ARCO VARA AS - NASDAQ OMX Baltic

Name of the company 2004 (EEK m) 2005 (EEK m) 2006 (EEK m)
The Group 9.7 12.9 23.1
SIA Latio, SIA “Latio
Vertetaji & konsultanti
Vidzeme”
34.3 62.3 n.a.
SIA "Ober Haus Real
Estate Latvia", SIA
"Ober Haus Vērtēšanas
serviss"
7.2 19.9 27.5
Despite having entered the Lithuanian market already in 2000, the Group has not been able to gain as
strong of a market position in Lithuania as it has in Estonia and Latvia. Since 2006, the Group’s
Lithuanian operations have been given additional support by the Latvian agency office. Ober Hausi
Kinnisvara is the market leader in Lithuania, followed by the Lithuanian-owned Inreal, which is
involved both in agency services and property development.
The Ukrainian real estate market, with a population of 48 million, is significantly larger than the Baltic
markets, with a combined population of seven million. The Group operates only in Kiev with 36
employees and thus has no substantial market strength. However it differentiates itself by the quality
of its agency service and has good prospects to compete with existing local companies. The Kiev
market is dominated by local companies, Blagovest, with more than 10 years market experience and
600 brokers, Planeta Abalon, Aliancebrok and Zalatoi Kljuts.
With no long-term track record in Sofia and Bucharest, the Group is still building its reputation in
these markets. Address Real Estate is a pioneer in the Bulgarian real estate business and market leader
with 60 offices. Mirela, Yavlena Real Estate Agency and Elta Consult (associated partner of CB
Richard Ellis since 2003) have had been operating since the early 90s and also have extensive market
coverage. The Romanian real estate agency sector has been penetrated by branches of international
leading real estate firms such as Colliers International and CB Richard Ellis, who compete with local
firms such as Eurisko Consulting and Regatta.
Development division
Arco Investeeringud is the parent company of the Group’s development division. It owns most of the
existing development subsidiaries and interests in respective joint ventures and will establish any
future companies that may be required in new markets. See “Business - Organisational Structure”.
The division is actively extending its project portfolio in Estonia and Latvia and looking for suitable
new projects in Lithuania, Ukraine, Bulgaria and Romania. The division comprises approximately
8 per cent of Group employees and generated 68.6 per cent of its total revenue and other operating
income in the financial year 2006.
With limited long-term market experience and contacts in Ukraine, Bulgaria and Romania, the Group
currently only considers development projects in capital cities where the services division is already
present, and which involves co-operation with a partner that has more experience in the local market.
In the Ukraine, the Group is co-operating with a local partner Mr. Juri Nikitin (through his whollyowned
Estonian company OÜ Bagatini) whilst in Romania it is partnering with the Estonian-based
IPC Romania OÜ that has been present in the market for a number of years. In Bulgaria, the Group is
partnering with Estonian-based Koger & Partnerid, through a jointly owned local company Arco &
Koger EOOD.
The main objective of the division is to act as project manager investing in and developing large
residential and non-residential projects. The process starts with choosing a location and ends with
well-organized and effective sales of the completed project.
Developing residential areas is a key strength of the division. The Group’s target in the coming years
is to reach a division where the residential development projects account for approximately 70 per cent
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