In 2016, the primary housing market in Vilnius grew by an average of 20 percent for the third year in a row, and buyers were more active than real estate (RE) developers: more apartments were purchased than were offered to the market. This led to a decrease in the balance of vacant housing to 3,600 apartments and an average increase in housing prices of only 8 percent to EUR 1,730 per square meter. In 2017, much greater developer activity is expected, and there should be no prerequisites for a supply deficit or a significant price increase..
Last year, real estate developers in Vilnius sold almost 4,200 new apartments, compared to about 3,500 such transactions recorded in 2015, and less than 3,000 two years ago. This indicates a growth in sales of one-fifth annually.
“In 2016, sales of middle-class housing grew the most – by 43 percent, sales of economy class by 22 percent, while sales of luxury housing fell by as much as 36 percent. This change was not caused by a decrease in demand, but by a lack of supply due to the complexity of projects of this type and the lack of plots suitable for development,” says Martynas Žibūda, Development Director of UAB “Eika”.
Despite the efforts of real estate developers, buyers this year bought more apartments than were offered to the market. As a result, the stock of vacant apartments not only did not grow, but even slightly decreased from 3,800 last year to 3,600 apartments this year. The absolute majority of vacant apartments are in houses that are still under construction or have recently started construction, and only about 500 apartments, or about 14 percent. of the total balance, are in completed projects.
For the second year in a row, there are more mid-range apartments (46 percent of supply) than economy apartments (40 percent of supply) in the Vilnius primary housing market at the end of the year. Prestigious housing accounts for 14 percent of available apartments. “It is not a common situation when more expensive housing is offered than cheaper housing, but this indicates a change in buyer behavior and the need to invest in higher-quality and long-term value housing. The prevailing opinion is that more unique housing located closer to the city center will be less sensitive to possible changes in housing value,” says a representative of UAB “Eika”.
Rental housing has been one of the investment types that provides the highest return and value stability in recent years. In 2016, 56 percent of all Eika home buyers used a loan to purchase a home, while in 2015, this figure was about 50 percent. It is likely that in 2017, this indicator will exceed the 60 percent transaction threshold. In 2016, investors bought about 30 percent of all apartments, which is the most of all buyer categories identified by Eika.
The average price of primary housing in Vilnius increased by 8 percent over the year, or almost the same as a year ago: from EUR 1,600 per square meter to EUR 1,730 per square meter. The greatest influence on this was the increase in the price of economy-class housing, which amounted to about 16 percent to EUR 1,400, while prestigious housing rose by about 11 percent to EUR 2,800 per square meter. The price level of middle-class housing, for which supply and demand were the highest, did not change and amounted to about EUR 1,690 per square meter.
“In 2017, the luxury housing segment should receive the most attention from real estate developers. For the last couple of years, the market has been supplemented by small prestigious projects in Vilnius’ Old Town, the implementation of which, at least for the best apartments, was extremely fast. In the coming years, this market segment will receive several larger projects, which will increase competition and provide more choice for buyers. Economy-class housing has the greatest potential for growth next year, but it is the least interesting for developers due to lower profit margins and the popularity of the middle class,” predicts Martynas Žibūda, Development Director of UAB “Eika”.
About the Eika group of companies
Founded in 1992, the company “Eika” is one of the largest real estate development and construction groups in Lithuania, successfully developing residential, commercial, public and other purpose building projects, creating a new quality of life and work. The company has already built more than 3,000 apartments and 270 thousand square meters of buildings. “Eika” has been awarded many times as the best real estate developer in Lithuania, and the company’s projects “Santariškių namai” and “EIKA namai Pilaitė” have also become the best in Lithuania.
More information:
Jorūnė Juodžbalytė
EIKA Marketing and Communications Manager
Mobile: +370 686 80126
Email: [email protected]