Yet, even as outside investor interest is swelling, there continue to be solid obstacles to buying properties in the 207,600-square-kilometer, or 80,155-square-mile, country.
All land in
Neither foreigners nor foreign legal entities are allowed to buy properties, although it can be done indirectly through Belarusian companies. "Everyone has their own strategic plan to participate in projects in different sectors here," says Mikhail Gradovich, managing director of Colliers International Belarus.
In May Colliers opened an office in the capital of
Gradovich says customers generally can be divided into two groups: locals with access to land who are seeking investment to help fund development, and outsiders who are eager to buy properties but generally cannot. Last year, he says, private investment funds, mostly from Europe, started to show interest in
Despite the strong demand for new properties, Gradovich says investment in construction projects are almost unheard of because Westerners are still very cautious about placing money in a country that will not grant them rights to land. Also, new commercial construction is generally of low quality. Only a small number of buildings would be considered "A" class by international standards.
Russians, who are used to operating in a similar environment, comprise most of the foreign investors in new construction. There is no official border between the two countries, so capital can be transferred from
The economy is still very Soviet-like, putting Western buyers at a disadvantage. Gradovich says the government still employs five-year plans and strong central control. During the Soviet era, control was exercised by the central committee of the Communist Party, Gradovich said, while "today it is exercised by just one person," referring indirectly to Lukashenko.
When Western buyers negotiate with potential local partners, Gradovich says they are discouraged by the "sometimes strange" steps they need to take and often "quietly withdraw." The process of building is frustrating and extremely bureaucratic, he says, with high fees and lengthy permit processes required during every step of the construction process.
Although foreign direct investment made up only 1 percent of
Residential properties in
Kevin Smith, a part-owner of Belarus Trade House, says the company is planning on entering the properties market for a very simple reason: "Price."
"Prices have been going up rapidly," says Smith, who also imports sparkling wine and crystal from
By comparison, residential prices in
"The country seems to be opening up much more to the
Smith says he is looking at several different approaches, including bringing in big investors on big property development projects on one end, and smaller deals in residential properties.
Even with supplies short and prices growing in all property sectors, Gradovich says the office market is the most promising due to the high and growing demand. As an illustration, he says his office rent was â'¬18 per square meter last January and it now is â'¬24 per square meter.
Retail real estate prices are increasing by an average of 25 to 30 percent per year, according to Colliers. The average cost of retail space in Minsk is â'¬1,400 to â'¬2,100 per square meter, excluding the value-added tax, while small areas of less than
For warehouse and industrial space, the demand has doubled while supply remained low according to Colliers. For example, the prices of unheated warehouses in
There are no international hotel operators in
Smith says prosperity is growing in
"Working in this region, there are always hoops there that you weren't quite aware of," said Smith, who says he is in the early stages of transactions. "It's easy to fall down holes, but if you know they are there, it's easy to avoid them."