According to the data of Realco, one of the largest real estate (RE) development companies in Lithuania, 343 dwellings were sold on the primary RE market of Vilnius in January this year, of which 185 were in the economy segment, 140 in the mid-range segment, and only 18 in the premium segment. Compared to the record-breaking January last year, the first month of this year saw a double drop in the number of sales and a one-third drop in the number of available homes.
In January, with the launch of several real estate projects, the housing stock curve broke away from the lows at the end of last year and crossed the 3,000-unit mark. Buyers can currently choose from 3,014 dwellings.
“We started the year with even higher housing prices. Currently, the average price per square metre of an apartment of a new-build project in Vilnius is EUR 2,559 – we have not recorded such a high average price in 15 years. We estimate that the price per square metre in newly launched projects is currently on average EUR 200 higher than the price per square metre in previously sold projects of similar location and development. There are still no signs that prices could fall,” Lukas Cicėnas, CFO of Realco, noticed.
In the first month of the year, Realco sold 25 dwellings on the capital’s primary market, which is half as many as in January last year.
Quench your thirst for high-end housing
The biggest housing shortage is still in the premium segment. According to the Realco data, high-end housing accounts for less than 10% of the total supply in the primary RE market, although in order to meet the demand, the share of such housing in the market should reach at least a third. One of the main reasons for the shortage is the lack of land plots in prestigious locations: Old Town (Senamiestis), Antakalnis and Žvėrynas, close to the city centre and full of green spaces, as well as Užupis, Turniškės and Valakampiai, with their distinctive atmosphere, are considered the capital’s most valuable neighbourhoods.
“Another reason is that premium housing projects are often the result of the conversion of historic buildings, which takes a very long time to coordinate with public bodies. In addition, a developer takes an above-average risk when developing high-end housing projects as both the size of apartments and the price per square metre in such projects tend to be significantly higher than the market average. The risk stems from the relatively narrow circle of buyers for high-priced real estate and the lower liquidity. Nevertheless, we observe that the price of as much as EUR 10,000 per square metre of a luxury apartment in Vilnius is no longer a limit,” the expert said.
Mr. Cicėnas, who closely follows the capital’s real estate market, has also some good news for high-end housing buyers – the supply of such housing is expected to increase significantly this year.
“In 2022, 5–6 high-end projects are planned to be launched in the vicinity of Old Town (Senamiestis) and Naujamiestis and there is room for a few more projects in Užupis and Markučiai. We see a lot of potential in the area next to Vingis Park and Litexpo Exhibition Centre, where a number of major new projects are also planned. If implemented, the area has great potential to become a prestigious part of Vilnius with a distinctive aura,” Mr. Cicėnas noticed.
Three high-end development projects
According to Mr. Cicėnas, this year, Realco will focus on high-end and higher-class housing – the company is currently developing three such projects. 230 high-end dwellings in these projects will be offered to the market.
Realco has recently expanded its portfolio with a land plot in the capital’s neighbourhood Antakalnis, P. Vileišio g. 27A, where it will develop a higher-class residential project. It acquired the land plot on the bank of Neris with a building permit, so construction work is expected to start in the second quarter of this year. The site of a multi-apartments building, which is almost 0.5 hectares in size, is planned to provide 70 apartments.
“Until now, buyers of luxury housing were forced to opt for the mid-range segment, as there was simply no higher-class option. The supply of high-end housing will increase this year, but not enough to affect the RE market substantially – we forecast that high-end housing will still be under-injected into the market,” the company’s CFO emphasised.