bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Saturday 16.12.2017 | Name days: Alvīne
LithuaniaLithuania

Lithuania’s litas-to-euro swap has not altered real estate prices

FaceBook
Twitter
Draugiem
print
(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Vilnius

Linas Jegelevičius for the BNN

Unlike in Estonia and Latvia, Lithuania’s euro adoption has not slowed down real estate market in the country. The pre-euro forecasts of a more tepid realty market have proven to be inaccurate mostly.

«I really cannot tell that there’s any slowdown in the market after the changeover. People out there just might seem more curious for a while, trying to sniff out what is going with the euro real estate market and what direction it can take,» Rimas Kirdulis, director of Lithuania’s Real Estate Agency Association (LREAA), told BNN.

Predictions were wrong

Ahead of the milestone currency swap, Lithuanian real estate experts were eagerly eyeing the other two Baltic States’ post-euro real estate sector and trying to work out a similar pattern of development for the euro-embracing Lithuania.

«From the experience of the countries with the euro, the market becomes sluggish in the aftermath for a while. It would be accurate to tell that after the adoption, people try to get adapted to the new currency and shun for some time to get engaged in real estate deals that usually require lots of money,» Saulius Vagonis said before the euro adoption.

Estonia, for example, has seen a 2 percent dip in real estate sales in the wake of the currency change in 2011. But the market did bounce back remarkably in 2012, when the real estate deals soared 23 percent against the previous year.

Meanwhile, Latvia reported a slower growth of the market following the euro kick-off. After seeing a 23 percent rise in 2012, 17 percent surge in 2013, year-on-year, the sales were quite slow in 2014, with the euro in place, when the annual real estate market’s growth accounted for 5 percent.

Kirdulis, of the LREAA, says there were particularly many predictions that, in the overwhelming «rounding-up» the prices, the property rent costs will be going up. But this did not happen to the surprise of the realtor.

«In fact, they remained at last year’s level, which could be probably explained by the fact that in anticipation of the euro adoption many Vilnius residents had bought up a lot of real estate, usually from their savings, without a bank loan. That, in fact, has hiked the rental residence supply in the Lithuanian capital Vilnius, which is why the lease is of the last year’s level», explained the association head.

Lithuanians frown at high-rises

Kirdulis predicts though that the rent in the capital will start inching up throughout the year later and that should eventually twitch up the real estate prices.

Speaking of general market trends, the LREAA director noted that Lithuanians dwelling in the largest cities have notably got fed up with Lithuanian-size residential high-rises and tend to seek now their own place in quiet residential neighborhoods or, those who can afford it, build their own house on the outskirts of the city.

«The wave of whims to acquire accommodation in a glassy glossy towering high-rise, a trend quite palpable during the peak of economy, has definitely fizzled out. Potential real estate buyers are against skyscraper builders today – many do believe that the climate we have –often frigid winters and scorching summers- aren’t compatible with the construction features of the high-rises – large areas of glass, air-conditioning in question and high heating bills, a major issue for most Lithuanians,» said the expert.

Over the last five years, he insisted, there has been a deepening trend of moving out from Vilnius to the city vicinities, where many took on building their own house. A relatively small one and, as a rule, energy-saving oriented.

«Expansion-wise, there are still pretty much large land areas at the entrance to the capital where they can be used for building new residential property. Interestingly, in terms of generation, both seniors and youth often prefer living outside the city. This is definitely the most noteworthy trend in Vilnius,» Kirdulis said.

Currency swap had no effect on Klaipėda RE

Danas Kasperavičius, a real estate broker at Dnb Bank-owned real estate company Dnbbustas, says the euro adoption has been smooth and shake up-free to the real estate market in the Lithuanian seaport of Klaipėda.

«With three weeks into the new year, all has gotten back in track. After the real estate price rise last April many mulled that the new upward price shake-up should be expected ahead of the euro adoption, especially before Christmas, but it proved not to be the case,» Kasperavičius told BNN.

Still, taking the last half-year of 2014, the sales curve went up in December.

As many of his counterparts, the broker admitted he was expecting certain calm in the market for some time in the new year, a result of the currency changeover.

«But quite surprisingly, the slowdown, as a matter of fact, never ensued. In fact, right after the holidays people started calling and inquiring about the real estate we sell,» the Dnbbustas broker said.

Price-wise, contrary to the widespread speculations that the euro will jiggle the RE prices upward, it, in fact, was jerking them down, he noted.

Speaking of the larger picture in the Klaipėda real estate market, 90 percent of all deals are on residential apartments.

«Especially, there’s much exuberance as a rule in the new residential property segment. But, notably, all of it, particularly with a good, picturesque view below the upper range of price has been sold out. If one sought to buy for a moderate price a fifth-floor apartment from which window the view would not be obstructed by other ,towering apartment blocks nearby, that would perhaps be impossible now,» the broker noted.

