The recovery of Lithuania’s economy and real estate market continues

In the first half of 2025, Lithuania’s GDP at constant prices grew by 3.2 percent year-on-year. Growth was supported by stronger household consumption, higher investment, and increased exports of goods and services. Wages continued to rise, while interest rates moved lower, providing additional momentum to the economy. The housing market showed further signs of recovery, supported by improved economic conditions and easing financing costs. Office market dynamics remained broadly unchanged. Vacancy rates in Vilnius have continued to rise, driven by slower business expansion and the entrenched hybrid work model. Meanwhile, conditions in Kaunas and Klaipėda remained stable. Logistics center operators, like office landlords, are increasingly confronted with the challenge of aging premises, pointing to the need for modernization and investment in higher-quality facilities. In the legal sector, new practices are beginning to take shape. The process is expected to be guided by the principles of reasonableness and proportionality, which should provide greater clarity and stability for market participants.

Lithuanian economic and real estate market report 2025 H1

Tadas Povilauskas, SEB bank economist: “Lithuania’s economy continues to expand, though the pace of growth is expected to moderate in the second half of the year amid somewhat less favourable external conditions. Looking ahead, U.S. trade policy and the uncertainty it generates represent the main downside risk to Lithuania’s economic outlook. Conversely, in 2026 the economy is set to receive a short-term boost from stronger household consumption linked to withdrawals from the second-pillar pension funds”.

Tomas Sovijus Kvainickas, Head of Investment and Analysis at INREAL Group: “Housing demand could experience a temporary additional boost from the combination of two factors. Allowing withdrawals from the second-pillar pension system would free up funds for down payments, while expected amendments to responsible lending regulations, reducing the minimum down payment requirement, would enable first-time buyers to purchase homes more quickly. Other buyers would be encouraged to carry out investment transactions before the down payment requirements are tightened.“

Artūras Kojala, COBALT Partner in the Real Estate and Infrastructure Department: “The first half of 2025 once again proved to be an intense period in the legislative field. The new geopolitical reality necessitates amendments to the legal framework governing the development of defence and related facilities. Consequently, amendments to the Law on Construction and other statutes have been adopted, significantly facilitating the implementation of defence and security industry projects. Understandably, concerns may arise that allowing the construction of such facilities without a building permit or without notifying the public could lead to certain practical challenges related to public awareness of such construction projects. Nevertheless, in our view, given the current circumstances, such amendments are necessary.“