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.