro remained relatively
stable throughout the year, rental rates in euros at such objects increased as well.
RENTAL RATES
Area
Rental Rates*
Up to 50 sqm
40 – 100
50 to 100 sqm
25 – 45
100 to 500 sqm
10 – 30
more than 500 sqm
7 – 19
* - EUR per square meter per month, VAT excluded
The rates at privately owned objects went up because the Decree No. 150 legitimated
free pricing in this sector. As a result, the average rental rates in the city increased within
a few months after the Decree had come into effect: rental rates for food product retail
spaces went up from EUR 8 to EUR 19 per sqm; those for non-food product retail
spaces increased from EUR 14 to EUR 25 per sqm. According to experts at Colliers
International, the rates at some objects went up by as much as four times.
The most noticeable increase in rental rates occurred in marketplaces and shopping
centres of old formats, where individual entrepreneurs are the main tenants. Rate
fluctuations were not so obvious at modern objects, where tenants are retail chain
operators, because in such cases the tenants and the operators had been trying to agree
on mutually acceptable rates since the end of 2011, after the situation on the monetary
and financial market had stabilised.
Price changes that occurred in 2012 can hardly be referred to as an increase in rental
rates. The rates did not reach the pre-crisis level reported in H2 2010 and Q1 2011 at all
shopping centres. However, there are objects that saw a considerable growth of rental
rates. The increase of the rates for small premises was especially notable. The main
reason for such an increase was not the aforementioned decree, but the stabilisation of
the consumer market, the growing demand and, as a result, the increasing activity of the
retailers.
VACANCY
The increase in the amounts of rental rates did not result in a considerable increase in
the volume of vacant areas. According to city authorities that monitored the situation at
shopping centres and marketplaces across Minsk during the first few months after
Decree No. 150 came into force, only 0.01 per cent of all the tenants in Minsk refused to
enter into new agreements or additional agreements appended to contracts still in force.
VACANCY RATES AT SHOPPING
CENTRES IN MINSK
7,0%
6,0%
Experts at Colliers International notice that the vacancy rates did not increase at privately
owned shopping centres either. There are objects on the market in which premises either
are not being filled or are being positioned on the market for a long time before being
filled. Such objects are of old formats.
5,0%
4,0%
3,0%
New objects did not have a significant effect on the vacancy level because they did not
have a large volume of vacant spaces to offer on the free rental market. The ALL
shopping centre was the only exception, as it was a totally speculative project. However,
the premises at this object were filled within some three months after opening.
2,0%
1,0%
0,0%
2007
2008
2009
2010
2011
RETAIL REAL ESTATE OBJECTS
SCHEDULED FOR LAUNCH IN 2013
2012
Rental spaces at large objects like shopping and entertainment centres Galileo and
Zamok as well as Arena City, which is to be launched next, will have much influence on
vacancy rates in 2013, because the filling of the object by tenants will peak during that
period. Since the filling process continues, it is difficult to tell how many vacant spaces
will remain at the object at the time of opening, but there will definitely be some.
Project
Developer
GLA,
sqm
Arena-City*
Koltso (1st
stage)
Zamok (2nd
stage)
Galileo
Triple
Rostem
33,270
24,000
TabakInvest
BNK
Engineering
TabakInvest
21,400
Tivali Centre
Festivalny
Centre
20,000
Skala
Rapa Torg
17,000
А-100
А-100
12,200
• Rental rates will remain stable and will be increasing at some new projects;
Bonus
PIK - Invest
10,400
• The dynamics of the growth of retail turnover will be positive;
No name
Mortex BCZ
10,000
Euroopt
Eurotorg
10,000
Nemiga-5
Fart i V
9,900
• Retail companies will keep acting as developers;
Grand Fashion
Mall
Euroopt
Autobiznes
8,700
• Anti-monopoly regulation of retail trading activities will be toughened.
Eurotorg
8,000
Slavianski Kvartal
6,200
Vitalur
Vneshekono
mstroy
Vitalur
No name
Lankorma
4,900
Vitalur
Vitalur
4,000
А-100
А-100
2,475
Vitalur
Vitalur
2,250
Korona-Uruchje
20,400
• A number of construction projects with GLA of more than 20 thousand sqm will be
completed;
• Objects launched in December 2012 will start functioning on the full scale;
20,300
• New foreign chain operators will enter the Belarusian market;
5,000
• The geography of presence of some retail chains will be expanded. Retail operators
will be active in the markets of regional cities;
• The volume of investments in the retail sector and retail real estate will increase;
4
19
37
1
2
11
4
6 47
7
17
51
45
7
16
16 17
41 6
22 31
53 34
5
52
50
6
1
23
55
30
3
48
Zebra
18 9
9
54
1.
3
8
10
20
33
32
24
39
27
36
26 25
(
13
28
44
7
12
phase)
39
5 14
40
15
1
8
29
49
9
10 11 13
12 46
4
3
42 14
15
35
8
18 2
43
5
2
19
20
21
Map data (c) OpenStreetMap (and) contributors, CC-BY-SA
| BELARUS | HOTEL MARKET
Hotel Market
OVERVIEW
OPERATING CERTIFIED HOTELS IN MINSK
Star
Rating
5*
Name
Number
of
Rooms
Operator
Crowne Plaza
Minsk
115
Princess
Group (IHG)
Hotel Europe
5*
Europe
67
4*
Victoria
169
Stolitsa
4*
Minsk
252
Hotel Minsk
3*
Dom Moskvy
14
Dom Moskvy
3*
Orbita
210
Hotel complex
Orbita
3*
Planeta
306
Hotel Planeta
3*
Sputnik
136
Minotel
3*
U Fontana
3*
Yubileynaya
3*
IBB
18
239
41
Hotel U
Fontana
Hotel complex
Yubileiny
Johannes Rau
International
Centre for
Education and
Exchange
Hotel complex
Tourist
3*
Tourist
3*
Garni
49
Minotel
2*
Zvezda
94
Zvezda
202
In 2011, the possibility to strip the Republic of Belarus of the right to host the event was
being discussed and the risk remained that the championship in Minsk would be
cancelled. However, on 18 May 2012, the Helsinki Congress of the International Ice
Hockey Federation (IIHF) approved Minsk as the host city for the 2014 World
Championship. Documentary approval of Belarus as the host country of the 2014 World
Championship had a positive effect on the moods of investors and developers and
added new dynamics to the construction of hotels and the development of related
infrastructure.
2012 saw the active development of hostels and the hospitality business sector, which
was new to Minsk. Only two hostels had been operating in Minsk previously, and both
were launched in 2011. Meanwhile, four new hostels were launched in 2012, two of
which belonged to the same owner.
2012 was also characterised by the development of yet another hotel real estate
segment in Minsk: Comfort apart-hotel with 134 apartments, the first of its kind in
Belarus, was opened in March.
Marriot and Accor chains officially confirmed their intentions to operate on the Belarusian
market in 2012. Marriot showed interest not only in the Minsk market, but also in the
markets of regional cities like Brest.
Meanwhile, it was also announced that the Rezidor SAS chain refused to operate the
hotel based in the complex of the National Olympic Committee headquarters, and the
municipal company called Stolitsa joined the project as the operator. The hotel was
named Victoria Olymp.
SUPPLY AND NEW CONSTRUCTION
1,912
Total
Ever since 2009, the development of the hotel real estate market in Minsk has been
related to the preparation of the city for the 2014 Ice Hockey World Championship
(hereinafter – the 2014 World Championship).
A total of 30 hotels with 3,319 rooms, including the Robinson Club hotel that was opened
in Minsk suburbs in 2011 and the Comfort apart-hotel, are currently operating in Minsk.
The hotels can accommodate approximately 4,400 guests.
Operator
14 hotels in Minsk that have a total of 1,912 rooms are officially certified for 2- to 5-star
ratings. Hotel Tourist has been certified for a three-star rating too. To achieve that, in the
period between 2005 and 2012 nine floors of the hotel were renovated, including full
replacement of furniture and plumbing equipment.
Hotel
Comfort
President Hotel (5*) and the reconstructed Poliot hotel were expected to start operating
by the end of 2012. However, neither of the two hotels was launched.
