Real estate market of Lithuania
Real Estate Market in Lithuania
Despite the development of the Lithuanian commercial property market was sluggish in 2011, there was a slight price increase.
* Compared to 2010, the volume of commercial property development in 2011 was a third higher. However, it was considerably lower than the amount of floor area built in previous years. In 2011, developers in major Lithuanian cities carried out projects to construct office, retail and warehousing premises totalling 70,000 m2 of leasable area. This is almost six times less than the amount that was built annually in 2007–2009.
* Office rents continued to increase in 2011: in Vilnius, Kaunas and Klaipėda, it increased 6–11 per cent (0,6–0,9 EUR/m2). Price growth in 2011 was influenced not only by the improving performance of companies or decreasing area of vacant premises, but also by the relatively low price level, particularly in Kaunas and Klaipėda.
* Total supply of modern offices in the capital city in 2011 increased just 0,5 per cent and amounts to 446,500 m2. The shortage of new supply influenced the positive developments in the occupancy rate of office premises. Over the last quarter of 2011, vacancy rate of office premises in Vilnius decreased from 9.4 to 8.8 per cent.
* The average net profitability of commercial space stands between 8 and 8,5 per cent.
* Realtors say that 8 per cent profit margin proves that foreign investors’ trust came back.
* There is a shortage of offices larger than 500 m² in A class business centres Vilnius. In the opinion of realtors clients should start negotiation about such offices when construction projects ar underway.
* Last year only one new A class business centres – Evita – was opened in Vilnius, which added 2,500 m2 to the market. This was the smallest increase of supply since 2000. Meanwhile the interest for office space was higher than expected. A total of 30,000 m2 was rented out according to the data of NEWSEC/Re&Solution.
* In the last quarter of 2011 only 5,5 per cent of A class office space remained free, compared to 7 per cent at the end of 2010. Vacant office space shrank to 12,8 per cent in B class offices from 17 per cent a year ago. About 10 per cent of all new office spase lease deals were made with companies that belong to foreign capital, realtors say.
* This year five B class business centres with total office space of 23,000 m2 will come to the market.