Nearly 50% increase in the capital value of top quality commercial property

The country’s growing economy continues to support the Lithuanian commercial property market, which can boast of sustainable growth and further development prospects. Rising commercial property rents and occupancy rates over the past few years have attracted both large and individual private investors. Higher quality property located in attractive locations of the capital city with high quality and more interesting exterior features (new or historic buildings), functional layout and prospects of a growth in value is of greatest interest. High-quality property is attractive for safety of investment. This is one of the most important criteria for large foreign investors seeking to avoid major risks in markets that they are not familiar with. Meanwhile, investors who know the local market are looking for various investment opportunities, including commercial property which is not of particularly high quality (B class business centres or shopping centres located in cities other than the capital).

Analysis of changes in the capital value of commercial property shows that the theoretical value of investment has been steadily growing since mid-2010, i.e. from the time when the market was at rock bottom. The capital value index shows the value of the investment at a certain moment, which is estimated by taking into account the rent and yield indicator. Rapid growth of commercial property rents and decreasing yields increase the capital value. For example, since mid-2010, A class office rents in Vilnius have already increased by 22% on average, while the yield over the same period fell by 1.4 percentage points on average – from 9% to 7.6%. Therefore, rental income increased by a fifth and the significantly reduced appetite of investors has, since mid-2010, increased the capital value by 45%. Similar trends can be observed in other regions of the country as well as in other segments of commercial property (retail, logistics), but it is clear that higher-quality property in the capital is recovering its value most quickly. It is likely that this segment will continue to record moderate growth of rental rates and decline in yields, which could slow down unless there is an instantaneous leap in supply or demand eases.

Click here to view full report

Latest news

All news
Ober-Haus Celebrates 25 Years: How Has the Property Market Changed in a Quarter of a Century?
2023-11-07

Ober-Haus Celebrates 25 Years: How Has the Property Market Changed in a Quarter of a Century?

In 1998, the Lithuanian real estate market was characterised by a lack of housing, poor credit conditions and an underdeveloped commercial real estate sector. Over the last 25 years, the number of apartments for sale has increased more than 10-fold, housing market activity has almost quadrupled, lending rates have fallen from double to single digits, and modern office buildings and shopping malls are now numbering in the hundreds – that’s the picture according to the Ober-Haus Real Estate Market Review 1998–2023, conducted to celebrate the company’s 25th anniversary. The Year 2000 Marked the Beginning of the Creation of the Lithuanian Real Estate Market The years 1998–2000 can be considered as the period when the real estate sector in Lithuania began to evolve. Due to the absence of credit services, the Lithuanian population was mostly only able to purchase a home using their own funds, and commercial construction with the intention to sell or lease was in its infancy. And so, 25 years ago, investors were developing single apartment blocks, business/office assets and shopping centres, where any new development for sale or rent was regarded as a significant event in the real estate market. The Russian economic crisis, which began in…

Buyers Show No Interest in Overpriced Housing
2023-10-24

Buyers Show No Interest in Overpriced Housing

The Ober-Haus Apartment Price Index for Lithuania (OHBI), which captures changes in apartment prices in the five largest Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys), remained unchanged in September 2023 (August 2023 figures had shown 0.4% growth). The overall level of apartment prices in Lithuania’s major cities grew by 2.6% over the last 12 months (an annual growth of 4.9% in August 2023). In September 2023, Klaipėda, Šiauliai and Panevėžys recorded 0.2%, 0.3% and 0.4% growth respectively, and the average price per square metre rose to EUR 1,613 (+3 €/m²), EUR 1,103 (+3 €/m²) and EUR 1,078 (+4 €/m²). Meanwhile, in Vilnius and Kaunas, the average price per square metre decreased by 0.1% month-on-month to 2.568 Eur (-3 €/m²) and 1.724 Eur (-2 €/m²) respectively. Over the year (September 2023 as compared to September 2022), apartment prices grew in all major cities of the country: in Vilnius – by 2.6%, in Kaunas – by 3.2%, in Klaipėda – by 1.6%, in Šiauliai – by 3.7%, and in Panevėžys – by 2.5%. The stagnation period in the Lithuanian housing market continues. Although the market activity indicators do not show any signs of improvement, the majority of home sellers have not…

Office sublease: thousands of invisible square metres
2023-10-02

Office sublease: thousands of invisible square metres

In the office segment, the phenomenon of sublease – the transfer of part of a company’s leased premises to a third party – became popular during the pandemic and has remained since. The market of subleased property is usually not included in the official statistics published by real estate agencies. According to OBER-HAUS, current tenants of Class A and Class B+ business centres in Vilnius alone could be offering several thousand or even tens of thousands of square metres of space for sublease. Sublease is usually simply understood as renting space not directly from the owner or manager of a business centre, but from an existing tenant established and operating in the business centre. The principle of sublease itself existed long before the pandemic, but has only become more popular in recent years as businesses switched to remote or hybrid work, consequently, the amount of space required for their operations has decreased. OBER-HAUS estimates that since the beginning of the pandemic, the average office space in Vilnius has decreased by about 30%. In other words, companies entering into new contracts today are renting office space by almost a third smaller than a few years ago. However, office lease contracts are…

All news
+
Mandatory
Mandatory cookies help make a website usable by enabling basic functions like page navigation and access to secure areas of the website. The website cannot function properly without these cookies.
Functional
Functional cookies enable a website to remember information that changes the way the website behaves or looks, like your preferred language or the region that you are in. Functional cookies are currently unused.
Statistical
Statistical cookies help website owners to understand how visitors interact with websites by collecting and reporting information anonymously. Statistical cookies are currently unused.
Advertising
Marketing cookies are used to track visitors across websites. The intention is to display ads that are relevant and engaging for the individual user and thereby more valuable for publishers and third party advertisers.
Allow all Deny All

Mail sent!

This site is registered on wpml.org as a development site.