PROJECTS CONPLETED IN MINSK IN 2012
Star Rating
Name
Apart-hotel
Comfort
Number
of
Rooms
134
3*
Garni
49
Minotel
The hotel on Zamkovaya Street, constructed using city budget funds, had also been
previously declared to be launched in 2012. However, by the end of the year the
construction was only about 40 per cent complete, and the Minsk city authorities
announced it was looking for a private investor to be able to complete the construction
works. Neither the potential investor, nor the possible construction completion time, was
known by the end of the year.
The situation with the one-star hotel on Yakubovskogo Street, the first of its kind in
Minsk, was unclear. The hotel was launched in the end of December 2011. However, it
was not operating during the entire year of 2012. Meanwhile, as a real estate object, the
hotel is officially planned to be launched in the beginning of 2013.
Therefore, just two new hotels with a total of 183 rooms were actually launched in Minsk
during 2012.
ENTRY OF FOREIGN TOURISTS TO
THE REPUBLIC OF BELARUS
34 projects (including those announced in the end of 2012) are currently in various
stages of implementation and construction readiness in Minsk. 12 to 15 announced
projects may actually be completed before the beginning of the 2014 World
Championship.
140
000s
120
Sites earmarked by the Minsk City Executive Committee for the construction of hotels
remain reserved and investors are still interested in them. Therefore, the development of
new projects to be completed in 2015-2016 may be expected in the future. The total
number of ongoing and potential projects in Minsk is estimated at 46.
100
80
A number of new hotel construction projects were announced in 2012. Some of them are
currently at the level of declarations of intent and have not been designed yet. Some
others started being constructed immediately upon announcement. Among new
participants of the hotel development sector, Lada OMS Engineering is especially worth
mentioning. After the completion of the Comfort apart-hotel project, the company
announced the beginning of implementation of two other hotel real estate projects
adapted for international operator Accor, which owns Novotel and Mercure networks.
60
40
20
0
2007
2008
2009
2010
2011
2012
Source: National Statistics Committee of the Republic of
Belarus
Adjustments to the previously announced projects were voiced as well. For example, the
number of rooms in the project of a hotel located in the multi-purpose complex at the
intersection of the Pobediteley Ave. and the Narochanskaya St. was reduced from 264 to
130.
Some market participants start noticing yet another problem related to the rapid
development of the hotel market in Minsk, and that is professional personnel. At least 3
thousand qualified staff members are expected to be needed in the 2013-2014 period.
There is a risk that due to the lack of well-trained personnel, the vacancies will be filled
by staff with a high-turnover, which will negatively affect the quality of services.
TOURIST ACTIVITY BY COUNTRY
DEMAND AND PRICES
3%
2%
2%
2%
1%
2%
3%
CIS
7%
Lithuania
Poland
According to the statistical data provided by the State Border Committee, 6.13 million
foreigners visited Belarus in 2012. 4.3 million of them visited the country on private or
business visits or as tourists. Minsk was visited by 400 thousand foreigners, mostly on
business visits.
Latvia
Germany
Italy
UK
78%
Turkey
Other
countries
More than 118.7 thousand people visited Belarus as members of organised tourist
groups in 2012.
Just like previously, medical tourism, especially the segments of health resorts and
dentistry, remain popular with foreigners, being very attractive in terms of the price to
quality ratio. Hunting tourism tours are also popular; such tours generated 50 per cent
more revenue in 2012 compared with the previous year. In 2012, market participants
also noticed that the visiting of farmsteads and gaming establishments is becoming
popular with foreign tourists, and especially with citizens of the Russian Federation.
ACCOMMODATION PRICES AT MIMSK HOTELS, PER DAY
Star Rating
Standard Room
Double Standard
Deluxe
Apartment
5*
240 - 270
260 - 310
330 - 370
550-1400
4*
138 - 143
159 - 184
222 - 247
437 - 615
3*
67 - 86
87 - 125
99 - 201
214 - 367
DYNABICS OF THE AVERAGE HOTEL
OCCUPANCY IN BELARUS AND
MINSK
70
Residents of the CIS are prevalent among the foreigners visiting Belarus due to the
absence of a visa regime. Citizens of a number of remote foreign countries also enjoy a
visa-free regime with Belarus, but they visit Belarus not as actively because of their
remote geographical location. In 2012, Belarus issued 450 thousand visas to citizens of
countries that have a visa regime with Belarus, including the EU Member States.
Hotel accommodation prices in Minsk remained virtually unchanged in 2012 compared
with the previous year; on the one hand, accommodation costs did not decrease, and on
the other hand there was no point for hoteliers to raise the prices, since prices at Minsk
hotels were higher than those found at most capital cities of Central European countries.
As a result, the situation in which potential hotel clients prefer private apartments
available for short-term rental is typical for Minsk.
%
65
60
55
50
However, prices increased slightly in the segment of three-star hotels at the end of the
year; the Garni hotel was launched in September, and the prices of certain types of
rooms at the hotel were above the market average.
45
40
35
30
2005 2006 2007 2008 2009 2010 2011 2012
Belarus
Minsk
Source: National Statistical Committee of the Republic of
Belarus
In December 2012, hoteliers were offered a draft memorandum stipulating the pricing at
Minsk hotels during the period of the 2014 World Championship. The main purpose of
the document was to reach a corporate agreement not to raise the prices of hotel
services by more than 10 per cent compared with the current level.
OCCUPANCY RATES
According to the results of 2012, the number of guests at the hotels in Belarus and Minsk
is expected to go up by 2.5 to 4.5 per cent compared with the previous year.
DYNAMICS OF THE CHANGE IN
MODERN RETAIL SPACES IN MINSK
000s
450
The positive dynamics of the growth of the number of guests led to good occupancy rate
results. The average occupancy rate in Minsk was 68 per cent, while the national
average was 43 per cent.
Occupancy rates were the highest at inexpensive hotels without a star rating as well as
at two-star hotels. The average occupancy rate of such hotels reached 96 per cent.
400
350
The three-star hotel Garni, which was launched in September, reported the occupancy
rate of more than 90 per cent during the first months of operation.
300
250
200
Just as in previous years, the number of foreign guests exceeded that of the local
guests.
150
100
50
0
2006 2007 2008 2009 2010 2011 2012
Foreigners
Local
Source: National Statistical Committee of the Republic of
Belarus
• Within the framework of preparation for the 2014 Ice Hockey World Championship,
construction works in projects scheduled for completion before the aforementioned
event are becoming more active;
• The number of announced new projects at sites reserved for hotel construction will
decrease;
• The integration of Belarusian hotels into international booking systems will continue;
• Developers will keep attracting major international operators to the projects;
• International operators are expected to show interest in projects developed in
regional cities of the Republic of Belarus;
• The level of competition on the market of hotel services will remain moderate in 2013
due to the completion of most of the announced projects by the end of the year.
32
14
31 15
5
7
10
16
30
8
29
1
12
11
13
12
20
11
Map data © OpenStreetMap (and) contributors, CC-BY-SA
33
9
4
3
24 5
23
9
7
10
6
27
2 19
3
2
2
13
25
4
6
1
1
18
17
22
28
21
26
8
34
Map data © OpenStreetMap (and) contributors, CC-BY-SA
| BELARUS | INDUSTRIAL MARKET
Industrial Market
OVERVIEW
DYNAMICS OF THE LAUNCHING OF
MODERN WAREHOUSSING FACILITIES IN
MINSK AND MINSK DISTRICT
700
Sqm (000s)
600
500
Construction work on 23 large warehouse real estate objects was undertaken at 22 sites
in the Republic of Belarus in 2012. 15 such projects were located in the territory of the
Minsk Region. When taking into consideration both new objects and existing objects that
are undergoing modernisation and development of warehousing infrastructure, a total of
48 projects are being developed in the country.
Rapid high-quality development of modern logistics infrastructure is important for Belarus
because of the need to implement the action plan aimed at improving the country's rating
in the World Bank's Logistics Performance Index. This fact is not a mere formality for
Belarus; the development of logistics infrastructure and the improvement of the country’s
position in the mentioned rating opens up many new prospects for Belarus in the global
goods movement system. This is especially important considering the location of the
Republic of Belarus between the EU and the CIS, the country’s participation in the
Customs Union with Russia and Kazakhstan, and the transition of trans-European
corridors No. 2 and No. 9 through the territory of the country (west to east and north to
south).