Real property over EUR 100,000 stands little chance

Meanwhile, in the house market, Kasperavičius said that houses up to EUR 87,000 stand the best chance to find a new owner in the Lithuanian seaport.

«Frankly, I get just very few calls inquiring about houses on sale over the price-tag. Quite recently, I’ve sold a house with a partly finish for EUR 72,000, and it took a single day to wrap up the deal,» the broker said. He added: «All real property over EUR100,000 stands an especially slim chance of seeing a deal now.»

Dnbbustas has still many free apartments to offer in the tallest residential skyscraper in Lithuania, situated at a walking-distance to the mall Akropolis and pier in Klaipėda.

Having built the 34-floor skyscraper during the buoyant economy –and high labor costs – times in early 2008, the builder now is struggling with the sales, though the upper apartments overlook the offing of the Baltic Sea and the panorama of the Kuršių lagoon opens up already from the units on the sixth floor.

Characteristically to the seaport, getting an apartment leased is a very hard task, a result of the shortage of residential property rentals.

«Really, there’s no supply for that. Especially in the recently built property,» the broker said.

Good crediting conditions spur RE deals

Jūratė Radzevičiūtė, sales head at JSC Kauno būstai, a developer especially known for moderate-size «friendly-price» residential apartments in the coastal resort of Palanga, says that the predictions of looming stagnation in the real estate market after the euro adoption have been far from truth.

«Frankly, I haven’t felt anything stagnating; people keep calling and, in fact, there have been more callers, quite curious one, with a keen eye on what we have,» the broker told BNN.

She insisted that the interest in property has been high in all Lithuania in 2015.

«I heard from my peers that people have been particularly interested in buying land in early January, in Palanga, too,» Radzevičiūtė. «There are now very favorable bank crediting conditions, and people want to take advantage of that. There’s an overwhelming opinion that the real estate prices will be going up,» she added.

The experts agree that the market has bounced back and been bullish in the recent years.

As the demand for new residential property has been higher than the supply, developers are scrambling to pump money into new residential projects to meet the demand.

Energy-saving matters most now

Another significant shift in the market is Lithuanians’ rising consciousness of the real estate’s energy-saving characteristics.

«Big, castle-resembling, but wind-blowing-through-type of houses are already becoming a relic of the past and, certainly, a big burden for the owners. Nowadays, people tend to build smaller-size, energy-saving houses,» Lithuanian Environment minister Kęstutis Trečiokas was quoted as saying this week.

Statistically, over the recent years, most of the new houses take up approximately 150-160 square meters, but even smaller houses, up to 100 square meters, have also been popular.

Implementing the EU legislation, energy utility criteria have been set and are applied to the modernized or new living accommodations. When buying a real property, the buyer is entitled legislatively to be informed of the house’s or apartment’s so-called energy utility coefficient. As of now, there are 39 residential buildings in the country bearing the highest evaluation in energy utility.

«Energy-saving characteristics will definitely be a major factor in setting the price for real estate soon,» agreed Kirdulis, of the LREAA.

Ref: 020/111.111.111.2109


Leave a reply

Citadele Index: businessmen are more optimistic about economic growth

After a four-year gap, optimism has been noticed in all of Latvia’s business sectors. For the third consecutive quarter Citadele Index value exceeds 50 points. Businessmen are also positive about the country’s economy and their own finances, according to the final Citadele Index study for 2017.

Bank of Latvia increases GDP growth outlook to 4.7% for 2017

Bank of Latvia has decided in increase gross domestic product growth outlook from 4.2% to 4.7% for 2017, as reported by the bank’s governor Ilmārs Rimšēvičs.

Latvian residents’ opinion of government’s work remains negative

Latvian residents voiced the biggest degree of dissatisfaction about the development of the situation in Latvia and the work performed by the government. Although the previous evaluation of government’s work had increased by four points, it has since declined by two points, according to data from Baltic International Bank’s Latvian Barometer.

Eel fishing to be restricted in Baltic Sea for three months

European Union Fisheries Council has decided to restrict eel fishing for three months in 2018 in all waters, including the Baltic Sea. Although the World Wide Fund for Nature and environmental organization in Europe view it as a notable first step, these efforts are unlikely to have a major impact on the most important problem – eel population continues declining rapidly, as noted by WWF.

LCCI: increase of electricity bills for thousands of companies in unacceptable

Latvian Chamber of Commerce and Industry (LCCI) categorically opposes increasing electricity bills for the majority of small and medium-sized companies due to mandatory procurement component’s differentiation. The organization believes that this would basically introduce a new additional tax, making them even less competitive.

Head of Latvian Association of Regions to spend Christmas thinking on remaining in the party

Dissatisfied with multiple decisions made by Latvian Association of Regions (LAR), Riga City Council member Mārtiņš Bondars will spend the holiday thinking about his place in this political party, as he mentioned in his interview to Rīta panorama or LTV.

