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Economic recovery supports good return on the Baltic property market

in the region.

“The Baltic countries have seen a strong economic recovery during recent years and are expected to keep on growing. Simultaneously, a period with high global propensity to save, low investment demand and low utilisation of capacity will hold down both real interest rates and inflation during the next few years. This will benefit the capital-intensive property sector,” says Newsec’s Chief Economist Arvid Lindqvist.

Rising cash flows.The Baltic economies are recovering from a deep recession and their prospects differ from much of the rest of the western world. Continuous growth in the region, in combination with limited supply of especially high quality office premises, will generate increasing cash flows for high-quality properties in good locations during coming years.

Access to credit.The fundamental changes that are currently happening on the global financial markets – with reduced access to credit and high selectivity by the banks leading to high margins – will have a negative effect on the credit-intensive property sector. However, the effects are expected to be less in the Baltic region than in Continental Europe because of the solid position of Nordic banks, which also dominate the Baltic credit market.

Lack of investment alternatives.Low risk-adjusted returns on alternative investments such as government bonds and equities mean that the Baltic property market will be an attractive investment choice for both domestic and foreign investors who are looking for stable returns.

“Despite a weakening world economy, liquidity on the Baltic property market is improving. The market turnover ended up at 260 million euro in 2011 and the segments that are expected to deliver the best risk-adjusted return over the next few years are prime offices in Tallinn and logistics properties in good locations in Riga,” says Newsec’s Chief Economist Arvid Lindqvist.

Newsec Property Outlook has been published since 2001. Download the latest Report at www.newsec.com/npo

For further information please contact:Ricardas Cepas, CEO Newsec BalticsTelephone +370 5 252 6444, E-mail r.cepas@newsecbaltics.com

Arvid Lindqvist, Chief EconomistTelephone +46 708 43 30 50, E-mail arvid.lindqvist@newsec.se

Niklas Alm, Communications ManagerTelephone +46 708 24 40 88, E-mail niklas.alm@newsec.se

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