The prospect of Belarus in the European logistics system was mentioned in the
”European Industrial & Logistics: A Long-Term Review” report of the central office of
Colliers International in the EMEA region, according to the results of extensive research
of the European logistics market, which was carried out together with the company’s
partners.
400
EUROPEAN LOGISSTICS CENTRES IN 2020
300
200
100
0
2006 2007 2008 2009 2010 2011 2012 2013
Expected Construction
New Construction
According to the conclusions made by European researchers, Minsk and Belarus have
all chances to become potential centres of distribution in Europe, potentially being
incorporated into the global regional logistics system by 2020. In order to realize this
possibility fully, both the state and business community need to develop the logistics
infrastructure in Belarus to similar levels as in established logistics centres throughout
Europe, especially since other regional logistics centres are expected to emerge in the
East, and they may either add to the Belarusian vector or become its rivals.
ОСНОВНЫЕ СКЛАДСКИЕ ДЕВЕЛОПЕРЫ
В 2012 г. (ПО ОБЪЕМУ НОВОГО
СТРОИТЕЛЬСТВА)
4
The expediency and attractiveness of this segment of commercial real estate
developers is worth mentioning separately. According to information from
Beltamozhservice company, the owner of two transportation and logistics centres,
workload of the company’s transportation and logistics centre in Brest exceeds 100
cent (the company has to look for additional spaces to meet clients’ demands);
workload of the object located near Minsk, which was launched later, reaches 72
cent, and the profitability of logistics services stands at 80 per cent.
for
the
the
per
the
per
The analysis of the first year of activity of the transportation and logistics centre revealed
that the estimated project payback period may be decreased from 8 to 5 years.
Therefore, the payback period of the Schitomirichi transport and logistics centre, a new
large object scheduled for launch in 2013, is estimated at 6 years.
77 205
The recent Decree No. 284 of the President of the Republic of Belarus on 21 June 2012
simplified the documentation procedures and eased the requirements for wholesale and
warehousing of alcoholic beverages, alcohol-containing products and tobacco products;
this decree, in turn, has simplified the activity of logistics operators.
9
68 755
SUPPLY
1
New industrial real estate objects, including warehousing logistics objects, were being
actively launched in 2012.
4 800
Number of projects
% GBA of projects
13 new warehousing complexes with a total area of around 140 thousand sqm were
launched in the territory of Minsk and the Minsk Region during the year.
above 10 000 sqm
5 000 - 10 000 sqm
under 5 000 sqm
MODERN WAREHOUSING COMPLEXES
LAUNCHED IN 2012
Developer
Type
Belvingeslogistik
(Belintertrans)
BLT-Logistic,
second stage
Vladprodimport
Logistics
Centre
Logistics
Centre
Logistics
Centre
Distribution
Centre
Logistics
Centre
Eurotorg
MZBN
GBA,
sqm
19,300
20,770
19,340
10,795
10,000
Logicom Import Ltd.
Warehousing
Complex
9,750
Ernis
Distribution
Centre
Warehousing
Complex
Logistics
Centre
Warehousing
Complex
Distribution
Centre
Logistics
Centre
Warehousing
Complex
9,055
Grand-Elite
Minsk Kristall
Evrokad
Belrusinvest,
Second Stage
Amazon-Kolorit
Victoria-91
Total:
8,000
7,300
6,700
5,950
5,600
4,800
137,360
Just as in previous years, companies of the built-to-suit segment were the most active
developers in the warehousing real estate market in 2012. However, during the previous
years, such objects were usually small and aimed at covering the existing demand of
companies for warehousing spaces. Meanwhile, projects developed in 2012 were
focused on quality and technological equipment. For instance, the Minsk Kristall trade
and logistics centre is a unique object in its own way; being 24 meters high at the highest
point, it allows eight-tier storage, has autonomous water supply and heating systems,
and features fully automated transport operation management.
Not all announced objects entered the market in 2012. However, this year was well
ahead of the previous ones in terms of the amount of launched warehousing spaces.
In 2012, developers had planned to launch modern warehouses with a total area of more
than 240 thousand sqm. However, the first stages of the biggest logistics complexes,
including Prilesye and Schomyslitsa, as well as some smaller objects were not
completed.
Projects and start-up facilities in projects that postponed their launch dates are likely to
be launched in 2013 because the construction readiness of such projects is quite high.
Therefore, more than 240 thousand sqm of new warehousing spaces may be launched
in 2013.
A number of projects scheduled for launch in 2014-2015 were also announced in 2012.
For example, Eurotorg Company, which operates Euroopt, one of the biggest retail
chains in Belarus, announced the construction of new warehouses. The need to build
new warehouses arose because two of their existing warehouses that were launched
near Minsk in 2010 and 2012 are unable to satisfy the needs of the rapidly growing
network. As a result, the company is currently building a 23 thousand sqm logistics
centre in Baranovichi, Brest Region, and may also build another large object in the Minsk
Region.
The Belintertrans Company, which operates the logistics centre in the Valozhyn District,
intends to build a large transportation and logistics centre near the Khatezhino village in
the Minsk District. For this purpose, it established the authorised company M-LogisticCity; more than 55 thousand sqm of warehousing facilities will be built in the territory of
15 ha.
DISTRIBURION OF PROJECTS
SCHEDULED FOR 2013 BY AREA
Transportation and forwarding company InterTransEkspeditsiya intends to build its own
transportation and logistics centre in Dzerzhinsk.
Another logistics operator and developer, the Belrusinvest group, will start building a new
18 thousand sqm logistics centre in 2013.
4
51%
The objects scheduled for launch in 2013 preserve the tendency of the increase in the
number of projects with large areas and the prevailing of such projects over the small
ones. However, medium-sized objects with areas of 10 to 20 thousand sqm are popular;
they are prevailing in terms of the number of such objects and constitute a considerable
percentage of the total volume of spaces.
6
DEMAND
44%
2
5%
Number of Units
% GBA of Units
20,000 and more sqm
10,000-20,000 sqm
Unlike the crisis year 2011, 2012 saw a clear normalisation of the demand for
warehousing spaces. The demand from consumers for spaces in new warehousing and
logistics complexes launched in 2011-2012 was stable. What is especially important, the
demand for large spaces was high, and the main tenants were professional distributors
and logistics companies: in some objects, the tenants were affiliated with the owners,
while other objects were rented out to third-party operators.
For example, an area of 6,000 sqm at the BelVingesLogistic logistics complex was
rented out to foreign limited liability company ALIDI West, a regional subsidiary of
Russia's ALIDI Group. The remaining spaces were operated by its subsidiary L-BIT
Group.
5,000-10,000 sqm
DISTRIBURION OF PROJECTS
SCHEDULED FOR 2013 BY AREA
The entire complex of Techstroyresurs company, including warehouses and
administrative and residential premises, with a total area of 15,811.5 sqm was rented out
to the limited liability logistics company Kompaniya FSK Logistic, a subsidiary of the
Russkie Sladosti limited liability company, which was previously located at the Novinki
complex owned by BLT-Logistic. Limited liability company European Fastening
Technologies became the new operator of the mentioned complex.
Meanwhile, BLT-Logistic focused on running a new complex in the Obchak village with a
total area of more than 41 thousand sqm. The complex was launched in two stages in
2011-2012.
25,0%
50,0%
25,0%
Professional logistics companies
Distributors and retail trade representatives were also active in the rental market. For
example, the entire warehousing complex with administrative premises with a total area
of 7,000 sqm, built by Evrokad in Bolshoi Trostinets, was rented by Patio, the operator of
the 5 Element chain of domestic appliance supermarkets.
Companies within this segment as well as manufacturing companies were also the most
active in the built-to-suit segment.
In 2012, the main tendency in the rentals market was as follows: professional logistics
companies became the main tenants instead of food product distributors, who dominated
in the warehousing rental market previously. Another typical feature of 2012 was that the
demand for large warehousing premises was not satisfied; as a result, the demand for
spaces in objects to be launched in the short and medium term is likely to be high.
