Forgotten markets - Belarus

With an area more than two times as big as Austria and only marginally smaller than Romania, Belarus in the northeast of Europe is a country that only very rarely is listed in expansion plans of large international retailers.

Despite it's size Belarus is only sparsely populated – 9.7 million inhabitants, of which 1.8 million live in the capital of Minsk, result in a population density that is only half as high as in Austria. In the long term the population numbers will decline. This is a trend that can also be seen in other eastern European countries (e.g. Romania and Ukraine) and that is mainly resulting from emigration to other countries.

However, the market in Belarus shows a very interesting turnover potential and opportunities for development in the medium term. Admittedly the last years showed more action in other eastern European countries than in Belarus. For example the shopping center density is still very low at 0.02 sqm per inhabitant and the number of planned projects is far below the possible numbers. At the moment only 6 shopping centers are in the pipeline – among them the Mega Plus City in Minsk that is supposed to offer 140,000 sqm sales area after the second phase is finished. However a completion date is still far away.

Other countries of similar size and economy, like Bulgaria with over 60 projects, have a substantially longer list.

The currently small stock of shopping centers consists mainly of small centers of which most are located in Minsk. Despite high yields (in retail 10.5%!) the willingness to invest is low.

The main reason for the hesitant expansion is, besides a very low purchasing power, on the highest level in the political situation. The “last dictatorship in Europe” is no breeding ground for investment. It is not stable and “clean” enough for international companies.

This is reflected in the high proportion of the share of the shadow economy in the GDP with 50% (see map)! And as long there is no significant change in the political, regulatory and economical framework, Belarus will remain one of Europe’s “forgotten markets”.