2023/01/05
Realco, one of Lithuania’s largest real estate development companies, has closed an active year. Last year, it sold 220 homes from its residential developments in the capital, concluded record numbers of notarised sales agreements and added several large development sites to its portfolio, which will allow the developer to put more than 1,600 new apartments on the market over the coming 1–2 years.
‘Last year, we sold 59% fewer homes than in 2021, a record year in the real estate market, during which we signed sales agreements for 534 homes. The company sold the most homes in the Go Life (92), 7 Vakarai (92) and Prie Vilnelės (25) developments and in the Vileišio 27 building (10), which was put on the market in the fall. The last apartments in the Šventosios Vartai development found their buyers through auction, a first for Realco. We’re satisfied with our achievements in 2022. We sold a substantial portion of the homes we had in store at the beginning of the year, entered into several large-scale transactions acquiring plots of land for future projects, hosted two architectural competitions and were granted construction permits for the Hero business centre,’ details Realco CEO Julius Dovidonis.
Record number of notarised[ sales agreements concluded
For Realco, the conclusion of last year and the beginning of the current year was marked by the signing of record numbers of notarised sales agreements. In 2022, Realco concluded sales agreements to the total value of 58.4 million euros – the highest this indicator has reached in the company's history. This record high was influenced by developments initiated back in 2021 and completed in 2022.
‘Last year, we concluded a total of 507 notarised sales agreements – keys were handed over to the new owners of apartments in the Go Life and 7 Vakarai projects. We’re already making arrangements for the conclusion of notarised sales agreements with buyers of the Prie Vilnelės development. Even though many of our apartments, especially in the Prie Vilnelės project, were sold in the early stages of construction, we kept our promise to our customers and did not alter our pricing,’ emphasises Dovidonis.
In 2022, the value of preliminary sales agreements signed by Realco in 2022 amounted to 30.7 million euros – half of the value of those signed in 2021 (67 million euros). This figure was affected by the substantially smaller number of homes the company had available for sale in 2022 and the general slowing of the real estate market.
‘Currently, we have 115 homes left available for sale; half are from the upper-segment Vileišio 27 project, which we began building in late summer. Even though we only put the latter on the market in the second half of last year, we’ve already sold 15% of the apartments – taking into account the slowdown of the market and the early stage of construction, we see this as a very promising result,’ says the company’s CEO.
A focus on new developments
Last year, Realco actively added to its portfolio by acquiring new building plots in Vilnius. At the beginning of the year, the company announced having acquired a plot of land and securing a construction permit for a 66-apartment residential building on 27A Vileišio St. in Antakalnis. A little later, the company further reinforced its portfolio with a 2 ha plot on 126 Justiniškių St., right next to its 7 Vakarai development, as well as a 2.4 ha plot on 1 Parodų St. in Lazdynai. It also hosted two architectural competitions last year for projects on both these plots.
‘Over the course of the next 1-2 years, we plant to put about 1,600 new homes on the capital’s primary market. Our focus is on a project on Didlaukio St. with 366 homes – we hope to get our building permit in the second quarter of this year. We are also in the design stage with the site on Justiniškių St., where we plan to build a residential building of 500 homes. Just several days ago, we announced the winning entry of our architectural competition for the site on Parodų St. – this means about 700 new apartments on the market,’ lists the CEO.
According to Dovidonis, the company is currently going through the project design and approval stage, so it is not faced with decisions about whether to start construction, put apartments up for sale or delay the sales stage. Such decisions would be more difficult to make given the current stagnation of the market and uncertain future projections. For projects that are currently in development, the company does not expect to secure building permits in anything less than a year. This is a long period of time, during which the real estate market can undergo a cardinal transformation.
Realco was granted a building permit for the Hero business centre last year. Construction on the project began in autumn and is expected to be complete by mid-2025. The long-neglected territory of the site will see the rise of a modern high-rise building oriented toward sustainable and advanced solutions, a new feature blending in and contributing to the urban fabric of the city centre. According to the company’s calculations, investment in the business centre in this prestigious location will amount to around 115 million euros.
In 2022, Realco invested 59.5 million euros in its development projects. This year, we intend to invest 45 million euros,’ says Dovidonis.
Few positive signs for the market
Europe was rocked by geopolitical, energy and economic challenges that had a strong impact on the entire real estate market, slowing it down and bringing the scale of sales back down to levels last seen in 2014–2015.
In 2022, developers operating in the primary real estate market of the capital concluded 2,165 sales agreements for homes, that is three times less than in 2021, when they concluded 7,181 agreements.
‘Developers encountered labour shortages, steep rises in raw material costs or their scarcity. Later, they were struck by record inflation, unprecedented surges in electricity prices and base interest rates approaching 3%. These challenges affected both developers and the public. We can sense from our buyers that everyone’s focus is now elsewhere – people are interested in new builds, but they don’t seem ready to make any purchases. If, in the months of October and November, we saw a slight uptick in buyer activity, in December, only 116 homes were sold across the entire market,’ explains the real estate expert.
According to Dovidonis, possibly the only positive trend, especially for the buyer, is the gradual, though not substantial, rise in the number of properties available for sale since spring. In 2023, the capital’s primary market started off with 3,576 homes, which is almost 28% more than in April of last year, when the market was at a record low with 2,584 homes for sale.
‘Since April, when we began to see a growth in supply, with 100-200 additional homes becoming available on the market each month, however, most of these homes are in buildings that have not yet entered the construction stage. At the moment, we have 1,671 such homes, which is almost twice as much as the number of homes in properties that are under construction or have already been built – 952 and 953 homes respectively,’ explains the Realco CEO.
]Kiek ieškau, nėra visiškai analogiško termino 'notarised sales', dažniausiai tiesiog rašoma 'sales agreements concluded' ar pan., neminint notarinio aspekto. Gal bent jau pavadinime šios skilties nevartojam žodžio 'notarised'. Galim skilties viduje jau paminėti 'notarinį' aspektą, bet pagrinde siūlau vartoti 'sales agreements concluded' ir pan.
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