Non-food products
Food products
RENTAL RATES
Following the drop and the subsequent rise observed in 2011, rental rates stabilised in
2012. However, the range of rental rates for objects of comparable quality expanded
slightly, partially because of certain cases when tenants rented large spaces and even
the entire new objects (resulting in a drop of rates), and partially because of owners’
attempts to raise the rental rates for small spaces above the market level.
12
There are no obvious preconditions for a drop in rental rates in 2013, as some of the
objects expected to be launched this year are built-to-suit objects, and others are being
built through shared-equity construction projects, which reduces the total volume of
rental spaces. There is also a high probability that not all of the planned projects will be
completed this year.
10
Therefore, the market will not be oversaturated with new warehousing spaces in 2013,
and the rental rates will remain on a considerably high level.
DYNAMICS OF RENTAL RATES
EUR
8
VACANCY
6
Following the post-crisis normalisation of economic activities of Belarusian companies,
by the end of 2011 the vacancy rate in the market of warehousing spaces stopped
growing and started showing signs of decrease. This process continued throughout
2012.
4
2
2007 2008 2009 2010 2011 2012
Class B
The launch of a considerable volume of new spaces did not result in increase of the
vacancy rate: the supply was being immediately absorbed due to the deferred demand
that occurred in the previous year.
Class A
DYNAMICS OF VACANCY OF
WAREHOUSING FACILITIES
10,00%
9,00%
8,00%
The supply was increasing only upon the launch of some new objects. However, rental
spaces were being positioned on the market for a very short period of time and were
removed from the supply within 1.5 to 3 months. While small spaces were still available
on the market, the demand for spaces of several thousand sqm was often not satisfied.
The situation did not change by the end of the year, since several new objects were
launched at that time, causing the supply to increase. Some spaces may also become
available to market participants within built-to-suit objects after their owners make final
decisions regarding the necessity for spaces to meet the needs of their own businesses.
For instance, at the end of the year, the Minsk Soft Drink Factory offered for rent 3,200
sqm of warehousing spaces in its complex with a total area of 10 thousand sqm.
Meanwhile, Vladprodimport rented out some of its spaces to the retail chain operator
Euroopt.
7,00%
6,00%
5,00%
TENDENCIES AND FORECASTS FOR 2013
4,00%
• There will be moderate growth of supply in the rental market as a result of the launch
of new objects;
3,00%
2,00%
• The first objects in large logistics parks that are currently under construction will likely
be launched;
• The current level of rental rates will remain unchanged;
1,00%
0,00%
• The demand for the services provided by customs warehouses and terminals,
including the demand from non-residents of the Republic of Belarus, will increase
because of the activity of the Customs Union of Russia, Belarus and Kazakhstan;
• Activity of developers from the built-to-suit segment will remain high;
• The market will see implementation of projects adapted for subsidiaries of logistics
companies and logistics companies affiliated with the developers.
3
15
19
12
7
5
12
4
2
10
6
4
11
9
3
1
21
17
8
10 2
7 11 14
11
9
13
1
1
8
12
8
4
9
7
10
22
20
3
5
2
18
13
5
6
16
6
BELARUS
Legal
Real estate in Belarus can be purchased in two ways – via an asset transfer deal or via a share transfer deal.
Asset deals and share deals relating to real estate are both commonly used in practice.
Asset Transfer Deals
Main Steps
Usually the sale of real estate by one party (seller) to another party (buyer) would be completed within 2-3 months
following these main steps:
1. The parties agree on the main terms of the deal (eg full information about the real estate object, purchase
price, payment mechanism, deadline for signing the final agreement). Sometimes, in the case of a larger
real estate transaction, the agreement between the parties on the main terms of the deal is reproduced in a
letter of intent or a preliminary purchase agreement concluded by the parties. Due diligence of the real estate
may be performed before the transaction.
2. If the real estate is subject to a right of first refusal to acquire the property by local authorities, the seller
offers the local authorities to exercise their right. The offer contains the same conditions as agreed between
the seller and the buyer. Local authorities have up to 5 working days to decide.
If the real estate is in joint ownership, the seller offers the co-owner to exercise its right of first refusal to
acquire the property. The co-owner has up to one month to decide.
3. If a third party with a right of first refusal acquires the property, then the purchase agreement is concluded
with that party. If a party with the right of first refusal declines acquisition then the seller and the buyer sign
a purchase agreement in at least three copies.
4. All copies of the signed agreement must be registered with the Unified State Register of Real Estate, Rights
thereto, and Transactions therewith (the Real Estate Register). Registration is performed on the basis of
an application signed by the representatives of both parties. In the purchase agreement the parties are free
to authorise one of them to sign the application on behalf of both of them.
5. After registration of the purchase agreement with the Real Estate Register, registration of the transfer of the
title to the property may be requested. Registration of the title may also be requested together with
registration of the agreement, unless otherwise provided by the purchase agreement.
It is common for the seller to require payment of the full price prior to the transfer of real estate to the buyer
and registration of the buyer’s rights in the Real Estate Register. Under current law, as a general rule, real
estate is considered to be mortgaged by the seller if it was transferred to the buyer but has not been fully
paid.
Main Benefits and Drawbacks




limited scope of due diligence investigation since the review concerns only the target asset;
agreements on supply of utilities and other services must be assigned to the buyer or new agreements signed
with service providers;
in some cases possibility of exercise by the local authority of its right of first refusal to buy buildings situated
within the respective administrative unit; and
foreign individuals and legal entities cannot own land plots (except for foreigners who inherit land plots).
Transfer of assets of a unitary enterprise features certain peculiarities. A unitary enterprise is an organisational
form of commercial legal entity established by one shareholder (founder). All assets of a unitary enterprise are
considered the property of the founder and assigned to the unitary enterprise under business management. The
authorised capital of a unitary enterprise is not divisible into shares.
Assets of a unitary enterprise can be transferred either individually (asset transfer) or as an asset complex (a kind
of share transfer). An enterprise as an asset complex is considered as real estate. Hence, a unitary enterprise as
an asset complex, transactions involving an assets complex and rights to it must be registered with the Real Estate
Register.
Transfer of an asset complex requires subsequent amendments to the articles of association of the unitary
enterprise and state registration of the amendments. The buyer of an asset complex (new founder of the unitary
enterprise) assumes responsibility for the whole company including any matters that occurred before change of
ownership, so that extensive due diligence is recommended.
Share Transfer Deals
Main Steps
The main steps for share transfer deals are:
1. Initial agreement on the transaction. This involves the understanding by both parties of the sale process.
At this stage, the parties may sign a Letter of Intent (usually non-binding) that will in general state the
understanding of both parties on the subject of the sale and the potential price (including price calculation).
The parties may also sign a confidentiality agreement to prevent leak of valuable information.
Usually at this stage a due diligence of the target company starts. Depending on the volume and business
activities of the target company, the buyer performs legal due diligence, tax due diligence and financial due
diligence, as well as other diligences that are less common – technical, environmental, and others.
The aim of the due diligence is to identify potential risks having negative consequences for the business or
share value of the target company.
Results of the due diligence can lead to decrease of the purchase price, change of the transaction structure
or even to a decision not to proceed at all.
2.
Pre-emptive rights of shareholders
If the seller sells a share in a limited liability company, additional liability company or closed joint stock
company, the seller should first offer the share to other shareholders and the company itself. The
shareholders and company itself should waive their rights to acquire the share prior to sale of the share to
third parties. The share may be sold to third parties at the price and on the same conditions as offered to
the shareholders and the company.
3.
Obtaining consent of the antimonopoly authority to the transaction.
In certain cases the consent of the antimonopoly authority (Department of Price Policy of the Ministry of
Economy of Belarus or departments of price policy of municipal authorities) is needed before the transaction
is even signed. Examples include transactions where the buyer and the target company operate in the same
commodity market and all the following conditions are met: (i) the intended transaction relates to acquisition
of shares of the target; (ii) the buyer and the target perform their activity in the same commodity market; (iii)
the buyer’s activity covers more than 30 % of a certain commodity market; (iv) the buyer is a legal entity or
an individual entrepreneur. The antimonopoly authority has one month to issue its consent for carrying out
the transaction.
1.
2.
3.
Agreement on terms and conditions of the transaction.
If the results of the due diligence were satisfactory, the shareholders and the company waive their right of
first refusal to acquire the share and the consent of the antimonopoly authority was obtained, the parties
start work on the transaction documents.
