Sales of new apartments in Vilnius exceeded expectations

Slightly different trends are recorded in the secondary housing market. According to the data of the Center of Registers, during the first quarter of 2015, approximately 1,670 housing sales transactions were concluded in Vilnius, i.e. 30% less than in the same period last year and 18% less than in the last quarter of 2014. The largest share of sales recorded by the Center of Registers – 81% – was made up of old-construction housing transactions.

“In the first quarter of this year, sales of new apartments in Vilnius grew, and home buyers did not need an adaptation period after the introduction of the euro. Currently, interest in new projects has increased significantly, apartments are being actively reserved as soon as the start of the project is announced. Housing sales are also encouraged by record-low interest rates, which are also an incentive for investors looking for an alternative to almost zero deposit interest rates,” says Tomas Žiaugra, development project manager at Eika.

During the first quarter of 2015, 320 economy-class apartments were sold, which accounted for 44% of all new construction apartment sales, while the middle class accounted for 42% of new housing sales transactions. The increased supply in the prestigious class is affecting sales. For the second quarter in a row, about 110 apartments have been sold in this class, which accounts for as much as 15% of primary market sales. In previous quarters, luxury housing accounted for only a few percent of the new construction housing market.

According to the development project manager of Eika, during the first three months of this year, the most popular districts in Vilnius were Naujamiestis (17%) and Baltupiai (9%), which accounted for 26% of all new construction apartment sales transactions. In third place in terms of sales activity are Pilaitė and Pašilaičiai (8% each), where buyers are offered economy class apartments. “As in 2014, the completion of the project did not have a significant impact on buyers’ decisions. Only 30% of new apartments were purchased in already built houses. All the remaining apartments were purchased in apartment buildings that were just starting to be built or were already under construction,” says the Eika representative.

During the first quarter of 2015, the average price per sq. meter decreased by only 1%. The price of economy class apartments decreased by 4% and currently amounts to 1221 euros per square meter. In the middle class, the price of apartments remained unchanged during the first three months of this year and amounts to 1694 euros per square meter. In the prestigious class, where demand has increased the most, apartment prices have increased by almost 2% since the beginning of the year and amount to 2645 euros per square meter.

Real estate developers are currently offering about 3,350 new apartments for sale in Vilnius.  Compared to the same period last year, the supply of new apartments has increased by as much as 94%. According to the calculations of the company “Eika”, during the first quarter, about 10 new projects were added to the supply, offering 500 apartments. According to T.Žiaugra, the growth in supply is only just gaining momentum. During the second quarter of this year, real estate developers plan to offer about 1,500 new apartments. Given such activity of real estate developers, home buyers need to assess the risk of builders’ reliability. Only 20% of the housing offered for sale today has been built, and the majority exists only on paper.

“In the near future, the market will be supplemented by several dozen more projects – most of them will be developed in Užupis and Naujamiestis, so the choice for buyers in these parts of the city will remain very large. For the last three quarters, the supply in Vilnius has fluctuated between 3,300-3,600 vacant new construction apartments. In the middle of this year, the supply may exceed the threshold of 4,000 vacant apartments, which has historically been exceeded only once – before the crisis of 2008-2009,” says the representative of “Eika”. “Time will tell whether it will not be too large, but in this situation the only winner will be the buyer.”

Founded in 1992, the company “Eika” is one of the largest real estate development and construction groups in Lithuania. The group of companies consists of: UAB “Eika” – a leader in the real estate market, valued for its innovation, reliability and responsibility; UAB “Eikos statyba” – a construction company with extensive experience in the construction and renovation of administrative, public, commercial, industrial and residential buildings.