Nordic investors and CIS funds will be the reason for growth of the real estate market in the Baltics in 2013
“After the drop in investor activity in the last few years, we have observed an upturn in our region, and the real estate market has been no exception. Although the number of institutional investors is limited, the funds invested by them are fairly significant. The increasing amount of incoming Nordic and Russian funds reach the Baltics via local partners, so creating a strong circle of local property professionals”, said Mindaugas Kulbokas, Head of Research and Analysis for the Baltics at the financial and real estate consultancy company Newsec.
"Part of the current appeal of the Baltic States as a desirable market for investment activities is the overall stability of the legal environment in the three countries. Of course, improvements still need to be made, but the anticipated growth in the real estate markets noted in the 2013 Baltic Property Market Report is in part due to an understanding by investors that regulation in this area of economic activity is in line with European norms. It is worth noting that while each of our countries still have their respective problem areas, they each continue to work to improve regulation relating to the real estate sector, and have engaged in healthy competition between Estonia, Latvia and Lithuania to create a better environment for business”, said Mr Raimonds Slaidinš, Chairman of the Management Board of LAWIN, the internationally highest ranked business law firm in the Baltics.
“Now is the best time to finalise contracts for the future lease of offices. One good example i shown by the lease signed by one of the largest banks in Lithuania AB DNBBnkas, part of Norway‘s largest financial services group, and Norwegian office eveloper Schage in the Quadrum project in Lithuania”, Mr Kulbokas said.
Development of New Centres Will Speed Up
According to Mr Kulbokas, 2013 will be distinguished not by the construction of new shopping centres, but by the expansion of currently existing ones.
“There is already a lack of appealing trading areason the main streets of the Baltic cities. The demand for the development of trading areas will be further propelled by well-known Swedish newcomers H&M across the Baltics and IKEA to Lithuania in the third quarter of this year”, outlined Mr Kulbokas.
Nowadays the figures for trading space are 584 sqm per thousand people in Lithuania, 685 sqm in Latvia and 765 sqm in Estonia. In the housing sector, potential investors will remain conservative and patient, they are only interested in high-quality accommodation of exceptional standard. According to the Newsec forecast, in 2013 (Y-o–Y) prices of modern new apartments should increase by 3–5 per cent and the prices of older accommodation would decrease by 5 per cent over the next few years.
Economy Class Hotels Prevail in Lithuania
Polish and Byelorussian tourists dictate trends in the hotel market in Lithuania; therefore, economy class hotels predominate in Lithuania and account for up to 75 per cent of all hotels. It is estimated that last year visitor numbers to hotels in Lithuania increased by 15 per cent up to 1.6 million, and hotel occupancy increased to 46 per cent in total, and to 58 per cent in Vilnius. Meanwhile, Estonia and Latvia boast of higher-class hotels, especially in the capitals. Tallinn had the highest tourist accommodation level in 2012 and this trend will continue in 2013.
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