Depending on the complexity of the transaction, negotiations on the terms and conditions of the transaction
documents can take from several weeks to several months.
Closing the transaction.
When the parties have agreed on all terms and conditions of the transaction agreements, signing of
documents takes place.
The time for closing is required to perform acts required for closing so that the title to the shares and control
of the target company can be transferred from the seller to the buyer on the closing date. These include eg
obtaining shareholders’ and company waivers, consent of antimonopoly authority, obtaining payment for
shares, plus performing other acts stipulated in the share transfer agreement.
Registration of changes of shareholders
The amendments to the articles of association reflecting new shareholders of limited liability companies
must be registered with the Unified State Register of Legal Entities and Individual Entrepreneurs (the USR).
Registration takes one day. A change in the shareholders of open and closed joint stock companies is
registered by the depository who enters new shareholders in a special shareholders register. No
amendments of the articles with USR are required to formalize changes of shareholders of these companies.
Issues to Take Into an Account
A share transfer of a company holding target real estate features the following:
 the buyer, on completing the transfer of shares, assumes responsibility for the whole company including any
matters that occurred before change of ownership;
 due diligence investigations are more extensive as a share transaction transfers the entire company (with all
known and unknown rights and liabilities) as opposed to due diligence of target real estate only;
 ownership of shares is transferred either as of the date the company is notified of the share purchase
agreement (for LLC) or as of the date of transfer of shares to the account of the buyer, held with a depositary
(for JSC); and
 VAT is not payable.
Title to Real Estate, Real Estate Register
Land plots can be held by legal entities (including those with foreign investments) in Belarus on the following
titles: right of ownership, right of permanent use, right of temporary use. Individuals and Belarusian and foreign
legal entities can also lease land plots.
Land plots, transactions, and titles to them must be registered with the Real Estate Register.
Buildings, agreements with respect to buildings, and titles to buildings are also registered with the Real Estate
Register. Lease agreements and lease rights to buildings need not be state-registered.
The Real Estate Register stores information regarding the legal status of real estate, including encumbrances.
The real estate information contained in the Real Estate Register is publicly available. However, a list of all real
estate objects owned by a particular individual or legal entity is unavailable to third parties.
General
Land plots can be acquired as a result of allocation as decided by local authorities or as a result of a transaction.
Transfer of a building involves transfer of title to the land plot to the new owner of the building. If the underlying
land plot is leased, then the rights and obligations of the tenant of the land plot are transferred to the new owner
of the building.
An acquisition may be invalidated upon a claim by the buyer if the building is leased and the acquisition agreement
does not contain information about it.
Change of Ownership
Change of ownership requires registration of the transaction, transition, and accrual of the right to real property
with the Real Estate Register. The period for registration is usually seven working days as of filing all necessary
documentation with the Real Estate Register. Fast-track registration procedure takes two working days.
Form of Agreements
Transactions with real estate require written form. The transaction should be certified by a notary or the registrar
of the Real Estate Register, if an individual is a party to the transaction (except for individuals acting in the capacity
of individual entrepreneurs and having a seal). A transaction with real estate requires registration with the Real
Estate Register, except for lease agreements of buildings and constructions.
Lease agreements of buildings and constructions require written form.
Language Requirements
No specific requirement exists under Belarusian law to use only the official state languages (Russian
Belarusian) in agreements on real estate. However, the Real Estate Register may register only documents
Russian or Belarusian. Hence, foreign language documents require a translation either certified by a notary
signed by the parties. A bilingual agreement is also possible, but sometimes finds resistance on the part
registrars.
or
in
or
of
Due Diligence
Before carrying out any real estate transaction, it is advisable to research, for example, ownership, history,
encumbrances, and lease agreements. The results of research may help to set the final purchase price reflecting
the value of the real estate. Some information is publicly available and can be obtained independently; other
information requires involvement of the seller.
Rights of First Refusal
Local authorities enjoy a right of first refusal to acquire certain buildings and other real estate located within their
territory. The list of such buildings and other real estate is determined every year by local authorities. In practice
this right is exercised very rarely. However, sale-purchase agreements may be registered with the Real Estate
Register and ownership transferred to the purchaser only after the local authority has decided not to exercise its
right of first refusal.
Restrictions
Restrictions on Acquisition of Real Estate
Restrictions on real estate acquisition in Belarus apply to land plots and buildings.
A foreign legal entity cannot own a land plot. A foreign citizen or person without citizenship may own a land plot
only in cases of inheritance.
Commercial buildings and constructions can be owned by foreign legal entities and individuals.
Encumbrances
Real estate may be encumbered by servitudes, mortgages, lease rights, gratuitous use, and other encumbrances
that should be considered in purchase and use of land plots and buildings.
Property Management
Maintenance of real estate is usually carried out by the owner. In the case of joint ownership, owners may
establish an owners’ association.
Lease Agreements
General
General terms for lease agreements are laid down in the Belarusian Civil Code. Terms of lease are subject to
agreement between the parties. Lease agreements should specify the description of leased objects (inventory
number, location, area) and the rent.
Duration and Expiry of Lease Agreement
The duration and expiry of a lease agreement are usually fixed in the agreement. Belarusian law lays down some
general rules under which lease agreements may be for a definite or indefinite term. The Civil Code sets grounds
for termination of a lease agreement by the court at the request of a party. The parties may agree additional
grounds for termination by the court or unilaterally.
Lease Payment and Accessory Expenses (Utilities)
The amount and the currency of lease payment (rent) are subject to agreement between the parties. However,
several restrictions apply to property owned by the state or companies with state share.
Maintenance and utilities (such as water, gas and electricity) are usually paid by the tenant in addition to the rent.
Distressed Assets Purchase
Acquisition of distressed assets may be a feature if a company that owns real property faces financial difficulty and
needs emergency funds to cover debts. Distressed assets purchase is not specifically regulated in Belarus.
However, the following issues should be taken into consideration.
Time for closing a transaction with distressed assets is usually shorter as the selling company is under pressure
to receive funds to settle with its creditors. Consequently, due diligence time frames may be shorter. At the same
time, due diligence is especially required as risks related to distressed assets are higher (eg the property may be
mortgaged or seized by a creditor).
The risk is that insolvency proceedings may commence against the seller after disposal of distressed assets to a
buyer. Under the Belarusian Law on Insolvency, transactions by the seller preceding insolvency may be held
invalid. For example, a transaction may be held invalid if it took place within six months, one year, or three years
before commencement of insolvency proceedings, depending upon the circumstances and grounds involved.
Sometimes distressed assets are sold at a low – even nominal – price. This option should be thoroughly assessed,
as the transaction may be held to be fictitious (eg intended to cover up a gratuitous transfer). This may mean that
the transaction is held invalid and may also entail tax consequences (charge of profit tax plus penalties).
ESTONIA, LATVIA, LITHUANIA, BELARUS
TAX*
SPECIAL NOTES
ESTONIA
Estonia offers a unique
CIT system as resident
companies
pay
no
income tax for retained or
reinvested
earnings.
Income tax at a gross
rate of 21% is deferred to
the moment of payment
of dividends, gifts, fringe
benefits,
non-business
expenditure
and
excessive
capital
reductions.
Personal income tax of
residents, however, uses
a
more
common
approach, and tax is
charged annually.
LATVIA
LITHUANIA
BELARUS
As an alternative to the
general system of taxation
businesses may use the
simplified taxation system
(STS) and pay a unified tax
imposed on gross revenues,
provided
that
the
established requirements on
gross revenues within one
calendar year and number
of personnel are met. Gross
revenues are considered to
be the amount of revenues
received during the taxation
period as the result of sales
of goods (work, services),
property rights and nonoperating
income.
Depending
on
circumstances, the main tax
rates under the STS are 3%
(if the STS with payment of
VAT is used); and 5% (if the
STS without payment of
VAT is used).
Certain
taxpayers
and
certain activities are subject
to
special
taxation
treatment.
Eg,
special
taxation
regimes
are
provided for residents of
SEZ, residents of a High
Technology Park (HTP),
businesses carrying out
their activity in small towns.