Estonian fund permitted to purchase several Latvia energy production companies

Latvian Competition Council has permitted Estonian fund to purchase several energy production and agricultural companies.

Meat processing giant sees room for growth in ready-to-eat foods

Consumption in the meat market segment of ready-to-eat foods is growing quickly, evaluated Finnish meat processing group HKScan that is planning to invest eight million euros in its factory in Estonia.

To fight for national minority schools, Russian representatives promise to hold a referendum

Defenders of Russian schools in Latvia promise to organize a referendum for autonomy of national minority schools, said co-chairman of Latvian Russians Association Miroslavs Mitrofanovs in regards to the transition to education only in Latvian language.

Tax payment process from capital growth to change in Latvia

As part of the tax reform, changes will be added to the Personal Income Tax Law starting from 1 January 2018. One of the changes is associated with payment and declaration of income from capital growth. The tax rate and the term for submission of declarations on income from capital growth will change next year.

Tusk deems EU migrant quotas ineffective as some states oppose taking in migrants

Donald Tusk, the head of the Council of the European Union and chairman of this week's EU summit, has evaluated that mandatory EU-wide quotas are ineffective and that there is a split between east and west as regards asylum policy.

Riga City Council’s 2018 budget – poorly planned or well-developed?

As the vote for the 2018 budget of Riga City Council draws near, representatives of all opposition parties say they will not support it as long as politicians of the ruling coalition continue viewing the city’s most important financial document as good and aimed at development.

Euro area economy has grown quicker than expected, European Central Bank estimated

Growth has been at a faster pace in the eurozone prompting the European Central Bank to raise its economic growth forecasts.

Weekends in Latvia expected to be snowy

A layer of snow will form in Latvia’s central and western regions that will remain until the middle of next week, as reported by State Environment, Geology and Meteorology Centre.

Opinion: Latvia at risk of restricting healthcare to 300,000 people

Kustība Par! political party has sent a letter to Latvia’s President Raimonds Vējonis, asking him to return to the Saeima the recently approved law on healthcare funding legislative draft. According to the party, the law restricts healthcare for 300,000 people in Latvia.

Lithuania’s 2018 budget focuses on spending cuts, NATO commitment and social security

Lithuania's 2018 budget, approved this week by the Seimas, Lithuanian Parliament, makes history for being the first budget ever with fewer spending for the governmental sector, the commitment to NATO of earmarking 2 per cent of the gross domestic product to defence and bigger allotments for social security. The budget was adopted by 84 MPs, 29 voted against, with 15 abstentions.

EU member states have to strengthen measures against sexual abuse of children

Member states of the European Union have to take more serious measures and cooperate more intensely with Europol and information technology industry to better combat sexual abuse of children, as noted by members of the European Parliament.

Latvian parliament views initiative for changing VAT rate for food product

On Thursday, 14 December, Latvia’s Saeima made its decision on the collective application that proposes reducing VAT on everyday healthy food products and increasing VAT on unhealthy products.

Maxima: residents have become more conservative in their choice of products

In Q2 and Q3, a higher degree of conservatism was noticed in residents’ choice of products. The number of buyers who gladly purchase new products has declined, whereas the number of buyers who do not change anything in their purchasing habits has increased, according to results of a study performed by Maxima.

Civil processes to be sped up and simplified in Latvia

On Thursday, 14 December, Saeima supported amendments to the Civil Process Law in the final reading. Amendments propose several major changes to the process of review of civil processes to make court sessions quicker and more efficient.

State Auditor dissatisfied with parliament’s slow legislative process

Latvian State Auditor Elita Krūmiņa plans to inquire to the Saeima about the delay with the approval of the legislative draft on the expansion of authority of her institution, as she mentioned in an interview to Rīta panorama programme of LTV.

Aldaris commences exports to France, China and Netherlands

Aldaris concludes 2017 with three new export contracts, commencing exports of products to China, France and Netherlands. Until now Aldaris has exported products to eight markets, with the largest one being United Kingdom, taking up 78.71% from Aldaris export volume, as reported by the company.

Estonian budget passed with 0.25 billion-euro deficit

The Estonian Riigikogu with 55 votes against 41 has passed the country’s 2018 state budget bill planning to spend by 0.25 billion more than it is planned to earn.

AFSAL: loan requests in non-banking industry are declined in 69% of all cases

In the first six months of 2017 Alternative Financial Services Association of Latvia (AFSAL) issued a total amount of EUR 84.7 million in consumer loans. No increase is noted in this amount when compared with the same period of 2016. Increase did not exceed 0.2%, as reported by the association.

European Parliament supports changes for combating activities detailed in Panama Papers

Public registries with names of true owners of businesses, effective protection of whistle-blowers and stricter requirements for financial intermediaries are some of the proposals intended to assist with the fight against tax avoidance, as noted by members of the European Parliament.

Newest comments

When do you go shoping for Christmas gifts?

View Results

Loading ... Loading ...

Polls Archive



Category feed: Feed: