MARKET COMMENTARY - Ober-Haus

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MARKET COMMENTARY - Ober-Haus

Lithuanian Residential Real Estate Q4 2010MARKET COMMENTARYIn the history of the Lithuanian residential property market, 2010will be recorded with a negative price changes. In 2010, the totalprice level of apartments in the main cities of Lithuania—Vilnius,Kaunas, Klaip÷da, Šiauliai, and Panev÷žys—dropped another 3.0%.However, given the price change in the prices of apartments in 2008and 2009 (15.2% and 26.8% respectively), the change in 2010 wasinsignificant. Last year could be defined as the year of searching forthe bottom because the drop in residential prices in the main citiesof Lithuania stabilised considerably and from mid 2010, the firstprice changes in the positive were recorded in Vilnius.9008007006005004003002001000Lithuanian apartment price index (OHBI)(January 1994 = 100)Data recorded by Ober-Haus show that in 2010 the prices forresidential property in the main cities of Lithuania experienceddifferent trends. Beginning June 2010 in the capital city, the firstpositive apartment price changes were recorded. Although they werenot significant, they remained until the end of the year. Vilnius is theonly city in Lithuania where a symbolic positive residential propertyprice change of 0.1% was recordered in 2010. In the capital city,the price change in apartments also experienced different trends indifferent segments. A positive price change was recorded only in theleast expensive segment, i.e. old or new apartments located inresidential districts. A more significant price change was observed inthe new apartment market, because shrinking supply and new andmore attractive projects allowed the developers raise the price inindividual cases by as much as 10–15%. Total price growth in thissegment, however, was only 5% in 2010. A slight price rise was alsoobserved in the prices of old apartments located in residentialdistricts since they attracted potential buyers due to having thelowest prices in the market. A slight drop of 3–6% was noted in thesegment of more expensive residential property (new and oldapartments in prestigious areas or the centre of the city) in 2010.01-199401-199501-199601-199701-199801-199901-200001-200101-200201-200301-200401-200501-200601-200701-200801-200901-201012-2010Source: Ober-Haus Data: 1994-2010Average apartment price changes4%2%1.1%0.1%0%-0.5%-2%-0.8%-1.5%-2.4%-4%-3.1% -3.1%-6%-4.9%-8%-8.3%-10%Vilnius Kaunas Klaipeda Siauliai PanevezysChange in last 12 months Change in last quarterSource: Ober-Haus Data: Q4 2010New construction flats annual supplyMeanwhile in other main cities of Lithuania, the total price level ofapartments last year experienced another drop. The largest annualdrop, 8.3%, was recorded in Kaunas. Compared to other majorcities in Lithuania, however, the total fall in prices in this city is thesmallest. This was influenced by the slower rise in the prices ofresidential property and lower price level in the past than was thecase in Vilnius or Klaip÷da for instance. In 2010 the prices ofapartments dropped 4.9% in Klaip÷da and 3.1% in both Šiauliaiand Panev÷žys.2000160012008004000166511227295173411590 8 0 08924Vilnius Kaunas Klaipeda Siauliai Panevezys Druskininkai2009 2010Source: Ober-Haus Data: Q4 2010www.ober-haus.com 1


Lithuanian Residential Real Estate MARKET COMMENTARY Q4 2010Despite various price changes, the number of residential propertytransactions in all the main cities of Lithuania experienced a rise in2010. According to data of the State Enterprise Centre of Registers,the number of sale/purchase transactions in Lithuania concluded in2010 was over 27% higher than it was in 2009. The growth in thenumber of detached house sale/purchase transactions in 2010 wassmaller—over 16%. It is evident that significantly lower residentialproperty prices and improving financing conditions in 2010 increased2500200015001000500Number of transactions in Lithuania(per month)the number of potential buyers. Even though market activities havenotably become more dynamic, in comparison with the years 2004–2007, the most active period in the real estate market of Lithuania,shows that the situation in the market is still fairly sluggish. Theindicators of 2010 were half what they were between 2004 and001-200904-200907-200910-200901-201004-201007-201010-201012-2010HousesFlatsSource: SE Centre of Registers Data: 2009-20102007, when the average monthly number of residential propertytransactions in Lithuania was around 4,000.As had been forecast, the supply of new residential properties lastAverage flat prices in old town,city centre, prestigious districts (EUR/sqm)year was very sparse. In 2010, over 500 new apartments were1800completed in Vilnius, i.e. 3 times fewer than in 2009 and 11–12times (!) fewer than in 2007 and 2008. Last year the scope of155014501350150012001350construction of new apartments was not satisfactory in Klaip÷da or900950Kaunas either. In the port city of Klaip÷da, nearly 350 apartments700650were built and in Kaunas only 160 apartments were constructed (3and 5.5 times fewer than were built each year between 2008 and2009). Such a drop in supply was expected because developersremaining in the market tried to complete only few projects that hadbeen started earlier. In 2009 hardly any residential constructionprojects were started, but the year 2010 was more hopeful. LastVilnius Kaunas Klaip÷da Šiauliai Panev÷žys DruskininkaiNew construction (without fit-out) Old constructionSource: Ober-Haus Data: Q4 2010year there was increasingly more mention of renewed building workand some companies did indeed start or renewed constructionworks. In light of the current market situation and the rate of newconstruction, a moderate growth in supply could be forecast in 2011.Average flat prices in residential districts(EUR/sqm)Even though in the last quarter of 2010 the number of newapartments (in completed apartment buildings) in the main cities ofLithuania went up slightly (some projects were completed), theannual drop in supply was significant. Although at the end of 2009,120095010507501100850700 7005505006507004,100 newly built apartments were unsold in the apartmentbuildings of the main cities of Lithuania, in 2010 real supplydecreased 30% to 2,850 apartments. At present, the followingnumbers of apartments are offered in apartment buildingsconstructed in 2007–2010: 1,350 apartments in Vilnius, over 600apartments in Kaunas, 800 apartments in Klaip÷da, and a total ofVilnius Kaunas Klaip÷da Šiauliai Panev÷žys DruskininkaiNew construction (without fit-out) Old constructionSource: Ober-Haus Data: Q4 2010approximately 80 new apartments in Šiauliai and Panev÷žys.www.ober-haus.com2

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