The information provided
below mostly concerns the
general system of taxation
RENTAL INCOME
Rental
income
of 15% (equal to CIT) applies
resident corporates does to taxable income based on
not trigger CIT.
annual financial profit or
loss adjusted for taxation
Rental payments by purposes.
Estonian corporates to
Estonian natural persons Individuals earning rental
or non-residents are income pay 24% PIT on the
subject to Estonian 21% profit (individuals with no or
withholding tax.
immaterial expenses can
pay 10% on the gross rental
income).
15% CIT applies to net Rental profit is taxed at the
income.
general CIT rate of 18%.
Reduced rate of 5% CIT
applies to small companies
with:
- income less than LTL 1
million
(approx.
EUR
289,620) in 1 calendar year;
and
- less than 10 employees.
Individuals earning rental
income pay 12% PIT on the
profit.
If an individual rents an
apartment
to
some
individual and the income
from renting
THIN
There are no traditional
CAPITALISATION thin capitalisation rules,
i.e.
substantial
debt
financing at market rate
interest is tax-neutral.
Two tests are applied:
- the first is based on a 4:1
debt-to-equity calculation;
- the second compares
the interest rate paid
with a rate of 1.2 times
the statistical average
of short-term loans by
Latvian banks in the
last month of the
taxation period.
Any
excess
interest
calculated under either
method is not deductible,
and if both methods result
in non-deductible interest,
the higher amount is nondeductible.
Non-deductible
interest
cannot be carried forward
and is lost as a deduction.
Financial and insurance
institutions are not subject
to thin capitalisation rules.
Deductions: all customary
expenses
incurred
in
relation to earning rental
income. Exception: nondeductible expenses falling
into an exhaustive list, e.g.
fines, penalties, dividends,
gifts.
obtained during a calendar
year does not exceed a
certain amount, then the
rate of PIT is fixed. The
exact fixed amount of PIT
is determined by local
authorities depending on
the
location
of
the
apartment within the limits
provided in laws.
Interest
and
currency
exchange losses on debt in
excess of a debt/equity ratio
of 4:1 are non-deductible for
CIT purposes if debt capital
is provided by a creditor
that:
- directly
or
indirectly
holds more than 50% of
shares or rights (options)
to dividends;
- or
- together with related
parties holds more than
50% of shares or rights
(options) to dividends,
and the holding of that
creditor is not less than
10%.
Thin capitalisation rules
were introduced on 1
January 2013. These rules
limit the deductibility of
interest on loans to related
parties and apply if the
lender is:
- a foreign company that
directly or indirectly
owns more than 20%
of
the
authorised
capital of a Belarusian
company; or
- a Belarusian company
which is an affiliate of
such
a
foreign
company. The debt-toequity ratio is 1:3.
Exception: if a taxpayer
proves that the same loan
could
exist
between
unrelated
parties,
thin
capitalisation
does
not
apply.
Company Law: the interest
rate on shareholders' loans
may
not
exceed
the
average bank interest rate
current in the location of the
lender's business.
Financial
institutions
providing leasing services
are not subject to thin
capitalisation rules.
Exception: These rules do
not apply to banks,
insurance companies and
companies which during
the tax period received
lease payments in an
amount more than 50% of
total revenues received
from the sale of goods
(works, services), property
rights and income from
operations
of
leasing
(financial leasing) of the
property.
DEPRECIATION
AND LOSSES
Depreciation: A unique
CIT system operates so
that
depreciation
is
entirely an accounting
matter
and
any
restrictions do not trigger
CIT.
Depreciation Buildings and
constructions
are
depreciated at a specified
tax rate of 10% using the
reducing balance method.
Depreciation
Buildings are depreciated
using the straight-line or
double-declining
method
(for certain types of assets).
Land is not depreciable.
Losses: A unique CIT
system
operates
in
relation to losses so that
losses can be carried
forward
without
limitations.
Losses
Losses arising before and
including the 2007 tax year
can be used for the
following 8 years. Losses
arising in 2008 and later tax
years may be carried
forward indefinitely.
Losses
Tax losses can be carried
forward for an unlimited
number of years as long as
they are set off against
income from the same type
of
activity
(Exception:
losses from disposal of
securities can be carried
forward for 5 years only
and can only be offset
against income from sale of
securities)
Taxpayers registered in
SEZ or Free Ports with
losses arising before 2005
may carry them forward for
up to 10 years, and losses
arising after 2005 may be Intra-group
transfer
carried forward indefinitely. losses allowed.
Intra-group
transfer
losses allowed.
WITHHOLDING
TAX
Dividends
(without
participation
requirement),
interest
(not exceeding market
interest
rate)
and
royalties
(payments
within the EU and 25%
participation) are not
subject to withholding
tax.
Rental payments by
Estonian
corporate
taxpayers to Estonian
natural persons or nonresidents are subject to
21% withholding tax.
of
of
Dividends are tax exempt Dividends
unless payments are made From a Lithuanian company
to
“black
listed” to a Lithuanian company –
jurisdictions.
15% CIT to be withheld by
the distributing company
Interest:
0%
–
on unless the participation
payments
to
unrelated exemption applies.
parties; 10% – on payments
to related parties; 5% – on From a Lithuanian company
payments to related EU to a foreign company –
companies (up to 30 June 15% CIT to be withheld by
2013, thereafter – 0%); as the distributing company
of 1 January 2014, any unless the participation
outgoing interest payments exemption applies.
will be tax exempt unless
paid to “black listed” Participation
exemption
jurisdictions.
applies where:
- the receiving entity holds
Management
and at least 10% of the shares
consulting fees: 10%, can granting
the
same
be reduced to 0% under a percentage of votes in the
tax treaty.
paying entity;
- for at least 12 months.
Royalties:
15%
on
Not applicable to
literature or art; 5% in other
cases; 5% on payments to
related EU companies up to
30 June 2013; as of 1
Depreciation
For the purposes of tax
depreciation real estate
objects are divided into
two
main
categories:
buildings
and
constructions, each of
which contains a range of
corresponding groups and
types.
With regard to real estate
objects the straight line
depreciation method is
used.
Losses
Losses can be carried
forward for a period of 10
years.
A taxpayer may not carry
forward losses if it made a
profit on its activities
overall.
A
Belarusian
company
can
carry
forward losses only if total
costs for the previous tax
period connected with
production and sale of
goods (works, services),
property rights, and nonoperating
expenses
exceeded the amount of
revenues
and
nonoperating income.
Dividends
From
a
Belarusian
company to a Belarusian
company – 18% CIT
which is withheld by the
distributing company.
Foreign companies that
do not carry out activities
through
a
Belarusian
permanent establishment
pay withholding tax on
certain types of income
derived from sources in
Belarus. Unless otherwise
provided
by
DTTs,
withholding tax is imposed
on the following types of
income at the following
rates:
dividends and income
from sale of shares in
authorised
capital
of
Belarusian companies –
12%;
royalties (payments for
use of property in Belarus
or the right to use such
property; fees for use of
property
rights
to
copyright objects, objects
of
related
rights;
payments for industrial
property objects, including
know-how) – 15%;
January 2014, outgoing dividends payable to FEZ.
royalty
payments
tax
exempt unless paid to Interest
“black listed” jurisdictions.
Paid to foreign taxable
entities registered in EEA
Rental fees on property or DTT country – nonlocated in Latvia – 5%.
taxable.
Sale price of real estate
located in Latvia or shares
in “real estate companies”:
2%
(a
“real
estate
company” is a company
more than 50% of whose
assets comprise real estate
directly or indirectly owned
within Latvia). Latvian DTTs
can reduce or eliminate
payment of withholding
taxes.
Most payments to “black
listed” jurisdictions – 15%,
though the tax authorities
may grant relief.
interest – 10%;
freight and other charges
connected with international
shipping transactions and
forwarding services – 6%;
other income (in particular,
income from sale of real
Paid to foreign entities estate located in Belarus;
registered
in
other income from real estate
countries – 10%.
transferred in trust; income
Exemptions:
from supply of various
interest
paid
on types of services) – 15%.
government
securities
issued in international
markets;
- deposit interest;
- interest on subordinated
loans meeting the criteria
set by the Bank of
Lithuania.
Royalties
Paid to associated EU
companies
–
no
withholding tax applies.
0% for all payments to Paid to other foreign
Lithuania.
companies – 10%.
