During the last years, there have been no remarkable property transactions in the Baltic countries. The reasons for low investor confidence have been pretty clear. But are there positive changes to come?
The answer is definitely yes. Estonia is going to adopt the Euro next year, which shows that the country has managed to meet all necessary criteria even during these difficult times. Lithuania’s GDP has been the fastest growing within EU in Q2, 2010. All major financial institutions have upgraded their economy forecasts of the three Baltic countries several times already. Everyone agrees that the recovery is faster than was expected before and all three countries have started moving upwards at a full pace.
In the light of the improving economies, stabilization of the property markets is evident as well. Vacancy rates have started to decline; rental rates have stabilized and in some segments have started demonstrating moderate growth. Over 30 per cent decrease in rental rates and min 200-300 bps increase in yield levels make these three countries very attractive in terms of potential investment return and future upside.
An evident example of available opportunities is a trophy asset on the main Baltic high street, Gedimino Avenue. The newly built, perfectly designed shopping centre is in foreclosure sale. One of the nicest and best located shopping centers is sold for less than today’s replacement costs and provides an excellent opportunity to earn from both property and recovering economy related issues.
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