Real estate has remained one of the most popular investments for many years and this trend is not changing. Sales statistics for the last 4-5 years show that the reason for purchasing a home is – investment. However, investors have different goals, so based on them, real estate developers distinguish two main types.
“The first type of investor can be classified as individuals who seek quick returns and try to get the maximum benefit from the purchased housing in a very short time. The second type would be classified as individuals who are more concerned with the increase in the value of the housing in the long term. Short-term returns are not as important to them as they are to the first type of investor,” says Martynas Žibūda, development manager at real estate development company Eika.
Investors seeking quick returns and payback are usually interested in 25–40 sq. m one-room apartments. True, the supply of intermediate – 1 and 2-room – apartments has been growing recently. Such apartments have a large, comfortable living room with a kitchen and a secluded separate bedroom area. They are more adapted to the long-term needs of residents than one-room apartments.
How long will it take to pay for housing in Pilaitė?
Most often, investors who want to make their apartment pay off as quickly as possible choose economy-class housing in Pilaitė or Šnipiškės, they are also interested in apartments in Žirmūnai and Naujamiestis. Specialists note that almost all 1-room apartments are sold to investors.
About 50 percent of investors seeking a quick payback take out loans from a bank, according to Eika statistics. They usually have already purchased their primary home and are planning to buy a second or third home to rent out.
According to M. Žibūda, recently investors have increasingly been buying housing with individual finishing. “For some buyers, individual finishing is more financially convenient, because the installation work of the housing can be covered with housing loan funds. In this case, half the savings are needed to install the housing. According to our calculations, sales of housing with standard finishing are growing and have recently accounted for about a fifth of all apartments sold,” says M. Žibūda.
It is estimated that a purchased 25–35 sq. m apartment in Pilaitė will pay off in 15–16 years, while the payback period for a 16–17 m apartment will be slightly longer in Šnipiškės, Žirmūnai and Naujamiestis.
How long will it take to pay off a prestigious home?
The second type of investor is usually interested in a full-fledged home that will grow in value in the long term. They prefer prestigious 2, 3 or 4-room apartments located in Žvėrynes, the city center or the Old Town.
“Investors seeking to increase the value of their housing are distinguished by the fact that almost always, in more than 80 percent of cases, they buy housing with their accumulated savings, without loans. They are looking for larger spaces, apartments of 40 to 80 sq m or more. True, as practice shows, the area of prestigious housing is also decreasing. They understand very well that investments will pay off slowly, but what is much more important is that the value of housing will not decrease over the next 5 or 10 years, but will increase. Our five-year statistical data shows that the price of prestigious housing in the capital has increased by about 30 percent,” says M. Žibūda.
Investments in prestigious housing will pay off over a longer period than in economic housing. Depending on the location and size of the housing, the payback period can last from 18 to 25 years.