Investment volumes in commercial real estate in Lithuania reach LTL 500 million in Q1-Q3 2013

The current situation in the market for commercial properties is also reflected by the recent growth in the number of investments. A total of seven investment deals were transacted in Lithuania in the first three quarters of 2013 (including direct, indirect and forced acquisitions of the available modern office, commercial or warehousing/production premises with a value exceeding EUR 1.5 million). The total value of these deals is EUR 146 million (LTL 500 million). This is a 28% increase compared to 2011 and 2012 taken together. Despite the visibly increased investments in commercial properties however, local funds or companies remain the key market players since they are very familiar with the local market and look for properties that can generate stable revenues. Office and retail sectors dominate in the Lithuanian investment market this year: offices – 60%, retail – 30% and warehouses – 10% of the total volume.

It was announced at the end of Q3 2013 that Danhaus LT, a company controlled by a Lithuanian, had acquired a A class business centre in Vilnius from the investment fund LORDS LB BALTIC FUND I. About EUR 16.2 million was paid for this office building with an area of 8,500 sqm. This was the second sale of this building: in 2010, LORDS LB BALTIC FUND I acquired it from the project developer Vilmesta. A new investment deal was announced in August 2013; one peculiarity of this contract is that it is a forward sale. BPT Baltic Opportunity Fund acquired the shopping centre (shopping park) Domus Pro, which is being constructed next to Ukmergės Street in Vilnius, from the Danish developer TK Development. The shopping park is expected to have an area of 11,000 sqm, and the completion of the first stage (7,500 sqm) is expected in the spring of 2014. The value of the investment deal was established based on the required initial yield of 8.5%.

The investment deals finalised recently demonstrate that investors who acquire standard properties in the capital city normally hope for an initial yield of at least 8.5%, while sellers hope to sell their sites at a yield not exceeding 8.0%. Any investment contracts finalised in the foreseeable future are therefore likely to be finalised within this range of investment yields. Given the current market situation, these figures look sufficiently reasonable.

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