News

Lithuania's real estate market bustling with activity

April brought a visible increase in Lithuania's real estate market activity as property transactions jumped 16% year on year, reports news2biz LITHUANIA.
Apartment trade increased by a solid 35% to a post-crisis monthly record of 2,343 units, according to preliminary figures from the real estate registry operator Registru centras. The Vilnius market went even higher with a 47% jump in April to close to 800 units.

Trade in non-residential building and premises was also up y/y across the country but still below record months in 2012. Trade in land plots intensified by 15% y/y.

Because of the absence of fundamental factors that could signal a general improvement in the financial situation of households (real wages still not growing, unemployment still in low teens), market analysts believe that the jump in activity is related to real estate being seen as a good investment alternative to low interest rate bank deposits.

Such an interest is also backed by the current ultra-low interest rates on mortgage loans, and banks are reporting a rising mortgage loan demand. For instance, Danske Bank, a relatively small player on the home loan market, said the number of mortgage loans it concluded during Q1 2013 almost trebled y/y to around LTL 33m.

"I won't go into details about why we found no common language with the first buyer. Now we have signed a head of terms with another potential buyer who is already known for its investments in Vilnius. In a few months we may have a deal," says Richard Schrijer, head of Evita's owner Respektas, to news2biz.

Evita has 4,500 sq.m of commercial space on Savanoriu Avenue, a busy commercial street leading to the Kaunas exit road. "It is fully leased out to two tenants – Norwegian Storebrand and local Teo telecom. The residential units are not covered by the potential sale. Of these we have 10 still vacant and around 50 sold," says Schrijer.

Although he would not name the new potential buyer, Schrijer says it is quite optimistic about investment leads that it sees in Vilnius. "These investors are not in the least as gloomy as some of the local players. They say, go to Southern Europe, see and compare."

Evita's original developer was Dutch-owned MEI Baltija (see no 300 page 7). "The present owners of Evita used to be minority shareholders in MEI Baltija. For them it was their first project in Lithuania and they are likely not to call it a success story," Schrijer notes.

The Norwegian company that was interested in Evita is Auris LT, a commercial real estate company owned by Odd Rune Austgulen, a Norwegian investor. Evita could have been Auris LT's second project after a new office centre in one of Vilnius' residential areas that was acquired more than a year ago. Austgulen has also co-invested in two logistics properties in Vilnius and Riga.

CSC Baltic, the Lithuanian arm of US Computer Sciences Corp (CSC) global IT services player, plans to boost its Vilnius-based office with hundreds of new staff, reported news2biz LITHUANIA.
Five years in business, the Vilnius unit specialises in providing 24/7 IT infrastructure support for mostly finance, logistics and travel sector customers located in the Nordics but also other European countries and even much further, in the US and Asia. It now employs 290 staff, of which around 50 have been added in recent months.
During the next few years these two figures will dwarf as CSC Baltic plans to grow to 1,000 jobs. The growth will be part of CSC's new USD 1bn, 12-18 month cost cutting campaign announced by the company's new CEO in mid-2012. The New York-listed group was hit with a USD 4.2bn loss last year. Cost cutting, among other things, will mean more jobs for the relatively cheap Vilnius office.
At a press conference in Vilnius to mark the 5-year anniversary and announce the expansion plan, John Walsh, CSC's Denmark-based VP and head for Northern Europe, commended Lithuania's ability to supply multi-language staff who provide IT support on using various business management and security systems.

Over the past three years the share of EU citizens who want to be self-employed has fallen from 45% to 37%

Brussels, Belgium — Over the past three years the share of European Union (EU) citizens who want to be self-employed has fallen from 45% to 37%, reports European Commission (EC). This year EC highlighted the need for more entrepreneurs in order to return the EU to economic growth and higher levels of employment.

However, historical, cultural and economic background of diverse European countries has significant effects on attitudes towards entrepreneurs in European countries. Lack of in-depth knowledge might determine future revival of entrepreneurship in Europe, reveals the study by Lithuanian Free Market Institute (LFMI) today presented in Brussels.

“It is a positive trend in Europe to turn to entrepreneurs and acknowledge their role in creating economic growth. Yet, without knowing the mistakes of the past, there is no future. This is especially important then considering New Member States, such as Lithuania or Bulgaria, which still carry a burden of post-communist past. Therefore, only full understanding of entrepreneurial situation per country can guarantee that necessary measures will be taken and they actually will give wanted results”, says Zilvinas Silenas, President of LFMI.

In line with the acknowledged need to revive entrepreneurial spirit of Europe, LFMI conducted an international in-depth study in two New EU Member States, Lithuania and Bulgaria, and for comparative reasons in two non-EU countries – Georgia and Kyrgyzstan. The aim of the current study was to determine attitudes towards entrepreneurs in countries sharing the same post-communist past and underlying historical, cultural and economic reasons of such attitudes.

How to get rid of the “exploiter” image of the entrepreneurs?

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American company opens agricultural plant in Vilnius district

Kinze Manufacturing Inc., the second largest planting and seeding equipment manufacturer in the United States, will open a production facility in Vilnius District along the highway to Druskininkai. The facility will manufacture the company’s agricultural machinery product line, planters/seeders, to support its growing market in neighbouring countries including Russia, Ukraine, Czech Republic, Bulgaria and Hungary. It will open in autumn 2013 and start with 10 employees. In a few years the manufacturer will eventually employ 250 welders, mechanics, CNC operators and other specialists in its Lithuanian operations.

“This is our first plant abroad geared to increasing sales in Russia, Ukraine and the whole of the European Union,” commented Susanne Kinzenbaw Veatch, Vice President and Chief Marketing Officer of Kinze Manufacturing, Inc. “We were looking to expand in Eastern Europe and were considering Slovakia, Poland or Lithuania. We chose Lithuania because the local workforce is undoubtedly productive and cost-effective. Also we were very impressed by the country’s long-standing manufacturing traditions and the degree to which public institutions were attentive to our business needs.”

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Increased import of electricity from the Nordic countries

The newsletter Energy Update, published by the Lithuanian transmission system operator Litgrid, summarizes the latest developments in the Lithuanian electricity sector.

In this issue:
- Good results in 2012 for Litgrid;
- Contractors selected for the reconstruction of the Alytus switchyard and the construction of the LitPol Link overhead line;
- Government allows laying a cable for the NordBalt electricity connection in the coastal zone;
- Liudas Liutkevičius: Electricity market – the active gain and the passive lose;
- In a few years, a new electricity transmission line will connect Kretinga and Benaičiai;
- Bigger import of electricity from the Nordic countries;

Please find attached the newsletter Energy Update.