A total of EUR 368 million pumped into commercial property acquisitions in the Baltic countries

In the first half of 2017, investor activity in commercial real estate in the Baltic countries was not uncommon, but the recorded scope of investment showed an unfading interest in the modern commercial property. A total of 18 investment transactions were concluded in this period in Lithuania, Latvia and Estonia, which involved the purchase of over 312,000 sqm of cash flow commercial property (modern offices, retail, warehousing and industrial buildings and premises, at least EUR 1.5 million in value). The total value of the acquisitions was EUR 368 million, nearly 18% less compared to the first half of 2016.

One transaction concluded in mid-2017 had a major effect on this year’s indicators. The transaction involved the acquisition of 80% ownership interest in the property investment company, Baltic Retail Properties, by CPA®:17 – Global of the US investment company W. P. Carey, and the Finnish Kesko Corporation. The property portfolio of Baltic Retail Properties comprises 18 retail stores in Lithuania, Estonia and Latvia, and a logistics centre in Lithuania. Following the acquisition, CPA®:17 – Global controlled by W. P. Carey Inc. became the main shareholder of Baltic Retail Properties paying EUR 127 million (including acquisition-related charges and costs) for its 70% share. Meanwhile Kesko acquired 10% of the shares of Baltic Retail Properties following Kesko’s sale of its 7 retail stores in Latvia and Estonia to Baltic Retail Properties for EUR 64 million.

Lithuania shared the major portion of the investment in the first half of 2017, i.e. EUR 198 million or 54% of the overall investment in the Baltic countries. The largest investment transactions in Lithuania during the period were the said acquisition of the shares in Baltic Retail Properties and the acquisition of the Vertas and Pentagon office buildings in Vilnius. In June 2017, the Swedish investment company Eastnine (former East Capital Explorer) completed the acquisition of Vertas. The company paid EUR 29 million for the building, which, according to the buyer, at the time of the acquisition guaranteed about 6.5% yield. The Finnish property investment and management company Technopolis purchased an almost completed office building in Ozas Park from the ICOR Group. The transaction involved the purchase of both the office building and the parcel of land next to the building. The acquisition of the building was completed in April, and the acquisition of the land is scheduled for completion by the end of 2017. The total transaction value is about EUR 32 million. According to the official notice of Technopolis, the initial yield of 6.5% is forecast on completion.

The value of investment transactions in Estonia in the first half of 2017 totalled EUR 91 million or 25% of the overall investment in the Baltic countries. The largest investment transactions in Estonia involved the sale of 3 retail centres managed by Kesko to Baltic Retail Properties, the acquisition of the shares in Baltic Retail Properties mentioned above, and the sale of the Prisma Shopping Centre in the city of Narva (the shopping centre was purchased by the French property management company CORUM for EUR 16.7 million from EfTEN Kinnisvarafond AS controlled by EfTEN Capital). Latvia saw the smallest share of investment over the period totalling EUR 79 million. The major portion of the investment in Latvia accounted for the sale of 4 retail centres managed by Kesko to Baltic Retail Properties and subsequent sale of the shares of Baltic Retail Properties to CPA®:17 – Global.

Almost 70% of investment pumped into commercial property acquisitions in the Baltic countries

Transactions involving W. P. Carey Inc., Kesko and Baltic Retail Properties determined the distribution of investment by property segments in the first half of 2017. Of the total EUR 368 million invested in Lithuania, Latvia and Estonia 69% went to the retail property sector. A total of 25% investment was made in offices and the remaining smallest portion (6%) was traditionally invested in warehousing facilities. The largest transaction in the warehousing property segment was the purchase of 21,000 sqm logistics centre in Vievis (with Rimi as the anchor tenant) by the Estonian investment company United Partners Property from Sirin Development.

One large investment transaction determined that US investors (W. P. Carey Inc.) were the largest single investors in modern commercial property accounting for 33% of the total investment in the Baltic countries in the first half of 2017. Local investors from the Baltic countries accounted for another 33% of the total investment and investors of other countries (Denmark, Finland, France, Sweden, Russia, and the UK) accounted for the remaining 34% of the total investment. The geography of investors in the Baltic countries does not expand considerably – local, Scandinavian and private investors continue to take centre stage. However, new international investors in the Baltic market (e.g. W. P. Carey Inc.) tend to expand their portfolios; the market also attracts new market players (e.g. the French property management company CORUM, which has made its first acquisition in Estonia this year). Despite the new larger investors in the market, the geographic pattern of investment remains limited. For example, over the past 17 years, investors from 15 different countries have invested in the developed commercial property in Lithuania and this number has not changed since 2015.

Lithuania Commercial Market Commentary Q2 2017

Latest news

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

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

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

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

Mail sent!

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