5 September 2017. On the first half of 2017, the country's real estate (hereinafter – RE) market has somewhat slowed down, but maintained an upward trend. In the new housing segment, 6 percent decrease in sales in the capital was compensated by a growing number of transactions in Kaunas (+14 percent), Klaipėda (+64 percent) and the regions. Meanwhile, developers did not slow down and added 35 percent more new apartments to Vilnius, and 56 percent to Kaunas housing markets, compared to last year. The growing supply did not allow housing prices to rise, even though the liquidity indicator remained favourable in all major cities – from 1,1 in Vilnius to 1,4 in Kaunas. In the business centre segment, Kaunas competed with the capital in the numbers of new square meters. The country's trade in real estate was consistent with the global online trading trends, and the small vacancies of storage facilities provided an impulse for the construction of logistics centres.
Residential segment
In the first half of 2017, the RE market remained active and liquid, however the decreasing growth of purchase-sale transactions and high developer activity has stopped the housing prices from rising.
Apartment market activity was particularly high in Vilnius, despite the fact that the number of transactions decreased compared to the appropriate period of 2016. "During the last couple of years, one of the main apartment demand catalysts in Vilnius was those who buy apartments as an investment, however, with the growing competition and decrease of the attractiveness of such an investment, part of the capital may be redirected to other sectors, which also had an influence on the decrease of apartment transactions in the capital“, – says Inreal analyst Robertas Žulpa. In the initial market, developer sales in the capital have declined by 6 percent during the first half of 2017, compared to the appropriate period of 2016 – around 1970 new apartments were sold. Despite this fact, the developers themselves were much more active in Vilnius during the first half of 2017 and provided the market with around 2070 apartments, which is around 35 percent more than in the first half of 2016. The general level of unsold (available and reserved) new apartments in the capital exceeded 4200 at the end of the second quarter, and exceeded the average level of 2016 by 600. Due to the increasing developer activity and decreasing sales, the liquidity indicator of newly built apartments calculated by Inreal has gradually increased in the first half of 2017, and reached 1,1 at the end of the period. This means that, if supply-demand indicators do not change, developers in Vilnius may expect to realize the entire current supply of apartments within approximately a year. The growing number of unsold apartments and fiercer competition among developers did not provide conditions for prices to grow, therefore the prices of the supply of newly built apartments in Vilnius were stable in all the segments in the first half of 2017.
In Kaunas, during the first half of 2017, the general growth of the number of apartment purchase-sale transactions has barely exceeded the level of an appropriate period of 2016, however 258 newly built apartments were sold in the newly built apartment segment in Kaunas, which is 14,2 percent more than a year ago. Such growth of the sales of newly built apartments is also related to the activity of developers who offered almost 390 newly built apartments during the last six months, which is 1,5 times more than during the appropriate period of 2016. Changes in the supply and demand balance also increased the liquidity indicator of new apartments in Kaunas from 1,2 to 1,4. On the other hand, this indicator still shows good liquidity in the market and forms relatively favourable conditions for RE developers to take on new projects.
In the first half of 2017, the new apartment market in Klaipėda was much more active than a year ago – 170 apartments were sold, i.e. by 63.5 percent more. Meanwhile, developers were more passive and offered 103 apartments to the market, i.e. 29 percent less than in the first half of 2016. The total number of unsold (available and reserved) newly built apartments in Klaipėda has decreased to 485 apartments in the first half of 2017. Significantly increased sales determined that the liquidity indicator calculated by Inreal in Klaipėda decreased over the first half of 2017 from 1,7 to around 1,2. In the first half of 2016, this indicator was twice as worse. "This is a very good sign for Klaipėda, showing that the market of newly built apartments is recovering in the country's largest port city, and it is likely that it will not lose its activity in the future", – says R. Žulpa.
Commercial segment
In the first half of 2017, Vilnius demonstrated the largest activity in the business centre segment, where two new business centres were opened, which added approximately 14 000 square meters to the modern office facility market. The general vacancy indicator in Vilnius decreased from 4,8 to 4,6 percent over six months, however vacancy level will grow until the end of 2018, when a lease area of around 146 000 sq. m. of new business centres will be added to the market. The activity of Kaunas was not far from that of Vilnius in the first half of 2017, during which 3 new business centres were opened, adding 11 200 sq. m. of lease area to the market and raising the vacancy indicator from 3,7 at the beginning of the year to 7,1 at the end of June. It is likely that a similar vacancy level will be maintained in the near future, since approximately 73 500 sq. m. of new leased space will be added to Kaunas city market until the end of 2018. The development of new business centres are still slow in Klaipėda. In the first half of 2017, the lease prices of business centres remained stable in all the major cities.
Even though business centre vacancies are small, and the economic conditions for business centre development remain favourable for several years now, investments in this segment are minimal. "It is a rather risky segment since the Lithuanian retail market is relatively small, and, in addition, the increasing popularity of online shopping poses more and more challenges to ordinary trade, therefore the demand for business centre space may even decrease in the long run", – says R. Žulpa.
Positive industry and export indicators, small vacancies, and gradually increasing storage facility prices provided an impulse for the development of the storage facility segment. The constructions of at least 3 logistics centres intended for lease and 1 for own needs will be finished in Vilnius in 2017 and will add around 40 500 sq. m. to the market. There were no constructions of new modern logistics centres for lease in Kaunas and Klaipėda over the past period. Storage areas for own use are built in these cities slightly more actively.
ABOUT INREAL GROUP
Inreal group which includes UAB Inreal valdymas, UAB Inreal and UAB Inreal GEO offers probably the widest range of real estate services in Lithuania. Inreal group companies belong to AB Invalda privatus kapitalas. The companies currently have over 100 employees, as well as offices and agencies operating in 11 different Lithuanian cities and towns (Vilnius, Kaunas, Klaipėda, Šiauliai,Panevėžys, Mažeikiai, Alytus, Plungė, Utena, Tauragė, Radviliškis). During more than 20 years of operation, over 50 various real estate projects were implemented, which earned recognition and won awards both in Lithuanian and in international competitions. Real estate projects are curretly being developed: "Marių verandos" in Neringa, "Dangės krantinės" in Klaipėda's old town and "HIGHWAY" business center in Vilnius. Inreal manages around 120 000 sq. m. of commercial premises, mediates in lease and sale of more than 550 thousand sq. m. of commercial premises, over 550 residential housing objects, over 300 land plots, 50 residential housing projects, 24 investment projects or their portfolios. More than 4900 valuation reports and about 80 consultations (feasibility studies, investment memorandums, and market research) are being drawn up annually. The value of assets after their valuation exceeds 720 million euros.
Rūta Merčaitienė
INREAL GROUP
Head of Marketing and Communication
Mob. +370 611 29779
ruta.mercaitiene@inreal.lt