CAPITAL GAINS
Capital gains of resident
corporates do not trigger
CIT.
Income tax is charged
only on gains derived by a
non-resident from sale of
Estonian real estate or
shares in a real estate
company if the nonresident's holding in that
real estate company is or
exceeds 10% and more
than
50%
of
the
company's property is
directly or indirectly made
up of real estate located
in
Estonia
in
any
preceding 2 years. No
income tax is charged on
a share deal if DTT allows
taxation of capital gains in
the seller's country only.
PIT and CIT on capital
gains applies to individual
taxpayers and corporate
taxpayers,
both
being
subject to a 15% rate.
However, capital gains
from sale of shares held by
a Latvian company are tax
exempt, unless shares are
held in a “black listed”
jurisdiction.
Capital gains earned by
Lithuanian entities – 15%
CIT (capital gains are
included
in
general
taxable income).
Capital gains from sale of
shares
in
entities
registered in EEA or DTT
countries – exempt from
tax if:
- at least 25% of the
shares in the entity were
held;
- for a period of not less
than 2 years.
There
is
no specific
concept of capital gains
tax.
Gains
received
by
Belarusian companies from
the sale of property are
taxable at the 18% CIT rate
Gains
received
by
Belarusian companies from
the sale of shares in
Belarusian companies are
taxable at the 9% CIT rate.
Foreign companies that do
not carry out activities
through
a
Belarusian
permanent establishment
are subject to withholding
tax on gains obtained from
the sale of:
- real estate located in
Belarus – 15%;
- shares in authorised
capital
of
Belarusian
companies – 12%;
- securities in Belarus
(except
shares
in
authorised capital of
Belarusian companies)
– 15%.
REAL
TAXES
ESTATE Land tax
The rate ranges from 0.1%
to 2.5% of cadastral value of
land excluding buildings.
The
rate
is
set
by
municipalities by 31 January
each year.
Real estate tax
Payable
by
corporate
owners or entities having
legal ownership or control
over use of Latvian real
estate. Individuals are liable
to tax on their residential
homes and apartments.
An owner-user ofresidential
land and building is exempt Tax applies at a rate of 1.5%
from tax within some limits. of the real estate’s cadastral
value and is levied annually.
A rate of 1.5% applies to
engineering structures and a
3%
rate
applies
to
uncultivated
agricultural
land. Subject to municipal
regulations,
derelict
or
unsafe buildings may be
subject to a 3% tax.
Local municipalities can set
the tax rate ranging from
0.2% to 3% in regulations to
be issued no later than 1
October of the preceding tax
year. If this is not done, the
default tax rates apply.
Individual property owners
pay
the
following
progressive rates on their
residential buildings and
apartments:
- 0.2% – for cadastral value
not exceeding LVL 40,000
(approx. EUR 56,900);
- 0.4% – for cadastral value
from LVL 40,000 to LVL
75,000
(approx.
EUR
106,700);
- 0.6% – for cadastral
value exceeding LVL
75,000.
Land tax
Payable by owners of
private land for land other
than forest land, roads of
common usage and land
owned by embassies.
Land tax
Payable by companies and
individuals who own or use
land.
Real estate tax
Payable by Lithuanian
and foreign legal entities
for real estate other than
land in Lithuania.
Tax base: market value
of
the
real
estate
calculated against the
results of mass valuation
.
Tax rates: 0.3%-3% of
the value of the real
estate. A precise tariff is
set
by
the
local
municipality annually.
Real estate tax
Corporate real estate tax is
imposed
on
the
depreciated
value
of
buildings,
constructions
and car parking spaces
owned or leased by
companies.
Except for a limited
number of cases, the tax
Tax base: market value base is the cadastral value
of the land calculated of the land, which can be
against the results of found at the official website
mass valuation.
of the National Cadastre
Agency http://nca.by/.
Tax rates: 0.01%-4% of
the value of the real Tax rates vary significantly
estate. A precise tariff is depending on the cadastral
established by the local value and functional use of
municipality annually.
land. Local government
authorities may increase
Payment:
before
15 (not by more than 100%)
November of the tax year or decrease (not by more
concerned based on a than half) the tax rates for
declaration provided by certain
categories
of
the tax administrator.
taxpayers.
Payment:
before
1
February
of
the
subsequent
year.
Advance payments are
made quarterly where the
A LVL 5 (approx. EUR 7) annual amount of tax
minimum is payable for each exceeds
LTL
1,500
registered item of real (approx. EUR 434).
estate.
Land lease tax
Local municipalities have
power to grant taxation
reductions
to
specific
categories of individual
Payable by legal entities
and individuals for state
or municipal land leased
by legal entities and
individuals.
If the landlord is a foreign
company not carrying out
activities
in
Belarus
through
permanent
establishment,
the
taxpayer is always the
tenant.
The annual corporate tax
rate is 1%. A 2% rate
applies to incomplete real
estate objects where the
terms of construction are
exceeded.
Buildings
and
constructions
in
the
process of reconstruction
or modernization are not
subject to the real estate
tax.
Individual real estate tax is
Tax rate: 0.1%-4% of the imposed on buildings,
land value
constructions
and
car
parking spaces owned by
Tax rates: 0.01%-4% of. individuals
(including
A precise tariff is set by individual entrepreneurs).
the local municipality for
each individual case.
An individual that owns
more than one apartment
has to pay real estate tax.
One
apartment
is
exempted from taxation;
other apartments are
subject to real estate tax.
The annual tax rate is
0.1%. Tax is calculated by
the tax authorities based
on the assessed value of
the real estate object. The
tax authorities send an
individual written notice to
taxpayers by 1 August of
the relevant year.
Local
government
authorities may increase
(by not more than 100%)
or decrease (by not more
than half) the tax rates for
certain
categories
of
taxpayers,
with
the
exception of the case
when Regional (Minsk
city) Councils of deputies
increase, but not more
than five times, the real
estate
tax
rate
on
buildings
and
constructions,
parts
thereof, which are unused
or inefficiently used.
VALUE
TAX
ADDED Sale and rental of real
estate
Generally
VAT-exempt
without the possibility to
deduct input VAT. However,
VAT applies to:
Leasing,
letting
or
establishing a usufruct on
multi-storey car parks or
premises
for
parking
vehicles;
- real estate with new
buildings,
if
transferred
before 1st use;
- real estate with reconstructed buildings, if
reconstruction costs exceed at least
- 10% of theacquisition cost
(i.e. 110% of acquisition
cost) and transfer is before
1st use after reconstruction;
- building lots within the
meaning of the Planning
Act if the lot contains no
buildings.
Sale of real estate
Sale of real estate
Sale of land and used Sale of real estate (land
buildings is VAT-exempt.
and buildings) is generally
VAT-exempt.
Sale of unused real estate
(buildings
and Exceptions:
constructions) and building sale
of
land
for
land (land granted a construction;
building permit) is subject to - sale of land with new
21% VAT.
buildings; and
- sale of new buildings.
In sale transactions, the Buildings are regarded as
value of land (exempt) and new if they started to be
unused buildings (taxable) used or were critically
cannot be separated for improved less than 24
VAT calculation purposes. months before the sale
(uncompleted buildings are
The taxable value for the also regarded as new
sale of reconstructed or buildings).
renovated property is the Lease of real estate
difference between its sale Lease of real estate is
price and the value of the generally
VAT-exempt
property
before except lease of dwelling
reconstruction
or houses.
renovation.
Sale and lease of real
estate
Subject to the standard
VAT rate – 20%.
An option is available to add
VAT at a rate of 20% to the
following:
- leasing or letting real
estate or parts thereof,
except residential;
- establishing ausufruct on
real estate or parts thereof;
real estate and parts
thereof, except residential.
Input VAT is recoverable if
paid for VAT supply. The
purchaser of an immovable
has to adjust deducted input
VAT within a 10-year period
according to use of the
property for taxable/nontaxable purposes.
REAL
ESTATE Costs incurred
TRANSACTION
Typically these include:
RELATED COSTS brokerage fees, real estate
valuation, bank fees, fees
for legal due diligence and
reviewing the sale and
security agreements, notary
fees and state duty.
Sharing costs
Sharing transaction costs is
a matter for agreement
between
the
parties.
