REVIEW OF RE MARKET 3rd QUARTER OF 2013
In the third quarter of 2013 SE Centre of Registers had registered significant transaction growth rates in the Lithuanian RE market. The amount of apartment sale-purchase transactions registered in the quarter was higher by a third than in the respective period of the previous year. The increase in the amount of transactions in the segment of private houses reached about 21.5 percent. Even higher purchasers’ activity was registered in the new construction apartment segment – about 980 of new construction apartments have been sold in Lithuania within the third quarter of 2013 – i.e. 60 percent more than in the corresponding period in 2012. The majority of new construction apartments (70 percent), that were sold in the country, were located in Vilnius. The highest growth of transactions is seen in this city. Meanwhile, this segment in the remaining cities of the country does not show significant growth rates yet.
Due to the increased purchasers’ activity the prices in new construction projects in the capital city are growing. The price level has increased in all housing segments within a year: the average price in the economic segment has increased by about 1 percent, in the medium class segment by about 7 percent, and the prices in the prestige class housing segment have increased by 3 percent at an average. The greatest price growth is seen in new emerging projects that are usually focussed on a higher price than the average price in the segment. Due to this reason the average price of new construction apartments in the capital city should maintain a moderate growth trend. Positive moods in Vilnius should spread to the secondary market, where the increase in prices is also expected in the nearest future.
Increase in prices is also noticeable in the coastal region. Price level in Palanga remained stable only in a mid-class new construction housing segment. Meanwhile, the average price level in the economic and prestige housing segments has increased by about 3 percent. In the third quarter of 2013, 74 new construction apartments (25 apartments/month) were sold in Palanga. It means even 80 percent more in comparison with the corresponding period of the previous year. 28 new construction apartments (9 apartments/month) were sold in Neringa, representing even 70 percent more than during the full 2012. In comparison with the corresponding quarter of 2012, the transaction growth is reaching more than a triple level. It shows that the segment of “second home” in the popular Lithuanian seaside resorts is becoming more popular, and the new emerging high-quality projects get purchasers’ attention immediately.
However, similar trends in other cities of Lithuania are not noticed. Less new construction apartments are being sold in Kaunas and Klaipėda than in Palanga and 11-12 times less than in the capital city. It points to the remaining weak demand in these cities. For this reason, we should not expect price increase there in the nearest future.
Only the capital city is standing out in the segment of business centres. Vacancy rate has decreased from 4.8 to 4.5 percent within the third quarter, the construction of two modern business centres is being completed and three modern business centres development continues; they will add about 54,000 sq. m. of rentable area to the market. It is expected to launch the development of at least three new projects, which would add about 32,600 sq. m. of rentable area. The development of these projects is driven by both the growing demand for modern premises and a favourable level of rents. Meanwhile modern business centres for rent are not being built in other cities of Lithuania.
In the 3rd quarter of 2013 the segment of shopping centres was further growing – retail trade volumes were growing, almost no vacant premises are left in the existing shopping centres. Vacancy rate in Vilnius shopping centres reached 0.7 percent (2,550 sq. m.), in Kaunas – 1.9 percent, (3,950 sq. m.), and in Klaipėda – just 0.3 percent (500 sq. m.). Poor supply of vacant premises in the country enables the managers of shopping centres to slightly increase rents for new tenants. Developers have resumed to the investments into this RE segment. The construction works of two shopping centres, Prisma (10,000 sq. m.) and Domus PRO (12,000 sq. m.), were launched in Vilnius. The construction of the shopping centre Luizė with the area of 6,200 sq. m. was launched in Klaipėda. The major part of rentable premises in all objects has already been reserved, although the opening of the shopping centres is expected no earlier than at the start of 2014.
The volumes of industrial production as well as export have been increasing during the third quarter of 2013. The expansion of warehousing facilities market has continued. It was particularly difficult to rent modern warehousing premises with an area exceeding 1,000 sq. m. in all three largest cities of the country. Vacancy rate in Vilnius modern logistic centres has decreased to 0.2 percent (600 sq. m.). This rate in Kaunas has also remained closely to 0 percent, and vacancy rate in Klaipėda has reached 1.2 percent (900 sq. m.). Decreasing vacancies and slowly growing rents promote developers to invest into new projects.
