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Foreign real estate funds may get interested in Belarusian commercial assets in a year or two - Legal advice for a foreign company doing business in Belarus Making the world a beautiful place - one painting at a time Making the world a beautiful place - one painting at a time
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Foreign real estate funds may get interested in Belarusian commercial assets in a year or two

Foreign real estate funds may get interested in Belarusian commercial assets in a year or two, Roman Osipov, director of the investment consulting office of investment company Uniter, said during the first international conference “Management of Commercial Real Estate. Building or Purchasing. Renting and Participation Ownership” on October 29.
In his words, so far no deals to buy commercial real estate have been made in Belarus. Nevertheless, there are plenty of funds, including European Union ones, interested in investing into readily available commercial real estate. One can expect such deals to be made in a year or two. Despite the global financial crisis foreign real estate funds have money and they are likely to make investments, including investments in Belarus, noted the expert.

In his words, the global financial crisis will not seriously affect the commercial real estate market of Belarus due to a lesser degree of loans taken by Belarusian companies in comparison with Russian ones. Apart from that, the construction of commercial real estate in Belarus has had quite conservative views regarding taking out loans and issuing shares. “In most cases such facilities were built using proprietary funds of investors. Borrowing usually didn’t exceed 50% of the construction cost. Therefore the risk of the global financial crisis impact on this part of Belarus’ market is suspended for now,” said the expert.

The representative of Uniter company also outlined options of successful investing into commercial real estate in Belarus. The involvement of investors in the project is one of the options. In the best case scenario investors should be involved during the design stage. If investors are expected to get involved in the project, a limited liability company is the most convenient legal form for the construction company. It is also desirable to set up its own design service, a construction management directorate, which will be in charge of ensuring the delivery of construction materials among other things. The establishment of a proprietary maintenance management company is desirable as well.

At present the Belarusian commercial real estate market has several drawbacks. Comparatively long construction terms are one of them. While in Lithuania and Latvia construction lasts 1.5-2 years, in Belarus it can take as long as four years and more to build a facility with the area of 6-20 thousand square metres. Roman Osipov attributed it to the lack of building capacity. There are few private construction companies and they are poorly financed. State-run construction companies build a lot and the state order is rather high. There are also problems with supplying construction materials for building commercial real estate.