Usually, the buyer pays
state duties for registering
ownership, whilst notary
fees are shared equally
between the parties and the
seller pays state duties for
deleting old encumbrances
(e.g. mortgages).
Real estate should be
registered
with
the
taxation
authorities.
Deducted
input
VAT
should be corrected and
over the next 10 years
according to use of the
real estate for VAT taxable
and exempt transactions.
Rental
of
residential
premises to individuals is
VAT-exempt,
whereas
lease
payments
for
commercial property are
subject to 21% VAT.
Optional taxation
Lithuanian VAT payers
have the option to tax the
sale or lease of real estate
if the buyer or lessee is
another Lithuanian taxable
person registered as a
VAT payer or a diplomatic
mission, consular office,
EU institution, international
organisation or office. This
option applies for a period
of not less than 24
months.
Costs incurred
brokerage fees, bank fees,
fees for legal due diligence
and reviewing sale and
security
agreements,
notary fees and state duty.
Sharing costs
Sharing transaction costs
is a matter for agreement
between
the
parties.
Usually, the buyer pays
state and stamp duties,
whilst notary fees are
shared equally between
the parties.
Costs incurred
brokerage fees, real estate
valuation fee, bank fees,
fees
for
legal
due
diligence, notary fees and
state duty.
Sharing costs
It is up to the parties to
agree how they will bear
the
transaction
costs.
Usually, the buyer pays for
state and stamp duties,
whilst notary fees are
shared equally between
the parties.
Costs incurred
Costs incurred during
purchase of real estate
include
state
duty,
payment
for
state
registration,
and
(if
applicable)
translation
costs, technical inventory
costs, fees for legal due
diligence.
Sharing costs
Sharing of costs incurred
during purchase is a
matter
for
agreement
between the parties.
STATE
AND
TRANSFER
STAMP DUTIES
State duty
For registration of title to
real estate – 2% of either
the real estate purchase
price or the cadastral
value of the real estate,
whichever
is
higher.
However, duty is capped
at LVL 30,000 (approx.
EUR 42,700). Duty does
not apply to mergers and
other restructurings. A 1%
duty
applies
to
investments in kind of real
estate in the share capital
of a company; duty is
capped at LVL 1,000
(approx. EUR 1,400).
Stamp duty
LVL 15 (approx. EUR 21)
for registration of title and
issue of a Land Book
certificate.
State duty
Duty for registration of
transfer of title to real
estate
is
calculated
separately for each real
estate object transferred
or acquired and depends
on the average market
value of the real estate.
Duty varies from LTL 10
(approx. EUR 3) to LTL
5,000
(approx.
EUR
1,448) per object.
Stamp duty
None.
State duty
The transaction is subject
to certification by a notary
or the registrar of the Real
Estate Register, if an
individual is a party to the
transaction (except for
individuals acting in the
capacity of individual
entrepreneurs and having
a seal).
Duty for certification of a
purchase agreement by
the notary amounts to
BYR 500,000 (approx.
EUR 45), by the registrar
of
the
Real
Estate
Register – BYR 112,000
(approx. EUR 10).
In
the
case
of
simultaneous registration
of
the
purchase
agreement and one real
estate object payment for
state registration amounts
to:-BYR 320,000 (approx.
EUR 29) for legal entities;
and
-BYR 110,000 (approx.
EUR 10) for individuals.
Stamp duty
None.
State duty
Is paid for registration of
ownership
and
encumbrances in the Land
Book. The amount depends
on transaction value and is
a fixed sum laid down by
law. For instance, duty for
registering a new owner of
real estate at a purchase
price of EUR 500,000 is
approx. EUR 767. Notary
fees and state duty are
usually less than 0.5% of
transaction value.
Stamp duty
None.
NOTARY FEES
MORTGAGE
Fees are set by law. In sale
transactions the fee for
notarising the purchase
agreement depends on the
value of the transaction.
For instance, the notary fee
on sale of real estate for
EUR 500,000 is approx.
EUR 1,548 plus VAT.
Notary fees and state duty
are usually less than 0.5%
of transaction value.
Real estate purchase is
often financed by a loan.
Usually, a mortgage is
established on real estate
as security in favour of the
bank
financing
the
purchase. The mortgage
agreement
is
usually
concluded at the same time
and in the same document
as the sale agreement.
If a mortgage already
encumbers real estate
before
sale
and
the
purchaser
needs
a
mortgage for its own
financing purposes, the
existing
mortgage
is
typically transferred to the
bank financing payment of
the purchase price. This
transaction structure is
more
cost-efficient
compared to deleting the
existing
mortgage
and
establishing a new one,
since it saves on both
notary fees and state duty.
Fees for drafting the Land
Book
registration
application and approving
the parties’ signatures
generally amount to LVL
65 (approx. EUR 92).
Purchase of real estate is
often financed by banks,
which require a mortgage
over real estate. As with
all encumbrances on real
estate,
a
mortgage
agreement
must
be
registered with the Land
Book. State duty for
registration amounts to
0.1% of the loan amount,
capped at LVL 1,000
(approx. EUR 1,423).
Stamp duty and notary
fees are the same as for
title registration.
The notary fee amounts
to 0.45% of the real
estate transaction value,
capped at LTL 20,000
(approx. EUR 5,792) for
transactions that involve
one real estate object and
at LTL 50,000 (approx.
EUR
14,481)
for
transactions involving two
or more real estate
objects.
A mortgage is a security
aimed
at
securing
fulfilment of contractual
obligations. A mortgage is
created by executing a
mortgage contract signed
by
the
debtor,
the
creditor, the owner of the
mortgaged real estate,
and
notarised.
The
notary’s
fee
for
certification of mortgage
agreement is capped at
LTL 500 (approx. EUR
145) and at LTL 1,000
(approx. EUR 290) for
perfecting a mortgage
over an enterprise (as a
pool of assets).
In addition, costs for
services
related
to
notarisation
of
the
mortgage and registration
of the transaction with the
Mortgage Register would
be added (approx. LTL
500, i.e. approx. EUR
145, on average).
If a purchase agreement
is certified by a private
notary, the parties also
pay a notary fee from
BLR 100,000 (approx.
EUR 9) to BYR 150,000
(approx.
EUR
14)
depending on transaction
peculiarities.
A mortgage of real estate
may be used as an
instrument for securing
liabilities (e.g. repayment
of loan). However, the law
lays
down
several
restrictions. A building
located on an owned or
leased land plot can only
be mortgaged with a
simultaneous mortgage of
the underlying land plot or
right of lease. A mortgage
of a land plot or right to
lease a land plot may
secure only repayment of
a credit extended by
Belarusian banks or a
loan provided by the
International
Finance
Corporation
(IFC)
or
European
Bank
for
Reconstruction
and
Development
(EBRD).
Belarusian banks may act
as mortgagees only if
they hold a licence from
the National Bank to
place attracted funds in
their own name and for
their own account on the
condition of recurrence,
interest payment and
maturity. The President of
the Republic of Belarus is
entitled to determine other
organisations which may
be mortgagees of land
plots and rights to lease
land plots.
Mortgages
must
be
registered with the Real
Estate Register.
CONTACT DETAILS
DIR
FAX
+375 172 569 569
+375 172 569 998
Colliers International
1st Zagorodny alley 20,
220073, Minsk, Belarus
www.colliers.com
http://colliers.by/
This publication is the copyrighted property of Colliers International and/or its licensor(s). © 2013. All rights reserved.
This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees,
representations or warranties of any kind,
express or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should
undertake their own inquiries as to the
accuracy of the information. Colliers International excludes unequivocally all inferred of implied terms, conditions and warranties arising out of this
document and excludes all liability for loss
and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.
www.colliers.ru I www.colliers.com
Accelerating success.

real estate market review

Transcription

Similar documents

Tweet your support #RespectAllMusic

Property Brochure - The Heidi Klum Estate

News Journal - Bay to Beach Builders

Nina Roket

advantage - Join RE/MAX

5278 34th St, Lubbock, TX 79407

4841 50th St, Lubbock, TX 79414

legal publication legal publication legal publication

Royal LePage Dynamic Real Estate Brochure

UNIVERSITY HEIGHTS SQUARE